June 14, 2020 Strategy Focus Southeast Asia New Economy ASEAN Who's Who • Welcome to our first report on Southeast Asia's New Economy. • ASEAN's digital landscape is similar to that of China and the US, offering potential for ongoing growth... • ...with the emergence of local champions and a spike in foreign investments. • Inside, we introduce ASEAN's new economy key players based on reported valuations, funds raised, download count and market position.
Exhibit 1 - Headquarters of ASEAN decacorns, unicorns and emerging unicorns
Source: Crunchbase, Tech in Asia, CRSHK. Note: Unicorns' valuation >US$1bn, decacorns' valuation >US$10bn. Identified by location of headquarters. *Grab started in Malaysia and shifted HQ to Singapore. **Emerging unicorns (funding >US$300mn).
Singapore, a breeding ground for startups: Tax incentives, cash grants, financing schemes and business-incubating infrastructure have made Singapore a preferred ASEAN location for startups – including Grab, which shifted its headquarters from Malaysia to Singapore. The Lion City now hosts 50% of ASEAN's unicorns, including SEA Group, Lazada, Trax and Razer. Indonesia, highly contested by all: Indonesia's sizable population (267mn), high GDP Research Team growth (6-8% p.a.) and 50% un-banked population point to upside opportunities. Many Jeffrey Ng Chinese tech players have invested in Indonesia. The country has four homegrown +852 2287 1643 unicorns: Bukalapak, Gojek, Tokopedia, and Traveloka. [email protected]
China Renaissance Securities (US) Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA. PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON APPENDIX A
China Renaissance Securities (Hong Kong) Limited 1 June 14, 2020 Strategy Focus
Contents
ASEAN New Economy Overview...... 3 Key statistics: ASEAN vs. China and the United States...... 5 ASEAN New Economy Verticals...... 7 ASEAN Decacorns and Unicorns...... 8 ASEAN Emerging Unicorns...... 9 ASEAN 10 Top Funded Fintechs...... 12 ASEAN Rising Startups...... 14 ASEAN: Active Adopter of E-Commerce and Top 10 E-Commerce Platforms ...... 15
Introduction to ASEAN Unicorns and Decacorns...... 17 Bukalapak...... 17 Gojek...... 19 Grab...... 22 Lazada...... 25 Razer...... 27 SEA Group...... 28 Tokopedia...... 30 Traveloka...... 32 Trax Retail...... 34 VNG Corporation...... 35
Appendix...... 37 List of companies mentioned in this report ...... 37 China Renaissance Research Analysts and Featured Reports...... 38 China Renaissance Coverage Universe...... 41
Notes on terminology: Unicorn is a term used to describe private companies with a valuation of more than US$1bn. Decacorn is a term used to describe startups or relatively new companies that are valued at more than US$10bn. Emerging unicorns are defined by CRSHK as private companies that have more than US$50mn in funds raised, reported valuation over US$500mn, or a leading market position in their respective sectors. Super App is defined as many apps operating under an umbrella app.
China Renaissance Securities (Hong Kong) Limited 2 June 14, 2020 Strategy Focus ASEAN New Economy Overview • China Renaissance's (CR) inaugural ASEAN report: Taking a leaf from China, Southeast Asia – or the ASEAN region, which includes countries that are members of the Association of Southeast Asian Nations – has digitalized sectors such as logistics, e-commerce, travel and financials. In this report, leveraging on CR's knowledge of the China market, we expand CR’s research offering to include ASEAN, in search of the next new economy market leaders in the region.
• What is in this report? We introduce ASEAN's new economy players in three main categories: unicorns (private companies valued at over US$1bn), emerging unicorns (based on funds raised and, where applicable, download count), and the most well-funded fintech companies. We also make comparisons between ASEAN's key economic indicators and China and the US.
• Fertile landscape for digitalization in ASEAN: The region's commitment to 5G and moves to regulate digital banking indicate ASEAN's readiness to shift its economies online. Moreover, ASEAN's mobile subscription rate is more than 100% and smartphone ownership is 60-90%, similar to China’s 83% (Ex. 1 & 2).
• Abundant growth opportunities: Central banks' data show bank account ownership in Indonesia, Philippines and Vietnam is below 50% and credit card ownership is below 5%, implying a large untapped market for fintech firms. Online spending per capita of less than 1% is substantially lower than China’s 3.8% and the US’s 3.3% (Ex. 7), suggesting potential for e-commerce growth. Many conventional sectors are still mostly trading offline.
• Emergence of unicorns: New economy players in ASEAN have not only achieved leading positions over the past decade but some have also achieved unicorn status. Today, ASEAN has 10 decacorns and unicorns (which we profile later in this report). ASEAN's e-commerce landscape is dominated by Bukalapak, Lazada, Shopee and Tokopedia. Traveloka leads the online travel sector. VNG's coverage in Vietnam ranges from retail and gaming to media, while Razer and Trax are well recognized in their respective sectors.
• Grab and Gojek are in the “Super App” league: Grab and Gojek (mainly in Indonesia) are used by the ASEAN population on a daily basis for activities including e-hailing, food delivery, payment and lifestyle solutions. The companies' influence can be equated to China's WeChat (owned by Tencent [700 HK, BUY, TP HK$520, covered by Ella Ji/Alex Liu]), in our view, based on their super app function. Grab and Gojek have also achieved "decacorn" status (with a valuation more than US$10bn). There are only 19 decacorns in the world, according to CB Insights.
• Foreign players' ASEAN exposure is via investment into local players: The region's silo economic structure, along with its varying laws and regulations, and cultures and languages that differ from country to country – or even from state to state within a single country – offer homegrown players an upper hand in their respective market. To gain a foothold, for example, Alibaba (BABA US, BUY, TP: US$270, Ella Ji) acquired Lazada to penetrate the ASEAN market.
China Renaissance Securities (Hong Kong) Limited 3 June 14, 2020 Strategy Focus • Mushrooming of fintech players to tap under-banked markets: Low levels of credit card and bank account ownership, coupled with flourishing e-commerce, has led to the rise of many online micro-financiers in ASEAN. Vietnamese and Indonesian fintech players have raised about US$1bn in recent years, based on data from Tech in Asia and Crunchbase. Prominent players in these two markets include Akulaku, KinerjaPay and VNPay. • Improving capital availability should drive more conventional sectors toward digitalization: Funds raised in ASEAN's new economy sectors grew 14x to US$14bn over the past four years, according to data from Google, Temasek and Bain reports. While we estimate that 65% has gone to unicorns, new sectors such as online used car auction marketplace (e.g., Carro, Carsome) and shopping benefit aggregators (e.g., Fave, Shopback) are receiving support as well (Ex. 11 & 12).
• Future reports will dive deeper into the impact of digitalization on the region's economy and regulation changes: While consumer spending behavior was quick to adapt to digitalization, regulations are still playing catch up in many countries. Grab and Gojek's influence on the development of new economy sectors throughout ASEAN has been farther reaching than anticipated by governments; thus, we believe their viability could shape legislation in their key markets.
China Renaissance Securities (Hong Kong) Limited 4 June 14, 2020 Strategy Focus Key statistics: ASEAN vs. China and the United States Exhibit 2 - Overview of ASEAN, China and the United States demographics
Source: United Nations (population, as of 2018), Bloomberg (Historical GDP growth data) • What are the countries in Southeast Asia? Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. • What is ASEAN? It stands for Association of Southeast Asian Nations. Member states are all the countries listed above except for East Timor. In this report, we focus on the six countries (Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) that are experiencing digitalization as measured by mobile and broadband speed, device ownership, e-wallet ownership and other factors. • ASEAN combined population is 655mn: This makes ASEAN the third most populated region in the world after China and India. Indonesia's 272mn population ranks it as the fourth most populated country, after the US (based on data from the United Nations). • ASEAN average GDP/capita is US$5,200, 48% below that of China. Noteworthy, in our view, is that Singapore's GDP per capita is fourth highest in the world, while Malaysia's is almost at theoretical developed nation status, according to the World Bank. The other ASEAN nations remain at developing stage. • ASEAN's cooperation model is different from the European Union's (EU): ASEAN does not have an official currency that can be used across its 10 member states. Citizens of member states can travel to each state without visas, but remain subject to border control. • Multiple languages spoken in ASEAN: The most commonly used language, Malay, is spoken in Indonesia, Brunei, Malaysia and Singapore. Each member state has its own official language (e.g., Thai, Vietnamese, Tagalog and others).
China Renaissance Securities (Hong Kong) Limited 5 June 14, 2020 Strategy Focus Exhibit 3 - ASEAN mobile penetration is even higher than in Exhibit 4 - ASEAN users prefer smartphones over other China and the US (as of 2019) devices (as of 2019)
Source: Internet World Stats, GSMA, penetration is sim card, internet and Source: Google Consumer Barometer. Percentage of population owning social media account divided by population smartphone, laptop or desktop, and tablet. Exhibit 5 - ASEAN spends more time online than China (as of Exhibit 6 - Most ASEAN countries remain severely under- 2019) banked (as of 2019)
Source: Global Web Index Source: Central Banks of mentioned countries. Exhibit 7 - ASEAN e-commerce spend is less than 5% of that Exhibit 8 - ASEAN spends less than 1% of GDP per capita in China and the US (as of 2019) online (as of 2019)
Source: World Pay, United Nations Source: World Pay. Note: ARPU stands for average rate per user, measuring online spend per person.
