Technology
Share price slumps as Alipay cuts stake - in this note, Aequitas discuss the placement dynamics and run the deal through their ECM framework. It represents 20 days’ worth of ADV and hence, won’t be the easiest one to digest; KP is now likely to face a large overhang for several months. The timing of the share sale also seems odd since Ant could have reduced their stake when the share price was significantly higher. Despite the sell-off, KP is still trading at 21x FY22 and 15x FY23 EV/Revenue, which isn’t exactly cheap.
Edition: 137
- 10 June, 2022
Alibaba (BABA US) vs. Tencent (700 HK)
Alibaba is now in a much better position than Tencent when it comes to regulatory matters - Alibaba's activities have very little bearing on societal issues that the Chinese government is so keen to address and Jack Ma has already been severely punished for his indiscretions. In contrast, the problems that Tencent faces are only just beginning. Richard Windsor believes it is only a matter of time before its financial services business is decimated by the state in the same way that Ant Group has been. Buy Alibaba, Sell Tencent.
Edition: 119
- 17 September, 2021
Risky Business: China’s Tech Crackdown & How to Navigate it
While the official ban on the most lucrative activities in the after-school tutoring sector marks a new low in the regulatory crackdown, RedTech maintain that China is not trying to strangle the golden goose. A handful of big losers will be offset by a majority of companies that are well positioned for growth in a tighter regulatory environment. The less risky (Tencent) are being dragged down with the more risky (Didi), creating lucrative, long-term investing opportunities. Other companies mentioned include Alibaba, Ant Group, ByteDance, Douyu, Huya, JD, Meituan, Pinduoduo, Sogou and TAL.
Edition: 116
- 06 August, 2021