Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

A chartered management accountant with more than 10 years of rich experience in investment research and financial analysis. Worked as an equity analyst for one of the world's largest asset managers with USD2.5trn in AUM covering numerous sectors including chemicals, retail, tech, autos, telco, real-estate and banks, globally. Experienced in fundamental equity research, industry research, commodity studies, forensic accounting, and due diligence reviews.

Equity Analyst

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Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

Yatsen Holding Ltd / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/yatsen-holding-ltd" target="_blank" data-smartkarma-citation="entities:29719:1" rel="noopener">Yatsen Holding (YSG US)</a> , the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO. The company has set an indicative IPO price range of US$8.5-10.5 per ADS, and at the midpoint of the IPO price of US$9.50 per ADS, the company will raise net proceeds of US$521.5m.<table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 256.0pt;">Yatsen Holding IPO Details</td></tr>
<tr>
<td style="width: 165.65pt;">No. of ADSs Issued</td>
<td style="width: 90.35pt;">58,750,000</td>
</tr>
<tr>
<td style="width: 165.65pt;">Ordinary Shares per ADS</td>
<td style="width: 90.35pt;">4</td>
</tr>
<tr>
<td style="width: 165.65pt;">Shares Outstanding Post IPO (m)</td>
<td style="width: 90.35pt;">2,662</td>
</tr>
<tr>
<td style="width: 165.65pt;">Offer as a % of Outstanding Shares</td>
<td style="width: 90.35pt;">8.83%</td>
</tr>
<tr>
<td style="width: 165.65pt;">Price per ADS (US$)</td>
<td style="width: 90.35pt;">8.50-10.50</td>
</tr>
<tr>
<td style="width: 165.65pt;">Net Proceeds from IPO (US$m)</td>
<td style="width: 90.35pt;">521.5</td>
</tr>
<tr>
<td style="width: 165.65pt;">Market Capitalisation (US$m)</td>
<td style="width: 90.35pt;">                  6,322.07</td>
</tr>
<tr>
<td style="width: 165.65pt;">Enterprise Value (US$m)</td>
<td style="width: 90.35pt;">                  5,514.20</td>
</tr>
</tbody></table><div class="content-caption">Source: Company Disclosures, LSR (Market cap and EV are at the midpoint of the IPO price range, EV is after deducting net cash and net IPO proceeds)</div>The company expects to use the proceeds for pursuing strategic investments and acquisitions, expansion of store network, development of technology and for general corporate purposes.In our previous insight on the company’s IPO, we examined Yatsen’s business model, segments, revenues and margins. Find below an extract from our previous insight:<div class="content-highlight">Having analysed the company’s IPO prospectus, we remain concerned about the company’s future prospects. We believe the company’s attempt to improve its top line comes at the expense of its margins. Though the company reported a 4.7% OPM in 2019, we believe the company will have to continue to incur on selling and marketing expenses in order to survive in the heavily competitive Chinese cosmetics market. In order to reach the iconic success of multi-national cosmetic brands, the company and its other domestic competitors will have to consistently innovate and launch new products to capture market share which we believe will eat into the company’s margins. We would not recommend subscribing for Yatsen’s IPO as we don’t see a clear path to profitability</div>In this insight, we examine the company’s valuation and whether it is attractive enough to compensate for the lack of profitability.

Yatsen Holding (YSG US) , the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO. The company has set an indicative IPO price range of US$8.5-10.5 per ADS, and at the midpoint of the IPO price of US$9.50 per ADS, the company will raise net proceeds of US$521.5m.
Yatsen Holding IPO Details

No. of ADSs Issued
58,750,000


Ordinary Shares per ADS
4


Shares Outstanding Post IPO (m)
2,662


Offer as a % of Outstanding Shares
8.83%


Price per ADS (US$)
8.50-10.50


Net Proceeds from IPO (US$m)
521.5


Market Capitalisation (US$m)
                  6,322.07


Enterprise Value (US$m)
                  5,514.20

Source: Company Disclosures, LSR (Market cap and EV are at the midpoint of the IPO price range, EV is after deducting net cash and net IPO proceeds)The company expects to use the proceeds for pursuing strategic investments and acquisitions, expansion of store network, development of technology and for general corporate purposes.In our previous insight on the company’s IPO, we examined Yatsen’s business model, segments, revenues and margins. Find below an extract from our previous insight:Having analysed the company’s IPO prospectus, we remain concerned about the company’s future prospects. We believe the company’s attempt to improve its top line comes at the expense of its margins. Though the company reported a 4.7% OPM in 2019, we believe the company will have to continue to incur on selling and marketing expenses in order to survive in the heavily competitive Chinese cosmetics market. In order to reach the iconic success of multi-national cosmetic brands, the company and its other domestic competitors will have to consistently innovate and launch new products to capture market share which we believe will eat into the company’s margins. We would not recommend subscribing for Yatsen’s IPO as we don’t see a clear path to profitabilityIn this insight, we examine the company’s valuation and whether it is attractive enough to compensate for the lack of profitability.

Yatsen Holding IPO: Expensive Valuation Does Not Reflect the Fundamentals