China Renaissance Securities (Hong Kong) Limited 6 June 14, 2020 Strategy Focus ASEAN New Economy Verticals Exhibit 9 - Established players in each new economy sector in ASEAN
Source: App Annie, Web Index, CRSHK compiled • E-hailing started ASEAN's new economy shift: Poor public transport infrastructure in most ASEAN countries and expensive car ownership in Singapore laid the foundation for the region's e-hailing services, in our view. An understanding of local laws helped lead to the emergence and success of Grab and Gojek. • Food delivery was a natural extension of e-hailing: Leveraging their existing driver pool (as has been the case with many such players globally), Grab and Gojek expanded into food delivery in the markets they operate in. They face competition from foreign players such as Foodpanda and Deliveroo, which operate in the region without local partners. • E-commerce is a crowded sector: ASEAN has witnessed the emergence of local champions such as Tokopedia and Bukalapak in Indonesia, Tiki.vn in Vietnam, Lelong in Malaysia, and others. Nevertheless, this sector has also attracted Chinese players such as JD.com (JD US, BUY, TP: US$57, Ella Ji) and Alibaba, which acquired a major stake in Lazada. Two brands that are well recognized across the region are Shopee (owned by SEA Group [SE US, Not Covered]) and Lazada. • Locals are winning the logistics battle: The backbone to e-commerce is logistics. Lazada is the only ASEAN e-commerce player that has established its own logistics company, Lazada Express. Others rely on local logistics firms. Ninja Van is the only player with operations in a few ASEAN countries outside its home market, Singapore. • Under-banked nations have attracted fintech start-ups: Bank account ownership in Indonesia, Philippines and Vietnam is below 50% of the population, according to central bank data. Fintech and conventional banks are using mobile technology to reach rural un-banked populations. • Only a few established players in the online travel agency sector: Traveloka is the region's most prominent player, based on download count on App Annie. Malaysia's budget airline AirAsia has also added hotel and activity bookings into its flight booking app. Klook, a Hong Kong-based company, is also active in ASEAN. • Lifestyle segment is fragmented but growing: Online grocery shopping is gaining popularity, with players that include RedMart (Singapore) and Happy Fresh (Indonesia, Malaysia and Thailand). Home services players like tukang.id (Indonesia), Kaodim (Malaysia) and ServisHero (Singapore) are also gaining acceptance, as evidenced by download count, per App Annie. Shopping and F&B aggregators such as Fave and Shopback are also making inroads, as both emerged among the top downloaded apps in 2019 in a few ASEAN countries. Lastly, ASEAN has its own over the top (OTT) media presence in iflix, which provides local content popular in the Malay-speaking market. • ASEAN new economy is still maturing: While the region's new economy today has only seven obvious sectors, we believe others are emerging. Of late, we are watching the digitalization of the used car market as it starts to offer online auction bidding.
China Renaissance Securities (Hong Kong) Limited 7 June 14, 2020 Strategy Focus ASEAN Decacorns and Unicorns Exhibit 10 - ASEAN new economy players with more than US$1bn valuations
Source: Tech in Asia, Crunchbase, CRSHK compiled. Note: China equivalent is based on functionality comparison. All valuations are as of latest funding round of respective companies. Exhibit 11 - Funds raised by ASEAN start-ups (aggregate) Exhibit 12 - Funds raised by ASEAN unicorns (aggregate)
Source: Google Temasek & Bain e-Conomy SEA 2019 report Source: Google, Temasek & Bain e-Conomy SEA 2019 report • What are unicorns? "Unicorn" refers to a private company valued at more than US $1bn. According to Google, there were 465 unicorns globally asof April 2020. As of May 2020, there are eight unicorns and two decacorns in ASEAN, according to the latest Crunchbase data. • What are decacorns? A"decacorn" refers to a start-up or relatively new company valued in excess of US$10bn. According to CB Insight, there were 19 decacorns globallyas of late 2019, with China's ByteDance and the US's Uber the two largest. • Rise in fund-raising in ASEAN: ASEAN has seen a surge in start-up investment in the past few years, based on the Google, Temasek & Bain "e-Conomy SEA 2019" report. US$37bn has been invested in ASEAN since 2015, of which 65% went to unicorns. We detail the established players' funding history in the company section of this report (pages 17 to 36). • Similarities to Chinese peers: Many ASEAN unicorns have similarities with their Chinese peers. Exhibit 10 lists comparable China players to the ASEAN unicorns, based on our analysis. ASEAN "super apps", however, differ from their Chinese peers, in that Grab and Gojek are focused on logistics solutions, while comparable Chinese players tend to be tilted more towards social media and e-commerce, based on their respective app user interface layouts. The similarity between ASEAN and Chinese super apps like WeChat and Alipay is e-wallet dominance.
China Renaissance Securities (Hong Kong) Limited 8 June 14, 2020 Strategy Focus ASEAN Emerging Unicorns Exhibit 13 - Headquarters of ASEAN emerging unicorns
Source: Crunchbase, Tech in Asia, CRSHK. *Klook's HQ is in Hong Kong but its ASEAN HQ is in Singapore. Exhibit 14 - ASEAN emerging unicorns, based on funds raised, download count, and/or market position
Source: Tech in Asia, Crunchbase, App Annie, Google Reviews, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 9 June 14, 2020 Strategy Focus • ASEAN's second wave of digitalization players: As ASEAN is seeing more sectors experience digitalization, we take a closer look at the players making a meaningful impact on sectors such as travel, media, fashion and healthcare, among others. • Screening criteria: 1) ASEAN based or focused; 2) funds raised more than US $50mn; 3) reported valuation of more than US$500mn; 4) market leader position in its respective sector based on user reviews on Google; and/or 5) most downloaded app in iOS/Andriod in past year, according to App Annie. • Klook, foreign OTA player with an ASEAN focus: Only a handful of online travel agencies (OTAs) operate in ASEAN, and Klook is one of them. While Klook was founded in Hong Kong, the company has been focused on ASEAN, likely hoping to capture any regional spillover from China's tech sector. Its ASEAN business is managed through its Singapore office. • Ninja Van, last-mile delivery solution provider: Ninja Van is one of the main delivery options for many online users in ASEAN, where established delivery options are limited. In 2019, Grab invested in Ninja Van to create Southeast Asia's widest logistics network, according to the companies. Ninja Van also established Ninja Direct, which helps online sellers source, purchase, ship and finance wholesale products. • iflix, ASEAN's version of Netflix (NFLX US, NC): iflix is funded by Patrick Grove’s Catcha Group Ventures. As of 1Q20, iflix is available in 13 countries in Asia and had 25mn users. Besides licensed content, iflix has produced a series of original content that caters to the Malay-speaking audiences in Indonesia, Malaysia, Brunei and Singapore. In early 2020, TikTok (owned by ByteDance) partnered with iflix with the stated goal of penetrating ASEAN's short video market. • Zilingo, Zalora and Sociolla, one-stop online shopping sites: Zilingo, a fashion marketplace, has operations in Singapore, Thailand, Indonesia and Philippines. While Zalora also acts as a marketplace, it carries exclusive brands that differ from Zilingo's. It serves areas including Indonesia, Singapore, Malaysia, Philippines, Hong Kong, Taiwan and Brunei. Sociolla is an online marketplace specifically for cosmetics products with its current customer base concentrated in Indonesia. • Carousell, C2C marketplace platform: Carousell is a "snap-list-sell" app for new and used goods. In 2019, it agreed to merge with companies that operate similar online marketplaces, including 701Search in Singapore, Mudah in Malaysia, Cho Tot in Vietnam and OneKyat in Myanmar. Thereafter, it was reported by Tech in Asia that Carousell was valued at US$850mn. • Carro and Carsome, online used car auction bidding platforms: Online used car trading is the latest sector that has started to ride the ASEAN digitalization trend, we believe. Carro and Carsome are two of the better-known online used car auction platforms in the region. Based on data from Carsome, the addressable market in Malaysia, Indonesia and Thailand is estimated at US$40bn, with 4.5mn used cars. • Shopback, a cash reward program for online shopping: Begun in 2014, ShopBack started out as a one-day flash sales site. It has since evolved into aggregating product listings from third-party e-commerce sites, which pay ShopBack a commission for each sale generated. As of 1Q20, it has 5mn users on its platform. • Fave, an app for discounts on goods and services: Evolved from Malaysian fitness subscription service KFi, Fave acquired most of Groupon's (GRPN, NC) ASEAN businesses to start a daily deal site and app. In 2018, Grab and Fave announced a strategic tie-up that will let them access each other’s user bases.
China Renaissance Securities (Hong Kong) Limited 10 June 14, 2020 Strategy Focus • Tiki.vn and Sendo, Vietnam's leading e-commerce platforms: Both are homegrown e-commerce platforms that command a top 5 spot in both value and download counts, according to App Annie. While both companies do not publish gross merchant value (GMV), it was reported by Tech in Asia that Tiki's GMV had consistently grown by 3x every year since 2010. • Alodoktor and Halodoc, Indonesian online healthcare: A shortage of doctors and hospitals in rural Indonesia makes online healthcare a viable alternative. Halodoc connects ~7mn patients/month to 22,000 doctors and 1,000 pharmacies, with 80% of patients residing outside the main cities, according to the company. During the pandemic, both apps have seen >150% increase in usage, according to AXA Insurance.
