Daily BriefsTMT/Internet

TMT: Alibaba Group, Sea Ltd, Linklogis, WeDoctor Holdings, Xiaomi Corp, AppLovin Corp and more

In today’s briefing:

  • BABA Long Entry Target
  • Sea Ltd (SE US) – The Stickiness of Shopee Food
  • ECM Weekly (5th April 2021) – Nayuki, Peter Warren, Linklogis, Zhaoke Ophthalmic, Macrotech Dev
  • We Doctor IPO Initiation: Patient Revolution
  • Chinese App Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu
  • AppLovin IPO Preview

BABA Long Entry Target

By Thomas Schroeder

Alibaba Group (BABA US) still has some basing work to complete before a fresh rally cycle can unfold. Current bearish flat sets a heavy tone to press below trendline support (a brief affair) and sets up a long with price and RSI buy levels aligning.

We outline a micro short trade if we tick up to 240 below the 245 pivot resistance.

The directional trade is to get long on a break below trendline support (220) near the 205 price level while aligning the RSI low target.


Sea Ltd (SE US) – The Stickiness of Shopee Food

By Angus Mackintosh

Shopee, the e-commerce arm of Sea Ltd (SE US) has quietly launched ShopeeFood in Indonesia. This could potentially pose a threat to both Gojek (1379371D IJ) and Grab (0967655D SP), which currently dominate the food delivery market between them. 

The two incumbent players do have a head start and an edge on logistics. ShopeePay’s success in digital payments shows the company’s ability to grab share quickly, suggesting that the firm’s new food delivery unit could be a force to be reckoned with.

There will also be synergies with ShopeePay, which could potentially provide discounts and cashback but overall it will help to increase the stickiness of the Shopee App.

The total gross merchandise value of the food delivery market in Indonesia reportedly amounted to US$3.7bn in 2020. If we were to assume that the market can grow by +15% in 2021 to US$4.2bn and Shopee could take 25% of the market then it could be worth US$1bn in GMV to Shopee.

Shopee certainly has the financial capacity to hire drivers, with the ShopeeFood Driver app, which is available on the google store already has over 100,000 downloads. Onboarding big and small will be key

Shopee’s biggest advantage over competitors remains its strength in terms of funding, given that it generates huge amounts of cash through its gaming business. Sea Ltd (SE US) could now decide to channel resources into Shopee Food to grow that business rapidly.

It is early days for Shopee Food but it has the potential to be another revenue driver for the company, which will underpin future growth and hence its premium valuations. Sea Ltd (SE US) trades on 13.3x FY21E EV/Sales and 9.5x FY22E EV/sales, with estimated sales growth of +78.8% and +38.4% for FY21E and FY22E respectively. 


ECM Weekly (5th April 2021) – Nayuki, Peter Warren, Linklogis, Zhaoke Ophthalmic, Macrotech Dev

By Zhen Zhou, Toh

Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.

The IPO pipeline in Hong Kong looks even stronger as of last week, after numerous draft prospectuses were filed. Notable deals include WeDoctor (1737089D HK), WM Tech (owner of Wumart Stores in China, and Medlive Tech (online professional physician network in China).

For upcoming debuts, Linklogis (LINK HK)  closed a day earlier and priced above the midpoint of its IPO price range. The company is due to trade this coming Friday. We covered the IPO earlier in:

We initiated coverage on Nayuki Holdings (NYK HK), a popular premium teahouse chain in China, and Zhaoke Ophthalmology Pharmaceutical (ZKO HK), a China-based ophthalmic pharmaceutical company, earlier this week:

In the US, bookbuild for Smart Share Global (EM US)  was short. Books opened Monday, priced on Wednesday, ADS debuted on Thursday. SSG’s share price struggled in early hours of trading and closed flat, even after pricing below their initial price range. We covered the IPO in:

In India this week, we initiated coverage on Power Grid Corporation Of India (PWGR IN) and revisited Macrotech Developers (LODHA IN), which was previously known as Lodha Developers. Anchor books are set to open this coming Tuesday:

Last, but not least, in Australia, we covered Peter Warren’s IPO which is set to list close to the end of the month.

