Daily BriefsTMT/Internet

TMT: Bukalapak, Yidu Tech Inc, Money Forward, Bilibili Inc, Alibaba Group, SK Hynix, Just Dial Ltd, Tata Elxsi Ltd and more

In today’s briefing:

  • ECM Weekly (18th July 2021) – Krafton, Kakao Bank, Bukalapak, Filinvest REIT, Zomato, China ADR IPO
  • Yidu Tech (医渡云) Lock-Up Expiry – About US$2bn Worth of Shares Unlocked
  • TOPIX Inclusion: Money Forward (3994) Could Outperform Freee (4478) Until End of Month
  • Bukalapak IPO Initiation: Island Shopping
  • Bilibili: Buy the Dip
  • Alibaba (BABA): China E-Commerce Growth Rate Not Declining, But Accelerating
  • SK Hynix: Leading DRAM IDM, Trading at Discount Multiples, in a Strong Demand Environment
  • Estimated Result Impact April to June (2021)
  • HSIE Results Daily: Cyient, Wipro
  • HSIE Results Daily: Tata Elxsi, L&T Infotech

ECM Weekly (18th July 2021) – Krafton, Kakao Bank, Bukalapak, Filinvest REIT, Zomato, China ADR IPO

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.

ECM activity eased after China’s Cyber Security announcement last week. 

It was reported that Bytedance has earlier halted its US IPO plans after warnings of data security from Chinese regulators. Adding to the list of halted China ADR IPO plans is Alibaba-and-Tencent-backed Xiaohongshu. Lalamove was also reported to be considering moving its US$1bn IPO to Hong Kong as well. 

On top of that, China is planning on exempting Hong Kong IPOs from seeking the approval of cybersecurity regulators, showing that it was specifically targeting US listings. Following our coverage on the event, this week, we discussed the new draft Cyber Security Review measures and its likely impact on future listings. 

For live deals this week, in Korea, we initiated on Kakao Bank, South Korea’s largest digital bank. Its US$2.2bn bookbuild will close on Wednesday, pricing on Thursday and it is expected to debut on 4th August. Despite its short operating history, Kakao Bank has recorded a stupendous growth rate.

Continuing our coverage on Krafton, we shared our thoughts on valuation, index inclusion, and its tiered IPO lock-up agreements. Books were said to be multiple times covered. Bookbuild is expected to close on 27th July and debut on 10th August.

In Indonesia, we shared our thoughts on valuation of Bukalapak. Later in the week, it was reported that IPO bookbuild was upsized to US$1.5bn, up from an initial US$1.1bn deal. Books were multiple times covered, with interests coming from global long-only investors, sovereign wealth funds and domestic institutions, as per media reports. Bookbuild will close on Monday and shares will trade on 6th August.

In the Philippines, Filinvest REIT launched its US$240m bookbuild. Despite an initial portfolio of 17 properties, we think that the REIT is like a single asset. The REIT has since guided pricing towards the lower end of the IPO price range. Books will close Monday and begin trading on 12th August. 

In India, Zomato closed its bookbuild, raising US$1.26bn and making it the largest listing in India from the technology sector. Books were oversubscribed by 38x with QIBs subscription at the highest 51.79x and HNI at 32.97x. Shares will debut on 27 July, and we covered the deal earlier:

Yidu Tech IPO lock-up expired Thursday this week and about a  total of about US$2bn worth of shares have been freed up. We discuss the profile of shareholders and their likelihood of selling in:

In Hong Kong, there were multiple biopharma debuts. Brii Biosciences debuted on Tuesday, traded slightly upwards on its first day before dipping, breaking deal price, and closing 6.5% below deal price on Friday. 

Medlive Technology priced its bookbuild at the top end and began trading on Thursday. Shares did well on its first day, closing 14% higher and ended the week 10.5% above IPO price. 

Kindstar Globalgene was priced at the top end and began trading on Friday. The IPO debuted poorly and closed 7.6% below IPO price on its first day. 

New filings this week include digital payments providers One 97 Communications Limited (Paytm) and Mobikwik. They are looking to raise US$2.2bn and US$255m, respectively, from their India IPOs. The former is backed by Softbank, while the latter boasts pre-IPO investors that include American Express, Cisco, Sequoia etc.