China Renaissance Securities (Hong Kong) Limited 11 June 14, 2020 Strategy Focus ASEAN 10 Top Funded Fintechs Exhibit 15 - ASEAN financial technology (fintech) companies
Source: Crunchbase, Tech in Asia. *Based on all publicly announced fund-raising details we can find online, we then rank them accordingly based on amount raised. • Singapore and Malaysia formally regulate fintech via digital bank license issuance: In 2Q19, Singapore announced that it would issue five digital bank licenses. As of today, issuance of the licenses is not finalized. Of these, up to two would be for digital retail banking, allowing firms to provide a range of financial services and take deposits from customers. Another three licenses are to be issued for digital wholesale banking, allowing licensees to serve small and medium-sized enterprises (SMEs) and non-retail sectors. Malaysia also issued a draft for the licensing framework for virtual banks in 4Q19. Malaysia's central bank will be issuing up to five licenses to qualified applicants to establish digital banks to conduct either conventional or Islamic banking business in Malaysia. • Vietnam, Indonesia and Philippines fintech companies tilt toward credit lending, because these countries are under-banked. Only 31%, 34% and 49% of the populations in Vietnam, Philippines and Indonesia, respectively, have bank accounts, according to data from the countries' central banks (as of 1H19). Credit card ownership is even lower, at only 2-4%, relative to Singapore's 35% and Malaysia's 21%. That said, 21% of Vietnamese and 10% of Filipinos and Indonesians have online payment experience, according to World Bank Inclusion Data (as of 2019) implying some degree of acceptance of digital payment usage. Fintech companies in these countries offer an alternative credit source to conventional banks. • Recognized foreign and domestic financial institutions (FI) are funding ASEAN fintechs: Some well-funded participating FIs include: Softbank, Singapore's sovereign wealth fund (GIC), Indonesian corporates and banks (e.g., Wahana, Telkomsel, Gojek, Mandiri) and international fintech companies and FIs (Nasper, Goldman, Ant Financial, Warburg Pincus). • VNPay and MoMo, Vietnam's leading digital payment portals: Over the past few years, Vietnam has seen a spike in investment in the fintech space as the government now encourages non-cash payment. Foreign investors include Warburg Pincus-backed MoMo, Alibaba's eMonkey and Grab's Moca. VNPay is backed by GIC and Softbank. • KinerjaPay, first Indonesian e-commerce firm listed on US OTC market: KinerjaPay is an e-commerce platform that also operates a mobile wallet service. Users can use the e-wallet to pay for their bills and shop on affiliate e-commerce sites. They can top up their e-wallet via bank transfers.
China Renaissance Securities (Hong Kong) Limited 12 June 14, 2020 Strategy Focus • SingLife, digital life insurance company: When the app was launched in 2019, SingLife was exclusive to a limited number of customers. Over 2,000 Singaporeans signed up, leading to creation of a waitlist, according to the company. SingLife offers hybrid products that combine savings, endowment insurance and layoff benefits. It also comes with a Visa debit card. • Akulaku, Indonesia micro financier: Founded by a former employee of Ping An Group, China’s largest insurer, Akulaku provides installment plans to consumers who want to buy products and services online but do not have a credit card to pay with. Apart from Indonesia, Akulaku also has a presence in Philippines and Vietnam. • FinAccel, better known as Kredivo: Kredivo is a digital credit card. A basic account allows users to repay online purchases of up to IDR3.5mn (US$250) within 30 days at zero interest. Applicants need to submit a copy of their government-issued identity card, plus details of any of their e-commerce accounts (with transaction history) and Facebook account. • coins.ph, an e-wallet with remittance and bitcoin: According to World Bank, 25% of the GDP of the Philippines is made up of overseas workers' remittances, while bank account ownership is low at 34%; this compares with Malaysia's 85% and Singapore's 96% bank account ownership (as of 2019). coins.ph's remittance process does not require a bank account. It also offers bitcoin as a medium of exchange. Gojek bought a majority stake in coins.ph for US$72mn in 2019, according to Tech in Asia (18 Jan 2019). • Red Dot Payment (RDP), Singapore's new payment gateway: According to RDP's website, its value to businesses and its key differentiator is its payment gateway, which helps merchants access multiple payment options in Singapore. PayU, Naspers’ payments and fintech arm, acquired a majority stake in RDP for US$65mn in 2019, according to Tech in Asia (4 Jul 2019). • KoinWorks, Indonesia's P2P lending platform: As of late 2019, KoinWorks (founded in 2016) was reported in Tech in Asia to be close to profitability, hitting IDR200bn (US $14mn) in disbursements/month, with non-performing loans staying below 1% in Sep 2019. • 2C2P, cash and card payment processor: Founded in 2003, 2C2P helps companies accept payments from over 620mn banked and un-banked ASEAN customers. Companies such as Facebook, Apple, Agoda, Traveloka, Thai Airways, Lazada and Zalora are using 2C2P to accept payments in ASEAN, according to the company's website.
China Renaissance Securities (Hong Kong) Limited 13 June 14, 2020 Strategy Focus ASEAN Rising Startups Exhibit 16 - ASEAN rising startups (seeding stage up to series E)
Source: Crunchbase, Tech in Asia, CRSHK compiled. *Based on all publicly announced fund-raising details we can find online. • ASEAN startups are still mushrooming. The emergence of a middle class in Indonesia, Philippines and Vietnam, in our view, should continue to be a driver for private equity and venture capitalist investment into ASEAN. We use Tech in Asia and Crunchbase databases to screen for companies (Ex. 16) that have raised funds in rounds up to series E over the past year. • Indonesia is seeing digitalization across many sectors: Indonesia’s digital economy is expected to grow to about US$150bn by 2025, according to a report by McKinsey & Co. (The Digital Archipelago; 28 Aug 2018). Indonesia is set to impose a 10% value-added tax on digital services provided by non-resident companies starting July 1, 2020 to level the playing field for local startups. The new tax, in our view, will continue to spur Indonesians to invest in startups and digitalize traditional business. Bonza (big data analytics), Eduka (education), Qoala (digital insurance) and Shipper (logistics) are examples of companies operating in sectors that are increasingly moving online. • Philippines capitalizes on its business process outsourcing (BPO) hub status: The Philippines has long been an outsourcing hub for overseas companies, including those from the US, such as JP Morgan and Accenture. According to the Philippines Statistics Authority, BPO contributed 7% to 2018 GDP. In the past, call centers were the most common BPO. Today, we see a rise of technology-based BPO companies such as GoodWork and Cloudstaff. • Vietnam is developing its economy via technology: Conventional banks in Vietnam are trying to reach the un-banked population (Ex. 6) via digital banking, as 73% of the population owns a smartphone (Ex. 4) according to data as of 2019 from Google. Fintech companies are also emerging to offer credit. Moreover, Vietnamese are spending a lot of time online (Ex. 5), even more than the Chinese based on central bank data. We see this as laying the foundation for Vietnamese startups across sectors such as recruitment, healthcare, professional services and accounting solutions.
China Renaissance Securities (Hong Kong) Limited 14 June 14, 2020 Strategy Focus ASEAN: Active Adopter of E-Commerce and Top 10 E- Commerce platforms • ASEAN leads e-commerce adoption: According to Global Web Index, the ASEAN region had the highest level of e-commerce adoption in the world (as of 2Q19). Interestingly, Indonesian internet users topped the 46-country survey. • Indonesia leads the region in e-commerce use: Nine out of ten Indonesians surveyed by Global Web Index shopped online in 2Q19, vs. a global average of 75%. • Most ASEAN countries show above-average e-commerce use: ASEAN's average e-commerce use of 83% is 8ppt higher than the global average. • ASEAN is also leading in mobile commerce: ASEAN's adoption rate of 69% is 17ppt higher than the global average (2Q19). Indonesia again topped the survey for mobile commerce, while Thailand, Philippines, Malaysia and Vietnam also demonstrate higher usage than the global average.
Exhibit 17 - E-commerce usage among ASEAN internet users Exhibit 18 - Mobile commerce usage among ASEAN internet users
Source: Global Web Index 2Q 2019. * Percentage of internet users aged 16-64 who said they bought something online in past one month via any Source: Global Web Index 2Q 2019. * Percentage of internet users aged device. 16-64 who said they bought something online in past one month via mobile device. Exhibit 19 - Annual e-commerce spend in • However, ASEAN e-commerce spend is low: While ASEAN has been quick to adapt 2018 - China, US and ASEAN to e-commerce, ASEAN's annual e-commerce sales in 2018 (World Pay, excludes travel) were only around 5% the size of sales in China and the US. • ASEAN online users spend the most on online travel: If we include online travel spend (mostly transport ticket purchase), ASEAN's 2018 e-commerce annual revenue was US$55bn, with travel accounting for 55% of the total, based on data from Statista as of 2018. • Fashion, beauty and electronics rank second in ASEAN online spending: ASEAN online users spent US$12bn on these categories, based on 2018 data from World Pay. • Projected 2023 e-commerce revenue of US$230bn: The Google, Temasek & Bain Source: United Nations, World Pay "e-Conomy 2019" report forecasts growth to quadruple from 2018. • ASEAN top 10 e-commerce platforms by spend and downloads: In Exhibits 20-21, we list the ten most downloaded e-commerce apps for each country and the top ten shopping sites by annual revenue. ASEAN e-commerce spend by category is detailed in Exhibit 22.