Accuracy Rate:

Our overall accuracy rate is 73.9% for IPOs and 67.1% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings this week

  • WM Tech Corporation Limited (Hong Kong, US$1bn)
  • We Doctor Holdings Limited (Hong Kong, US$1bn)
  • Medlive Technology Co., Ltd. (Hong Kong, US$500m)
  • Green Tea Group Limited (Hong Kong, US$200m)
  • Transcenta Holding Limited (Hong Kong, >US$100m)
  • eBeauty Holdings (Cayman) Limited (Hong Kong, >US$100m)
  • Helens International (Hong Kong, >US$100m) 
  • Edding Group Company Limited (Hong Kong, refiled)

News on Upcoming IPOs

Hong Kong

U.S. China ADRs

India

Philippines

Australia

Singapore

Japan

Analysis on Upcoming IPOs

NameInsight
Hong Kong
Betta Pharma

Betta Pharma (贝达医药) A+H: Tier 2 Player Struggled to Break Out 

ByteDance

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)

ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 

ByteDance

ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

ByteDance

ByteDance (字节跳动) Pre-IPO: How Has It Done in 1H? 

ByteDance

ByteDance: The Unlisted Company’s Video Apps Leading the Market and Threatening Internet Giants 

ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 

ByteDance

ByteDance (字节跳动) Pre-IPO – Globally the Most Downloaded App for Jan 2020 Driven by India 

ByteDance

ByteDance (字节跳动) Pre-IPO: Global Ambition Meets Regulatory Challenges 

Chaoju

Chaoju Eye Care (朝聚眼科) Pre-IPO: Growth Prospect Far from Being Impressive 

Dida

Dida Pre-IPO – Making Hay While Big Brother Retreats 

Dida

Dida Pre-IPO – Earnings Forecast and First Stab at Valuation 

Dida

Dida Pre-IPO – Peer Comparison – Lagging in Scale, Leading in Profitability 

Intco Med

Intco Medical (英科医疗) A+H: From China No.1 to Global No. 1 

Kilcoy

Kilcoy Global Foods Pre-IPO – Rapid Earnings Growth on the Back of Margin Improvement 

Kilcoy

Kilcoy Global Foods Pre-IPO – A Lot of Things Still Remain Unexplained 

Kindstar

Kindstar (康圣环球) Pre-IPO: Issues with Scalability 

Kindstar

Kindstar (康圣环球) Pre-IPO: Is It Worth the Premium? 

RemeGen RemeGen (荣昌生物) Pre-IPO: Thoughts on Valuation of RC18 and RC48 
Bio-heart Shanghai Bio-Heart (上海百心安) Pre-IPO: Needs a Long Runway 
Toplist Toplist China Pre-IPO – Overwhelmingly More Negatives than Positives 
Tasly Tasly Biopharm (天士力生物) IPO: Visible Growth from Approved Drug but Lacks Blockbusters 
WeDoctor WeDoctor (微医) Pre-IPO -App Walk Through – The Online Medical Directory and More 
WeDoctor WeDoctor (微医) Pre-IPO – A More Focused Online Medical Svc Provider than Ping An Good Doctor 
Youran Dairy China Youran Dairy(悠然牧业) Pre-IPO – A Leader Pulling Ahead in a Fragmented Market 
India
Aadhar Housing Aadhar Housing Finance Pre-IPO – Decent past Growth but Comes with Weird Disclosures 
ASK ASK Investment Managers Pre-IPO – Riding on a Wave of Wealth 
Anmol IndAnmol Industries Pre-IPO Quick Take – No Growth, Generous Payments to Founders
Bharat Hotel

Bharat Hotels Pre-IPO – Catching up with Peers 

Bajaj En

Bajaj Energy Pre-IPO – Supposed to Deliver Steady Performance if Only Its Sole Client Would Let It 

CMS InfoCMS Info Systems Pre-IPO – When a PE Sells to Another PE… Only One Gets the Timing Right
Crystal CropCrystal Crop Protection Pre-IPO – DRHP Raises More Questions than in Answers
ESAF SFB ESAF Small Finance Bank Pre-IPO – Growing Fast but Remains Highly Dependant on a Related Party 
Flemingo Flemingo Travel Retail Pre-IPO – Its a Different Business in Every Country
Emami Cem Emami Cement Pre-IPO – Still in Ramp Up Phase but Shares Pledge Might Lead to an Early IPO 
NSENSE IPO Preview- Not Only Fast..its Risky and Expensive
NSENational Stock Exchange Pre-IPO Review – Bigger, Better, Stronger but a Little Too Fast for Some