Accuracy Rate:

Our overall accuracy rate is 73.7% for IPOs and 67.5% for Placements 

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

New IPO filings this week

  • One 97 Communications Limited (PayTM) (India, US$2.2bn)
  • Mobikwik (India, US$255m)

News on Upcoming IPOs

Hong Kong/China

US/China ADRs

India

Others

Analysis on Upcoming IPOs

NameInsight
Hong Kong
Anjuke

Anjuke Pre-IPO – Mixed (Positive and Negative) Developments 

Betta Pharma

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

Broncus

Broncus (堃博医疗) Pre-IPO: Big Potential to Be Tested 

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 

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 

Edding Grp

Edding Group (亿腾医药) Pre-IPO: Notes from Latest Financials and Its Related Party 

Edding Grp

Edding Group (亿腾医药) Pre-IPO: Notes from Latest Financials and Its Related Party 

Hanyu

Shanghai Hanyu (捍宇医疗) Pre-IPO: Not a Straight-A but Listing at Right Time 

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 

Novotech

Novotech Pre-IPO: Biotech Focused CRO at Hefty Pre-IPO Valuation 

RemeGen RemeGen (荣昌生物) Pre-IPO: Thoughts on Valuation of RC18 and RC48 
SH 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 
WeDoctor We Doctor (微医) Pre-IPO – Peer Comparison – Picking Its Battles Wisely 
WeDoctor We Doctor (微医) Pre-IPO – Forecasts, Early Thoughts on Valuation, and Acquisition Gripes 
Weilong Weilong Delicious Global Pre-IPO – The Positives – Fast Growth, Strong Backers 
Weilong Weilong Delicious Global Pre-IPO – The Negatives – Spicy Valuation 
WM Tech WM Tech Pre-IPO – Digitalization Efforts Coming Through but Not Well Substantiated 
WM Tech WM Tech Pre-IPO – Peer Comparison and Pre-IPO Valuation – Some Signs of Advantage 
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 
Zomato Zomato Pre-IPO – Filings Lack Narrative, a Little Bit of History Helps 
Zomato Zomato Pre-IPO – Food Delivery Revenue Was Probably up 16x 
Malaysia
QSRQSR Brands Pre-IPO – As Healthy as Fast Food
The U.S.
ForU ForU Worldwide Pre-IPO – Mostly Negatives 
Qiniu Qiniu Cloud (七牛云) Pre-IPO: PaaS Doesn’t Warrant a Premium 

Yidu Tech (医渡云) Lock-Up Expiry – About US$2bn Worth of Shares Unlocked

By Zhen Zhou, Toh

Yidu Tech Inc (2158 HK) (Yidu) IPO lock-up expired on 15th July, 2021. Earlier in January, the company raised about US$539m in its Hong Kong IPO after pricing at HK$26.30 per share, the top-end of the price range.

Yidu is a healthcare data solution provider. It leverages big data and artificial intelligence (AI) technologies and provides solutions to key healthcare participants that include mainly hospitals, pharmaceutical, biotech and medical device companies, regulators and policy makers. 

Our previous coverage of the IPO:


TOPIX Inclusion: Money Forward (3994) Could Outperform Freee (4478) Until End of Month

By Janaghan Jeyakumar, CFA

Cloud-based business accounting software company Money Forward (3994 JP)  announced on 7th June 2021 that they had received approval to move from the Mothers Section to the First Section of the Tokyo Stock Exchange which triggers inclusion into the TOPIX Index. Previously, this situation was covered in TOPIX Inclusion: Money Forward (3994 JP)

On 15th July 2021, Money Forward (3994 JP) announced earnings for the quarter ending May 2021. Below is a closer look at how the stock has traded since the TSE1 promotion was announced and the upside potential for the remainder of the event timeline. 


Bukalapak IPO Initiation: Island Shopping

By Arun George

Bukalapak (BUKA IJ), which means ‘opening a kiosk’ in Indonesian, is a leading e-commerce player in non-Tier 1 cities in Indonesia, with a market share of 35% in 2020 based on GMV (gross merchandise value), according to Frost & Sullivan. Bukalapak carries out its main business activities through the mobile platform Bukalapak and Bukalapak Partners. Bukalapak has increased its IPO size by about a third to $1.5 billion due to strong demand, according to press reports. Bookbuilding will close on 19 July and the shares are set to list on 6 August. 