China Renaissance Securities (Hong Kong) Limited 15 June 14, 2020 Strategy Focus Exhibit 20 - ASEAN top 10 most downloaded shopping apps (by country) in 2019
Source: App Annie Exhibit 21 - ASEAN top 10 transactional websites (by country; based on aggregate US dollars spent) in 2018
Source: Similar Web Exhibit 22 - ASEAN E-commerce spend by category and country (based on aggregate US dollars spent) in 2018
Source: Statista
China Renaissance Securities (Hong Kong) Limited 16 June 14, 2020 Strategy Focus Introduction to ASEAN Unicorns and Decacorns 10 key players (arranged in alphabetical order)
Company name: Bukalapak Bukalapak – Indonesia homegrown e-commerce market leader Private company • Founded in 2010 by Achmad Zaky, Nugroho Herucahyono and Fajrin Rasyid. Bukalapak has 2mn site visits per day and 50mn registered users, according to the 2010 Founded: company. On the seller side, it covers products from 4.5mn SMEs, 500,000 kiosk Headquarters: Jakarta, Indonesia vendors and 700,000 “independent” micro-businesses in Indonesia. Bukalapak means “open a stall” in Bahasa. Sector: Indonesia e-commerce Funds raised to date: unknown; only • Indonesia-focused B2C e-commerce: Bukalapak's initial aim was to enable everyone known fund raised amount is series D fund- in Indonesia to be able to sell digitally. Given the company believes it has achieved this raising of US$50mn, as reported in Tech in aim, it has unveiled a new feature called BukaGlobal, which allows consumers outside Asia and Crunchbase Indonesia to shop on its platform, expanding the reach of Indonesian goods. China or global comparable: T-Mall, • 2019 GMW of US$5bn: Bukalapak released several key figures for 1H19. One of them Pinduoduo, JD.com, Amazon is its annualized run-rate paid gross merchandise value (GMV), which it says amounted to US$5bn as of mid-2019.
Exhibit 23 - Bukalapak - fund-raising history
Source: Tech in Asia, CrunchBase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 17 June 14, 2020 Strategy Focus Exhibit 24 - Bukalapak in-app user interface overview
Source: Bukalapak
China Renaissance Securities (Hong Kong) Limited 18 June 14, 2020 Strategy Focus Company name: Gojek Gojek – Indonesia's super app Private company • Started as a call center, now offers more than 20 services in Indonesia: PT Aplikasi Karya Anak Bangsa, Gojek's registered corporate name meaning "Nation 2009 Founded: children's application creation", was started by Nadiem Anwar Makarim, who is now Headquarters: Jarkata, Indonesia Indonesia's Education Minister. When Gojek was established, it was a call center to connect customers to 2-wheelers as a ride-hailing service (commonly known as "ojek" Sector: Indonesia super app, ASEAN e- in Indonesia). hailing app Funds raised to date: est. US$5bn (based • Strongly rooted in Indonesia: Gojek has expanded its product offering extensively on all reported amounts on Tech in Asia in Indonesia, now comprising food delivery services, grocery shopping, investment, and Crunchbase) lifestyle services (e.g. facial, nail polish to house cleaning), online streaming, and business solutions. China/Global Comparable • Ventured outside Indonesia: In May 2018, Gojek expanded outside Indonesia to • Super App: WeChat, Alipay Vietnam, Thailand and Singapore. Services offered in those markets thus far include e-hailing, and food and parcel delivery. Gojek management has stated it remains • E-hailing & food delivery: Lyft, Uber, disciplined and has avoided price wars to acquire users or drivers. Didi, Dida, Meituan Dianping, Kuobei, 58.com • Post money valuation >US$10bn: After nine rounds of fund-raising for a total of US $5bn since 2014, CB Insights reported that as of latest funding round in 2020 Gojek is valued at over US$10bn.
Exhibit 25 - Geographical overview of Gojek's operations
Source: Gojek official website
China Renaissance Securities (Hong Kong) Limited 19 June 14, 2020 Strategy Focus Exhibit 26 - Gojek - fund-raising history
Source: Tech in Asia, Crunchbase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 20 June 14, 2020 Strategy Focus Exhibit 27 - Gojek (Indonesia) in-app user interface overview
Source: Gojek, note user interface varies once user is in different country
China Renaissance Securities (Hong Kong) Limited 21 June 14, 2020 Strategy Focus Company name: Grab Grab Holdings Inc. – the ASEAN "Super App" Private company • Grab started as an e-hailing company: Grab, formerly known as "My Teksi", started its e-hailing business in Malaysia in 2012 but founders Anthony Tan and Tan Hooi Ling 2012 Founded: shifted its headquarters to Singapore in 2014 to take advantage of Singapore's tax Headquarters: Singapore incentives for tech-based startups. Grab has since expanded its e-hailing business to Thailand, Philippines, Vietnam, Myanmar, Cambodia and Indonesia. Its app function Sector: ASEAN super app also expanded from e-hailing to food delivery, logistics, lifestyle and an e-wallet known Funds raised to date: est. US$10bn as "GrabPay", in all of its markets except Vietnam. (based on all reported amounts on Tech in Asia and Crunchbase) • Becoming a platform for other brands: With >160mn downloads as of late 2019 according to App Annie, many new economy players use Grab as a platform to market their services. Examples include services such as home cleaning & maintenance China/Global Comparable (kaodim) and hotel booking (OYO, booking.com, Agoda). • Super App: WeChat, Alipay • Expanding its e-hailing geographically: To service its large ASEAN user base, Grab • E-hailing & food delivery: : Lyft, Uber, users in Singapore and Philippines can now book and pay for rides in Japan and the Didi, Dida, Meituan Dianping, Kuobei, Middle East, as well. The bookings are fulfilled by JapanTaxi in Japan and Careem in 58.com the Middle East. • Fintech digital banking license application: Grab and Singtel confirmed that they formed a consortium to apply for a Singapore digital bank license. Grab will have 60% stake in this consortium and Singtel will have 40% stake. • Raised nearly US$10bn: After 27 rounds of fund-raising, Grab is now one of the highest-valued tech companies in ASEAN, according to CB Insights, as of the latest funding round in 2020.
Exhibit 28 - Geographical overview of Grab's operations
Source: Grab official website
China Renaissance Securities (Hong Kong) Limited 22 June 14, 2020 Strategy Focus Exhibit 29 - Grab (Malaysia) in-app user interface overview
Source: Grab, note user interface varies once user is in different country
China Renaissance Securities (Hong Kong) Limited 23 June 14, 2020 Strategy Focus Exhibit 30 - Grab Holdings Inc. - Fund-raising history
Source: Tech in Asia, Crunchbase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 24 June 14, 2020 Strategy Focus Company name: Lazada Group Lazada – Strong foothold across ASEAN Private company • Founded by Maximilian Bittner in 2012: Lazada's initial backing was by European Rocket Internet SE. Maximillian said in 2013 in a news article in Tech in Asia, “ASEAN 2012 Founded: is a high-single-digit billion US dollar opportunity”. Headquarters: Singapore • Strong foothold in ASEAN e-commerce space: As of end-2019, Lazada had Sector: ASEAN e-commerce recorded the most downloads in four of the six ASEAN countries we monitor, according Funds raised to date: est. US$4.2bn to App Annie. It also commanded the top 3 position in transactional value in ASEAN (based on all reported amounts on Tech in e-commerce as per Similar Web. Asia and Crunchbase) • Alibaba holds controlling stake: Alibaba invested US$4bn in Lazada since 2016 to China or global comparable: T-Mall, gain a foothold in ASEAN e-commerce. Alibaba’s first investment came in April 2016 Pinduoduo, JD.com, Amazon when it bought 51% of Lazada for US$1bn; it added another US$1bn in June 2017 to increase its equity to around 83%. In March 2018, the Internet giant injected another US$2bn to capitalize the business, according to the company.
Exhibit 31 - Lazada - App download and Exhibit 32 - Lazada - fund-raising history transactional ranking in ASEAN
Source: App Annie, Similar Web
Source: Tech in Asia, Crunchbase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 25 June 14, 2020 Strategy Focus Exhibit 33 - Lazada in-app user interface overview
Source: Lazada
China Renaissance Securities (Hong Kong) Limited 26 June 14, 2020 Strategy Focus Company name: Razer Razer – World's leading brand for gaming hardware Bloomberg ticker: 1337 HK • Well known for gaming mice and laptops. Founded in 2005 by Tan Min-Liang and Robert Krakoff after they took over Razer from kärna LLC. Today, Razer has one of 2005 Founded: the world’s largest gamer-focused ecosystems of hardware, software and services by Headquarters: Singapore volume, according to The Verge. Sector: Gaming hardware, including • Developed first gaming smartphone: In 2017, Razer was among the first smartphone laptops, mice, keyboards, smartphones manufacturers to introduce a gaming-focused smartphone with a refresh rate of 120Hz. Funds raised to date: est. US$728mn It launched Razer 2 in late 2018 and is scheduled to release its third in 2H20 according (based on all reported amounts on Tech in to The Verge. Asia and Crunchbase) • Ambitious fintech plan: A widely recognized (in Singapore) tweet by Tan on 24 August China or global comparable: Xiaomi Black 2017: "Say the word and I'll have the epayment system rolled out nationwide in 18 Shark, Nubia Red Magic (ZTE) months. 'For Singaporeans. By Singaporeans'." received a response from Singapore's Prime Minister asking for a proposal. In April 2018, Razer acquired e-payments platform MOL for about US$61mn. • A contender in Singapore for a digital banking license: Razer is leading a consortium comprising of Sheng Siong Holdings, FWD, LinkSure Global, Insignia Venture Partners and Carro to bid for a full digital bank license. Razer would take a majority stake of 60% and the rest would hold the remaining equity interest in Razer Youth Bank (partnership name).