LIC

Life Insurance Corporation of India Pre-IPO – Early Take on India’s Largest IPO 
Penna Cem Penna Cement – Aggressive Expansion Plans Even Though Past Performance Has Been Tepid 
PNB MetPNB Metlife Pre-IPO Quick Take – Doesn’t Stack up Well Versus Its Larger Peers
Samhi Hotels Samhi Hotels Pre-IPO – Assets and Borrowings Are Growing, but Earnings Haven’t Kept Pace 
Malaysia
QSRQSR Brands Pre-IPO – As Healthy as Fast Food
Singapore
ThaiBev Beer ThaiBev BeerCo Pre-IPO – Declining Rev and Mkt Share Concerns but Good Cost Control 
ThaiBev Beer ThaiBev BeerCo Pre-IPO – Thoughts on BeerCo and ThaiBev HoldCo Valuation 

We Doctor IPO Initiation: Patient Revolution

By Arun George

WeDoctor Holdings (1737089D HK) is the largest digital medical service platform in China as measured by both the number of internet hospitals as of 31 December 2020 and the volume of digital medical consultations provided in 2019, according to Frost & Sullivan. We Doctor was filed for an HKEx IPO to raise around $2-3 billion, according to press reports. We Doctor counts Tencent Holdings (700 HK), Hillhouse Capital, AIA Group Ltd (1299 HK), Sequoia Capital, Goldman Sachs Group (GS US) and Qiming Venture Partners as shareholders. 

In response to the COVID-19 outbreak, individuals have become increasingly focused on personal health and wellbeing which has driven user acceptance of online healthcare platforms. The proportion of digitalisation in the Chinese health market is expected to increase rapidly from 3.3% in 2019 to 24.0% of total healthcare expenditure in 2030, according to Frost and Sullivan.

Consequently, and despite the choppy markets and waning enthusiasm for Chinese tech, the shares of Ping An Healthcare and Technology Company Limited (1833 HK), Alibaba Health Information Technology (241 HK) and JD Health (6618 HK) are up 10%, 1% and 62% YTD, respectively. Overall, for investors willing to brave the IPO markets, we believe that We Doctor is an attractive play on the accelerating digitalisation of China’s healthcare market.


Chinese App Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu

By Ming Lu

  • Xiaomi plans to produce electric vehicle.
  • The court forces Douyu to compensate Huya for broadcaster poaching.
  • Tencent Music and Vipshop launch share repurchase programs.

Our coverage on Chinese equities:

E-commerce: Alibaba (9988 HK, BABA US), Meituan (3690 HK), JD.com (9618 HK, JD US), JD Health (6618 HK), KE (BEKE US).

Online Entertainment: Tencent (700 HK), Kuaishou (1024 HK), NetEase (9999 HK, NTES US), Bilibili (BILI US), Tencent Music (TME).

Others: Xiaomi (1810 HK).


AppLovin IPO Preview

By Douglas Kim

  • Founded in 2011, AppLovin Corp (APP US) is getting ready to complete its IPO in 2Q 2021. The company is aiming to raise about $1 billion in this IPO. KKR purchased a minority stake in the company in 2018 at about $2 billion valuation. The IPO valuation is likely to be much higher.
  • The company originally started its business helping customers to improve the smartphone customer experiences for all the users. In recent years, the company has become a much bigger player in the mobile gaming segment and it also helps developers to grow their users and improve monetization of their apps. 
  • AppLovin’s income statement shows strong sales growth in the past three years but declining profit margins. AppLovin generated sales of $1,451.1 million and an operating loss of $62.1 million in 2020. The company’s sales have nearly tripled from 2018 to 2020. Despite the company’s strong sales growth, one of the things that is not so clear in the prospectus is what percentage of the company’s sales growth in the past three years has been driven by organic growth versus acquisitions.

Before it’s here, it’s on Smartkarma