The COVID-19 pandemic has accelerated the rate of e-commerce adoption in Indonesia as more consumers are reluctant to travel and started changing their shopping habits to online shopping, due to personal preferences or lockdown restrictions. The share of e-commerce of total retail spending in Indonesia has grown from 5.6% in 2017 to around 22% in 2020 and will reach 35.9% in 2025, according to Frost & Sullivan. 

Like its peers, Bukalapak is benefiting from this market tailwind. Bukalapak’s strategy of focusing on consumers in the non-Tier 1 area and the mass market in the Tier 1 area results in a relatively small overlap (less than 20%) between its customers and customers of other online marketplaces such as Sea Ltd (SE US)‘s Shopee, Tokopedia PT (1087142D IJ) and Alibaba Group (BABA US)‘s Lazada. Competitors generally target the affluent segment of the market. Overall, Bukalapak’s fundamentals tick all the right boxes of rising monetisation, lower losses and declining cash burn, in our view. We will discuss valuation in our next note. 


Bilibili: Buy the Dip

By Shifara Samsudeen, ACMA, CGMA

The Chinese mobile games and video platform Bilibili Inc (BILI US) ’s shares have dropped 30.3% to US$109.01 per ADS from its peak of US$156.37 per ADS in mid-February 2021 due to the widening antitrust probe and cyberspace crackdown on Chinese tech companies, those that are listed in the US in particular.
However, considering Bilibili’s business operations and its not so dominant market share in the Chinese mobile games and video streaming markets, we believe Bilibili is less likely to be probed by the Chinese antitrust authorities and the current drop in the company’s share price offers a good point of entry.

Alibaba (BABA): China E-Commerce Growth Rate Not Declining, But Accelerating

By Ming Lu

  • We believe China online retail growth rate accelerated in May and June 2021 compared to the same months in 2019.
  • In 2021, e-commerce apps managed to retain most users who started online shopping during the lockdown in 2020.
  • The YoY growth rates are misleading. It is a mistake that online shopping is slowing down after the pandemic has eased in China.

SK Hynix: Leading DRAM IDM, Trading at Discount Multiples, in a Strong Demand Environment

By Wium Malan, CFA

SK Hynix (000660 KS) is the second-largest Dynamic Random-Access Memory (DRAM) semiconductor Integrated Device Manufacturer (IDM) in the world and is set to become a major player in the global NAND industry following the acquisition of Intel Corp (INTC US)’s NAND business. 

Based on the compelling demand outlook for the industry, the significant increase in spot memory prices this year, and the expected revenue uplift in 2022 from the closure of the Intel NAND acquisition there looks to be room for an upside surprise to current earnings expectations which could sustain the earnings upgrade cycle, for a stock that is trading on valuation multiples that are below historical average levels as well as that of global peers. 

This insight is also a natural follow up from an idea generated through our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index: Screening for GEMs: July 2021.


Estimated Result Impact April to June (2021)

By SMC Online

retail loan growth may see good boost but overall loan may see mute performance. AUM may see moderate improvement. Disclaimer: This Research Report is for the personal information of the authorized recipient and doesn’t construe to be any investment, legal or taxation advice to the investor. It is only for private circulation and use. The Research Report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Cyient, Wipro

By HDFC Securities

Cyient: Cyient reported a weak quarter, with revenue down 4.3% QoQ (in line with estimate), but margin performance was better than expected. The services segment was flat QoQ, led by continued softness in the aerospace vertical (-6.1% QoQ). The worst phase of commercial aerospace is over (traffic is at ~60% of the pre-COVID level) but MRO related activity will take 2-3 quarters to recover. The management has guided for double-digit growth in services, which will be led by communications, utilities and transportation verticals.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Tata Elxsi, L&T Infotech

By HDFC Securities

Tata Elxsi: We downgrade Tata Elxsi (TELX) to REDUCE (ADD earlier), based on diminishing margin of safety at 43x FY23E and following an in-line Q1 (both revenue and margin). While we remain positive on the company’s prospects and growth leadership in ER&D (24/26% revenue/EPS CAGR over FY21-24E), the unfavourable risk-reward can be construed from (1) concentrated growth pockets with ~25% of business driving ~50% of growth (IDV and medical devices-EPD), (2) reducing growth premium vs. ER&D peer, and (3) the fact that its margin is currently at a peak (32.8% EBITDA margin adj.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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