Exhibit 34 - Razer - fund-raising history
Source: Tech in Asia, Crunchbase, Bloomberg, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 27 June 14, 2020 Strategy Focus Company name: SEA Group SEA Group – ASEAN e-commerce and digital gaming market leader Bloomberg ticker: SE US • Digital gaming came before e-commerce success: Founded by Forrest Li in Singapore in 2009 as an online gaming company, SEA now has three divisions - Garena 2009 Founded: (gaming platform), Shopee (e-commerce) and AirPay (digital payment). Headquarters: Singapore • Garena licenses games from Tencent, which also held a ~40% stake in SEA Group Sector: ASEAN e-commerce (Shopee), (pre IPO). Games available include League of Legends, Call of Duty (mobile), FIFA online gaming (Garena) and digital finance Online 3, Hero of Newerth, Free Fire and Arena of Valor. Garena was started in 2009. (Sea Money) Funds raised to date: est. US$4.7bn • Shopee: SEA started its e-commerce division in 2015 with a consumer-to-consumer (based on all reported amounts on Tech in (C2C) model but later changed it to business-to-consumer (B2C) to compete with Asia and Crunchbase) Lazada and other B2C sites. Shopee offers online shopping security where it withholds payment to sellers until buyers have received their orders. China or global comparable SEA • E-commerce: T-Mall, Pinduoduo, • IPO in Oct 2017, currently applying for Singapore digital banking license: JD.com, Amazon raised US$894mn in its 2017 IPO. In January 2020, it applied for a Singapore digital full bank license, making it the first applicant to apply without any partners for that category. • Online gaming: Tencent • Digital finance: Alipay Exhibit 35 - Shopee - App download and Exhibit 36 - SEA Group - Fund-raising history transactional ranking in ASEAN
Source: App Annie, Similar Web
Source: Tech in Asia, Crunchbase, Bloomberg, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 28 June 14, 2020 Strategy Focus Exhibit 37 - Shopee in-app user interface overview
Source: Shopee
China Renaissance Securities (Hong Kong) Limited 29 June 14, 2020 Strategy Focus Company name: Tokopedia Tokopedia – Indonesia's leading e-commerce platform Private company • Founded in 2009 and now an ASEAN unicorn: William Tanuwijaya and Leontinus Alpha Edison are the founders. According to research done by University of Indonesia’s 2009 Founded: economic and social research institute, Tokopedia is projected to have contributed US Headquarters: Jakarta, Indonesia $12bn to the Indonesian economy in 2019, or around 1% of GDP. Sector: Indonesia e-commerce • Leading position in Indonesia's B2C e-commerce: According iPrice Group, Funds raised to date: est. US$2.4bn Tokopedia was the most visited e-commerce website on desktops in Indonesia between (based on all reported amounts on Tech in July and September 2019, with a total of 66mn average monthly visits, securing 25% Asia and Crunchbase) of total market share. China or global comparable: T-Mall, • Deeply rooted in Indonesia: Mr. Tanuwijaya stated publicly that Tokopedia will focus Pinduoduo, JD.com, Amazon on its domestic market rather than expand overseas. There are more than 60mn SMEs in Indonesia and Tokopedia has 10% of them on its platform, according to the company. As such, management still sees vast untapped growth potential and will work closely with local governments to educate small merchants on the usage of technology. • Management has discussed the possibility of an IPO: Tokopedia management stated in a November 2019 interview with Tech in Asia that its operation is mature for a public listing and that they have been preparing for it,without elaborating on the details. Management stated that it believes it is crucial for Tokopedia to be listed in Indonesia as the company focuses on an Indonesia-only market. They would consider dual listing as it would enable them to secure access to larger pools of liquidity. No specific time frame was provided.
Exhibit 38 - Tokopedia - fund-raising history
Source: Tech in Asia, Crunchbase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 30 June 14, 2020 Strategy Focus Exhibit 39 - Tokopedia mobile web user interface overview
Source: Tokopedia, note Tokopedia app is only available in Indonesia
China Renaissance Securities (Hong Kong) Limited 31 June 14, 2020 Strategy Focus Company name: Traveloka Traveloka – ASEAN online travel agency Private company • Established in 2012 by Derianto Kusuma, Ferry Unardi, Albert Zhang and Ainun Najib. It began as an airfare comparison website before it evolved to become a 2012 Founded: ticket reservation website in 2013. Today, Traveloka offers flights, hotels, trains, hotel Headquarters: Jakarta, Indonesia packages, attractions and activities, connectivity products, airport transport, and buses. Sector: Online travel agency • Expedia leverages Traveloka's local knowledge via investment: Expedia invested Funds raised to date: est. US$920mn US$350mn in Traveloka in July 2017. This offers Traveloka access to a diverse set (based on all reported amounts on Tech in of international accommodations. Conversely, Expedia can access Traveloka’s local Asia and Crunchbase) knowledge to augment its Southeast Asia presence. China or global comparable: Trip.com, • A well-known travel brand in ASEAN: Traveloka partners with more than 100 Tongcheng, eLong, Fliggy, Expedia domestic and international airlines, and serves consumers in Indonesia, Thailand, Vietnam, Malaysia, Singapore, and Philippines with different payment options and a variety of accommodations from hotels to homestays. Traveloka says its mobile app has been downloaded over 20mn times as of 2019.
Exhibit 40 - Tokopedia - fund-raising history
Source: Tech in Asia, Crunchbase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 32 June 14, 2020 Strategy Focus Exhibit 41 - Traveloka in-app user interface overview
Source: Traveloka
China Renaissance Securities (Hong Kong) Limited 33 June 14, 2020 Strategy Focus Company name: Trax Retail Trax – Image recognition technology for retailers Private company • Headquartered in Singapore: Founded in 2010 by Joel Bar-El and Dror Feldheim, Trax is the global leader in computer vision solutions for consumer packaged goods 2010 Founded: and retailers, as per Trax's website description. Its platform enables tighter execution Headquarters: Singapore controls in-store and the ability to leverage competitive insights through its in-store execution tools, market measurement services and data science to unlock revenue Sector: Fast-moving consumer goods opportunities at all points of sale. Funds raised to date: est. US$365mn (based on all reported amounts on Tech in • What is shelf value enhancement? Fast moving consumer goods (FMCG) Asia and Crunchbase) companies spend US$70bn annually on shelf merchandising standards, buying shelf space and marketing materials on a global basis, according to information provided by China or global comparable: Huawei Trax. Arrangement and positioning of products in a store is called a planogram, and it Holosens, Reconova, SenseTime, face++, helps achieve maximum visibility and increased sales. Arc Soft, Orbbec, Huajie IMI • Trax digitalizes planogram: Before 2010, manual surveying was the only avenue for global FMCG companies to assess sales progress, a time-consuming and costly process. Trax uses image recognition placed on racks and all over the retail space to collect real-time data. With in-house software, Trax can analyze spending patterns to improve in-store product visibililty.
Exhibit 42 - Trax - fund-raising history
Source: Tech in Asia, Crunchbase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 34 June 14, 2020 Strategy Focus Company name: VNG Corporation VNG — Vietnam online gaming, social media, e-commerce and media leader Private company • Founded in 2004 by Le Hong Minh: Formerly known as Vinagame, the company changed its name to VNG in 2009. Besides licensing and developing games, VNG 2004 Founded: has other Internet ventures such as Zing MP3 (online music), Zing News (online news Headquarters: Ho Chi Minh City, Vietnam portal), Zing Chat (online communication platform) and Zing Me (social platform). Sector: E-commerce and online gaming • Initial success via Lei Jun's Kingsoft (3888 HK, HOLD, TP: HK$16.00, covered Funds raised to date: est. US$920mn by Alex Liu): After an unsuccessful attempt to bring MU Global (an online game) to (based on all reported amounts on Tech in Vietnam from China, Le Hong Minh found success in obtaining a license of Kingsoft's Asia and Crunchbase) Swordsman Online, which had a million users since its launch in 2005. From there, VNG built a platform that includes mobile games (licensed games), music and video China or global comparable streaming, a chat app, an online payment gateway, and a movie theater booking app. • E-commerce: T-Mall, Pinduoduo, JD.com, Amazon • In May 2016, it acquired a 38% stake in Tiki for US$17mn to enter Vietnam's e- commerce: Tiki was founded by Tran Ngoc Thai in 2005 as an online bookseller. • Online gaming: Tencent Today, Tiki sells products across 26 different categories, totaling over 1.2mn million stock keeping units (SKUs).
Exhibit 43 - VNG - fund-raising history
Source: Tech in Asia, Crunchbase, CRSHK compiled
China Renaissance Securities (Hong Kong) Limited 35 June 14, 2020 Strategy Focus Exhibit 44 - Tiki.vn in-app user interface overview
Source: Tiki.vn
China Renaissance Securities (Hong Kong) Limited 36 June 14, 2020 Strategy Focus Appendix List of companies mentioned in this report
Note: Where no ticker is provided, the company is private and not listed on an exchange. Source: CRSHK
China Renaissance Securities (Hong Kong) Limited 37 June 14, 2020 Strategy Focus
China Renaissance Research Research Analysts and Featured Reports
Jeffrey NG ASEAN Strategy
Jeffrey Ng joined China Renaissance as Head of ASEAN Research in March 2020. He graduated with a Bachelor of Commerce degree from University of Melbourne in 2003. He then started his career in a Malaysian buyside firm, Meridian Asset Management, before spending 10 years at Bank of America Merrill Lynch as a Southeast Asia sell- side analyst. In 2014, Jeffrey joined APS Asset Management as Head of Research before returning to the sell side in 2015 with Deutsche Bank, where his last role was ASEAN Equity Strategist.
Consumer – Consumer Durables, Consumer Services, Food & Beverage; Ecommerce; Leisure – Gaming, Charlie CHEN Lodging Charlie Chen joined China Renaissance in Hong Kong in April 2019. Before joining the firm, he worked for more than 10 years with Macquarie, BNP Paribas, Deutsche Bank and Credit Suisse in various consumer research roles. He also worked for Carlsberg and a beverage management consulting firm before joining the sell side. Charlie oversees Consumer research at China Renaissance, with his main focus on staples and e-commerce retailing. Charlie holds an MBA from the Fuqua School of Business, Duke University and a Bachelor of Engineering degree from Tsinghua University. Featured Reports: Pork recovery - WH Group minds the gap; Initiate at BUY Beer in China: Less is more Food & Beverages: Awakening of the Health Conscious
Chris GAO Consumer – Luxury Goods
Chris Gao joined China Renaissance in Hong Kong in March 2019 and leads coverage of the luxury goods sector. Prior to China Renaissance, Chris worked at Daiwa Capital Markets and DBS where she gained experience in Macau Gaming and China/Hong Kong healthcare sectors. Chris holds a Bachelor’s degree in Accounting and Finance from the University of Hong Kong. Featured Reports: Luxury Goods: Full recovery of China's market takes time; a more challenging 2Q20 expected for sector Luxury Goods: China demand stands still; sector valuation is rich Moncler: Fashion Revolution Is Ongoing Luxury Goods: Rich valuation despite solid fundamentals
Bruce PANG, PhD Economics; Strategy
Bruce Pang joined China Renaissance in Hong Kong in August 2019 as Head of Macro/Strategy Research. Previously, Bruce worked as China/Hong Kong equity strategist at HSBC, while he also managed HSBC Global Research’s Shanghai Office. In 2018, AsiaMoney ranked him as a top-three regional strategist and a top-four H- share strategist. Prior to HSBC, he covered various sectors as an equity analyst at BOC International. Bruce holds a PhD in economics from the University of Hong Kong, an MA in sociology from the University of Chicago, and an MSc in economics from the Hong Kong University of Science and Technology. He worked at PwC after earning his Bachelor’s degree from Renmin University. Featured Reports: Strategy: Chinese ADRs: The journey home Strategy: ChiNext: China's Next STAR Strategy: Virus disruption on supply chain goes global
China Renaissance Securities (Hong Kong) Limited 38 June 14, 2020 Strategy Focus
Bing ZHAO, PhD Healthcare
Bing Zhao joined China Renaissance in Shanghai in March 2019. Before joining China Renaissance, he was the chief Healthcare analyst at UBS Securities and prior to that he worked at Shanghai Securities for six years. Bing received his Doctor’s degree from the Faculty of Medicine, National University of Singapore. Featured Reports: Pharma distribution: Industry consolidation should benefit leaders; Initiating coverage OTC TCM: TCM riding consumerization trend: we initiate coverage, preferring branded OTC-TCM Ping An Healthcare: Online healthcare on a new runway; Initiate at BUY
Szeho NG, CFA Information Technology – Semiconductors
Szeho Ng joined China Renaissance in Hong Kong in February 2018. Prior to joining China Renaissance, Szeho held a corporate strategy and IR role at ASM Pacific Technology. His sell-side experience is founded on his prior roles as Head of Greater China Technology Research at BNP Paribas, and at JP Morgan, CSFB and Morgan Stanley. Szeho holds a Bachelor’s degree in Electrical Engineering from Rensselaer Polytechnic Institute, New York. He is a CFA charterholder. Featured Reports: Alchip Technologies: Growing fabless "design-lite" trend: initiate at BUY Semiconductors – PMIC: Summer siesta: downgrade Silergy to HOLD Semiconductors – Foundry: W-shaped share price pattern, a higher low
Colin LIU Information Technology – Software & Services
Colin Liu joined China Renaissance in Hong Kong in November 2019. Prior to joining China Renaissance, Colin was Telecom & Software Research Analyst in HSBC’s global research team in Hong Kong. Colin was instrumental in leading the coverage of Hong Kong-listed and China software companies. Colin holds a Bachelor’s Degree of Business Administration from the Chinese University of Hong Kong, majoring in Professional Accountancy and minoring in Finance. Featured Reports: Kingsoft Cloud: Initiate at HOLD: A Cloudy Sky Ride on the Cloud – Initiating Coverage Insight Series: Working on Cloud – Microsoft Call Takeaways
Jason SUN Information Technology – Technology Hardware
Jason Sun joined China Renaissance in Hong Kong in September 2016. Jason is an industry veteran with experience in the technology hardware industry, where he has worked for companies such as Huawei, ZTE and Alcatel. Prior to joining China Renaissance, Jason covered Asia Technology stocks at Macquarie Securities. Jason holds a Master’s degree in Business Administration from the Hong Kong University of Science & Technology. Featured Reports: Greater risks on smartphone supply chain-related stocks; downgrade Sunny to HOLD Technology Hardware: Looking into 2020: Opportunities ahead in the mist Technology Hardware: Everything 5G: PCB/CCL, chips and smartphones; upgrade Shengyi to BUY
Ella JI, CFA Internet – Ecommerce, Online Media, US Internet
Ella Ji joined China Renaissance in New York in September 2015. Ella oversees China internet research with a focus on e-commerce, search and online media. She also covers US internet and ecommerce companies. Prior to joining China Renaissance, Ella was Managing Director at Oppenheimer & Co., where she was ranked Top Analyst in Consumer Discretionary by Fortune Magazine in 2011. Ella holds a Master’s degree in Finance from Boston College and a Bachelor’s degree in International Finance from Fudan University. She is a CFA charterholder. Featured Reports: Livestream Commerce: Content Marketing’s Best Monetization Model US Internet: US/China Retail Difference Differences Tell the Story; Instagram E-commerce Promising, Amazon Upside Limited China Internet: Uncovering the Life of the Internet in China’s Lower-Tier Regions
China Renaissance Securities (Hong Kong) Limited 39 June 14, 2020 Strategy Focus
Jacky ZUO, CFA Internet – Fintech
Jacky Zuo joined China Renaissance in Hong Kong in October 2019. Previously Jacky worked as China financial analyst in a top-ranked team at Deutsche Bank for over six years covering Fintech, leasing and asset management sectors. His previous team ranked No. 2 in the Bank sector in Institutional Investor’s Asia poll in 2013-15 and No. 4 during 2017-18. Jacky holds a Bachelor’s degree in Quantitative Finance from The Chinese University of Hong Kong. He is a CFA charterholder.
Featured Reports: Payments: China merchant acquirers – Seizing upside from value-added services; initiate coverage Online lending: Tracking the consumer credit cycle – Further improvement seen in April ZhongAn Online (6060 HK)； On the right track; initiating coverage at BUY
Alex LIU Internet – Live Streaming, Online Games, Online Media; Education
Alex Liu joined China Renaissance in Hong Kong in February 2018. Prior to joining China Renaissance, Alex worked as a research analyst at Daiwa Capital Markets, with a focus on China Internet & Education sectors. Alex and his team ranked third in the annual AsiaMoney Brokers Poll for Regional Internet & Software sector research in 2016. Previously, Alex was a buy-side analyst at Union Bancaire Privee, covering Asia-ex-Japan equity markets. Alex holds a Bachelor’s Degree of Business Administration in Finance and Accounting from the Hong Kong University of Science and Technology. Featured Reports: Back-to-Basics: Quantifying Offline Upside Potential Through Penetration Analysis Back-to-Basics: How Urbanization Shapes China's Tutoring Market Bits & Pieces: Uncovered New Disclosure in Annual Filings
Yating ZHOU Property
Yating Zhou joined China Renaissance in Shanghai in April 2017. Yating covers the property sector and has more than 10 years of experience as a property analyst. She previously worked for Huatai Securities and Ping An Securities, and at real estate companies including World Union Real Estate and CITIC Real Estate. Yating has been ranked in various external polls, including New Fortune, Golden Bull Award (金牛奖) and Crystal Ball Award (水晶球奖). Yating holds a Master’s degree in International Finance and Economics from Cardiff University.
Featured Reports: CIFI Holdings: Balanced and steady developer; initiate with BUY CIFI Holdings: Consolidation of Ever Sunshine improves financials Property Management: Proprietary data analysis on key topics; initiate coverage
China Renaissance Securities (Hong Kong) Limited 40 June 14, 2020 Strategy Focus Coverage Universe
Price Target price Potential Market Cap EPS 2019- 2021E Ticker Company Name Sub-sector Rating Analyst (LCY) (LCY) Upside (USD mn) 2021E CAGR PE(x) Consumer 1717 HK Ausnutria Consumer BUY 15.60 20.00 28% 3,249 23.2% 16.2 Charlie Chen 1112 HK H&H International Holdings Consumer BUY 34.85 55.00 58% 2,896 24.4% 12.4 Charlie Chen 2319 HK China Mengjiu Dairy Consumer BUY 29.60 32.00 8% 15,033 5.2% 23.5 Charlie Chen 600887 CH Inner Mongolia Yili Consumer BUY 29.10 37.50 29% 24,947 15.2% 19.4 Charlie Chen 291 HK China Resources Beer Consumer BUY 43.60 43.00 -1% 18,251 30.9% 29.1 Charlie Chen 168 HK Tsingtao Brewery-H Consumer HOLD 55.00 44.00 -20% 10,978 6.8% 30.8 Charlie Chen 600600 CH Tsingtao Brewery-A Consumer HOLD 64.35 40.00 -38% 10,978 6.8% 39.5 Charlie Chen 600132 CH Chongqing Brewery Consumer SELL 58.50 39.00 -33% 4,001 14.0% 50.0 Charlie Chen 288 HK WH Group Consumer BUY 6.74 13.00 93% 12,809 0.0% 8.7 Charlie Chen 6862 HK Haidilao International Consumer HOLD 34.95 35.00 0% 23,901 31.4% 42.0 Charlie Chen 1579 HK Yihai International Consumer HOLD 69.80 59.00 -15% 9,429 32.0% 49.4 Charlie Chen 520 HK Xiabuxiabu Catering Consumer HOLD 8.29 6.60 -20% 1,157 7.2% 24.4 Charlie Chen 000651 CH Gree Electric Appliances Consumer BUY 58.92 62.59 6% 50,094 0.9% 14.1 Charlie Chen 000333 CH Midea Group Consumer BUY 59.98 67.91 13% 59,335 11.2% 14.0 Charlie Chen 600690 CH Haier Smart Home Consumer BUY 16.59 18.55 12% 15,633 4.3% 12.2 Charlie Chen 1169 HK Haier Electionary Consumer BUY 22.80 24.62 8% 8,287 -1.7% 14.5 Charlie Chen 002508 CH Robam Appliances Consumer BUY 34.15 35.41 4% 4,580 8.3% 17.3 Charlie Chen KER FP Kering Luxury goods HOLD 487.00 490.00 1% 70,258 -0.5% 19.2 Chris Gao MC FP LVMH Luxury goods HOLD 375.10 360.00 -4% 218,417 4.7% 24.0 Chris Gao MONC IM Moncler Luxury goods BUY 33.65 38.00 13% 10,007 1.1% 23.2 Chris Gao Education BEDU US Bright Scholar Edu Education BUY 7.67 17.00 122% 922 28.9% 9.2 Alex Liu EDU US New Oriental Edu Education BUY 127.78 154.00 21% 20,244 21.5% 33.3 Alex Liu TAL US TAL Education Group Education BUY 63.04 60.00 -5% 37,303 9.7% 70.8 Alex Liu 6068 HK Wisdom Edu Education BUY 3.00 5.60 87% 792 21.5% 8.8 Alex Liu 1797 HK Koolearn Technology Education BUY 30.65 28.00 -9% 3,715 N/A N/A Alex Liu Healthcare 002044 CH Meinian Onehealth Healthcare BUY 11.54 18.03 56% 6,393 38.9% 21.4 Bing Zhao 300347 CH Tigermed Consulting Healthcare BUY 85.79 83.08 -3% 9,087 26.8% 47.7 Bing Zhao 603259 CH Wuxi AppTec - A Healthcare BUY 83.18 118.00 42% 27,104 33.6% 41.6 Bing Zhao 2359 HK Wuxi AppTec - H Healthcare BUY 88.80 132.00 49% 27,104 33.6% 40.5 Bing Zhao ZLAB US Zai Lab Limited Healthcare BUY 68.99 76.60 11% 5,110 N/A 2,299.7 Bing Zhao 300294 CH Boya Bio Healthcare BUY 37.50 50.88 36% 2,297 29.7% 22.1 Bing Zhao 002007 CH Hualan Bio Healthcare BUY 41.27 48.41 17% 10,641 18.1% 30.8 Bing Zhao 2269 HK Wuxi Bio Healthcare BUY 129.00 122.40 -5% 21,675 27.4% 80.7 Bing Zhao 1801 HK Innovent Bio Healthcare BUY 47.50 60.93 28% 8,231 -57.8% N/A Bing Zhao 000538 CH Yunnan Baiyao Healthcare BUY 86.49 114.07 32% 15,615 -2.9% 24.2 Bing Zhao 600436 CH PIEN TZE HUANG Healthcare BUY 154.13 131.70 -15% 13,142 27.1% 37.7 Bing Zhao 000999 CH CR Sanjiu Healthcare BUY 27.40 40.06 46% 3,791 -4.8% 13.0 Bing Zhao 600085 CH TRT Healthcare HOLD 25.78 29.52 15% 4,997 17.6% 23.0 Bing Zhao IMAB US I-Mab Healthcare BUY 23.75 32.72 38% 1,373 -37.5% N/A Bing Zhao 1833 HK PingAn Healthcare Healthcare BUY 111.40 128.72 16% 15,341 -51.7% N/A Bing Zhao 1099 HK Sino Pharma Healthcare BUY 19.50 29.62 52% 7,852 13.3% 6.6 Bing Zhao 2607 HK Shanghai Pharma-H Healthcare BUY 12.80 17.53 37% 6,399 13.7% 6.3 Bing Zhao 601607 CH Shanghai Pharma-A Healthcare BUY 17.96 23.36 30% 6,399 13.7% 9.7 Bing Zhao Information Technology 1347 HK Hua Hong Semicon Semiconductor HOLD 17.92 16.10 -10% 2,985 -13.4% 25.7 Sze Ho Ng 6415 TT Silergy Corp Semiconductor HOLD 1,675.00 1,325.00 -21% 5,166 27.9% 39.8 Sze Ho Ng 981 HK SMIC Semiconductor BUY 19.38 21.00 8% 13,838 0.0% 50.0 Sze Ho Ng 2330 TT TSMC Semiconductor BUY 316.00 330.00 4% 276,246 19.3% 16.7 Sze Ho Ng 2303 TT UMC Semiconductor BUY 15.70 17.40 11% 6,469 27.4% 11.8 Sze Ho Ng 5347 TT Vanguard Int'l Semiconductor HOLD 75.70 72.00 -5% 4,183 7.0% 18.5 Sze Ho Ng 3711 TT ASE Technology Holding Semiconductor BUY 66.30 79.00 19% 9,689 27.1% 10.5 Sze Ho Ng 002156 CH TongFu Microelectronics Semiconductor SELL 24.10 19.00 -21% 3,930 369.0% 109.5 Sze Ho Ng 600584 CH JCET Semiconductor BUY 27.75 29.00 5% 6,286 200.0% 61.7 Sze Ho Ng 300661 CH SG Micro Corp Semiconductor SELL 239.03 150.00 -37% 5,251 28.0% 129.2 Sze Ho Ng 002185 CH Tianshui Huatian Technology Semiconductor HOLD 13.37 11.90 -11% 5,177 41.4% 55.7 Sze Ho Ng 688008 CH Montage Technology Semiconductor SELL 88.20 56.00 -37% 14,084 16.8% 73.5 Sze Ho Ng
China Renaissance Securities (Hong Kong) Limited 41 June 14, 2020 Strategy Focus
Price Target price Potential Market Cap EPS 2019- 2021E Ticker Company Name Sub-sector Rating Analyst (LCY) (LCY) Upside (USD mn) 2021E CAGR PE(x) 3661 TT Aichip Technologies Semiconductor BUY 361.00 435.00 20% 744 63.7% 18.7 Sze Ho Ng 268 HK Kingdee Software & Services BUY 13.94 10.67 -23% 5,990 N/A N/A Colin Liu 600588 CH Yonyou Network Software & Services HOLD 35.72 38.15 7% 16,401 -13.4% 99.2 Colin Liu 603039 CH Shanghai Weaver Network Software & Services BUY 65.50 92.31 41% 1,965 3.1% 64.9 Colin Liu KC US Kingsoft Cloud Software & Services HOLD 20.94 15.89 -24% 4,298 -40.7% N/A Colin Liu 2018 HK AAC Technologies Technology Hardware BUY 41.90 57.95 38% 6,534 22.9% 13.8 Jason Sun 522 HK ASM Pacific Tech Technology Hardware HOLD 75.60 71.38 -6% 3,989 65.2% 18.2 Jason Sun 002241 CH GoerTek Inc Technology Hardware HOLD 24.18 16.70 -31% 11,090 31.3% 35.0 Jason Sun HMI US Huami Corp Technology Hardware BUY 10.49 17.70 69% 650 9.3% 6.3 Jason Sun 002475 CH Luxshare Precision Technology Hardware BUY 54.50 54.08 -1% 41,325 42.6% 30.8 Jason Sun 1478 HK Q Technology Group Technology Hardware HOLD 9.91 11.26 14% 1,499 18.5% 13.7 Jason Sun 2382 HK Sunny Optical Technology Hardware HOLD 109.80 110.90 1% 15,540 22.9% 18.2 Jason Sun 1810 HK Xiaomi Corp Technology Hardware BUY 12.80 14.91 16% 39,690 22.9% 16.5 Jason Sun 002273 CH Zhejiang Crystal-Optech Technology Hardware HOLD 16.04 13.85 -14% 2,760 17.7% 26.3 Jason Sun 763 HK ZTE Corp Technology Hardware BUY 21.05 33.18 58% 22,878 32.8% 8.9 Jason Sun 002456 CH O-film Tech Technology Hardware HOLD 16.09 11.72 -27% 6,128 110.3% 19.2 Jason Sun 600183 CH Shengyi Technology Technology Hardware HOLD 27.52 29.40 7% 8,853 24.3% 27.0 Jason Sun 002916 CH Shennan Circuits Technology Hardware HOLD 152.72 177.09 16% 10,255 29.6% 24.9 Jason Sun 002463 CH WUS Printed Circuit Technology Hardware HOLD 23.43 26.63 14% 5,711 22.8% 21.9 Jason Sun AAPL US Apple Inc Technology Hardware BUY 335.90 354.80 6% 1,455,903 17.0% 20.6 Jason Sun 285 HK BYDE Technology Hardware BUY 15.90 21.44 35% 4,623 37.4% 10.8 Jason Sun Internet BABA US Alibaba Group Ecommerce BUY 215.24 270.00 25% 577,429 23.8% 25.9 Ella Ji JD US JD.com Inc Ecommerce BUY 57.24 57.00 0% 84,640 44.8% 26.6 Ella Ji BZUN US Baozun Inc Ecommerce BUY 32.03 37.00 16% 2,019 39.6% 19.7 Charlie Chen PDD US Pinduoduo Inc Ecommerce HOLD 71.51 59.00 -17% 85,642 N/A 722.8 Charlie Chen VIPS US Vipshop Holdings Ltd Ecommerce BUY 17.35 22.00 27% 11,666 19.1% 11.9 Charlie Chen MOGU US Mogu Inc. Ecommerce BUY 1.43 3.20 124% 153 -47.5% N/A Charlie Chen LX US LexinFintech Fintech HOLD 8.91 12.00 35% 1,611 5.4% 4.4 Jacky Zuo QD US Qudian Inc Fintech HOLD 1.55 2.40 55% 393 -43.3% 3.1 Jacky Zuo QFIN US 360 Finance Fintech BUY 9.67 12.50 29% 1,419 6.6% 0.5 Jacky Zuo 6060 HK Zhongan Online Fintech BUY 28.35 37.00 31% 5,377 N/A 43.9 Jacky Zuo 300773 CH Lakala Payment Fintech BUY 33.66 46.40 38% 3,806 10.5% 13.2 Jacky Zuo 000997 CH Newland Fintech BUY 15.63 25.70 64% 2,323 16.5% 15.8 Jacky Zuo 1806 HK Huifu Payment Fintech BUY 1.79 3.60 101% 298 11.8% 5.4 Jacky Zuo 9923 HK Yeahka Fintech BUY 17.24 35.00 103% 923 -8.8% 12.2 Jacky Zuo HUYA US HUYA Inc Live steaming BUY 17.25 21.00 22% 3,786 45.9% 17.7 Alex Liu MOMO US Momo Inc Live steaming BUY 19.30 28.00 45% 4,028 7.0% 5.9 Alex Liu YY US YY Inc Live steaming BUY 73.26 97.00 32% 5,767 13.4% 15.0 Alex Liu DOYU US Douyu Live steaming BUY 8.99 13.00 45% 2,854 108.1% 14.3 Alex Liu TCOM US Ctrip.com O2O HOLD 26.54 28.00 6% 15,740 5.3% 15.3 Ella Ji 3690 HK Meituan O2O BUY 165.60 140.00 -15% 124,527 80.0% 59.1 Ella Ji 799 HK IGG Inc Online games HOLD 5.27 6.20 18% 846 -21.6% 8.5 Alex Liu 3888 HK Kingsoft Corp Ltd Online games HOLD 26.20 16.00 -39% 4,641 N/A 82.5 Alex Liu NTES US NetEase Inc Online games BUY 411.44 450.00 9% 56,440 12.2% 20.2 Alex Liu 700 HK Tencent Online games BUY 441.00 520.00 18% 543,626 27.8% 25.3 Ella Ji/Alex Liu BIDU US Baidu Inc Online media HOLD 111.83 135.00 21% 38,544 14.5% 80.7 Ella Ji IQ US iQIYI Inc Online media HOLD 17.84 19.00 7% 13,088 -56.9% N/A Ella Ji WB US Weibo Corp Online media HOLD 31.76 38.00 20% 7,192 -4.4% 12.6 Ella Ji BILI US Bilibili Inc Online media BUY 33.90 37.00 9% 11,710 -20.6% N/A Alex Liu 1896 HK Maoyan Entertainment Online media BUY 13.42 16.00 19% 1,958 25.4% 12.4 Alex Liu TME US Tecent Music Entertainment Online media BUY 12.40 16.00 29% 20,801 6.6% 26.3 Alex Liu SNAP US Snapchat US Internet HOLD 19.71 15.00 -24% 28,490 N/A 164.3 Ella Ji GOOGL US Google US Internet HOLD 1,401.90 1,237.00 -12% 957,662 6.6% 25.2 Ella Ji FB US Facebook US Internet BUY 224.43 250.00 11% 639,424 23.8% 22.7 Ella Ji TWTR US Twitter US Internet SELL 33.03 23.00 -30% 25,916 -2.4% 41.8 Ella Ji AMZN US AMAZON US Internet HOLD 2,557.96 2,162.00 -15% 1,275,849 27.5% 42.9 Ella Ji FTCH US Farfetch Ltd US Internet HOLD 14.62 18.00 23% 4,969 -49.3% N/A Ella Ji
China Renaissance Securities (Hong Kong) Limited 42 June 14, 2020 Strategy Focus
Price Target price Potential Market Cap EPS 2019- 2021E Ticker Company Name Sub-sector Rating Analyst (LCY) (LCY) Upside (USD mn) 2021E CAGR PE(x)
Lodging 600258 CH BTG Hotels Group Lodging HOLD 17.25 20.00 16% 2,408 3.0% 19.8 Nate Deng HTHT US Huazhu Group Ltd Lodging BUY 35.94 35.00 -3% 10,668 17.7% 33.4 Nate Deng 600754 CH Sh Jinjiang Int'l Hotels Lodging BUY 29.53 30.00 2% 3,550 8.3% 21.9 Nate Deng 2006 HK Sh Jinjiang Int'l Hotels Lodging BUY 1.48 2.70 82% 1,063 12.5% 7.1 Nate Deng GHG US GreenTree Hospitality Group Lodging BUY 13.36 18.00 35% 1,365 6.0% 17.8 Nate Deng Logistics 002352 CH SF Holding Co Ltd Logistics BUY 53.29 58.00 9% 33,246 36.1% 30.3 Charlie Chen ZTO US ZTO Express Logistics BUY 34.49 43.00 25% 27,037 15.9% 3.8 Charlie Chen Property 000560 CH 5I5J Holding Group Property BUY 3.32 4.40 33% 1,105 6.3% 9.5 Yating Zhou 2048 HK E-House China Enterprise Property HOLD 8.93 7.40 -17% 1,596 8.5% 11.2 Yating Zhou 002377 CH Guochuang Hi-Tech Material Property BUY 3.92 6.80 73% 508 13.7% 7.4 Yating Zhou 000671 CH Yango Group Property BUY 6.54 8.90 36% 3,784 32.9% 3.8 Yating Zhou 817 HK China Jinmao Property BUY 5.70 5.40 -5% 8,661 19.8% 6.6 Yating Zhou 1995 HK Evershine Life Service Property BUY 11.50 10.10 -12% 2,280 61.2% 26.9 Yating Zhou 2869 HK Greentown Service Property HOLD 9.84 9.20 -7% 4,084 27.7% 29.0 Yating Zhou 6049 HK Poly Property Development Property BUY 83.45 72.20 -13% 5,958 45.7% 40.3 Yating Zhou 884 HK CIFI Holdings Property BUY 6.60 7.30 11% 6,746 20.3% 4.8 Yating Zhou Note: Close prices as of June 12, 2020. Source: Bloomberg, CRSHK estimates, CRSUS estimates, Huajing Securities estimates
China Renaissance Securities (Hong Kong) Limited 43 June 14, 2020 Strategy Focus Appendix A
Analyst Certification I, Jeffrey Ng, certify that the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers featured in this report. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report. One or more research analyst responsible for this publication is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority ("FINRA") and may not be an associated person of China Renaissance Securities (US) Inc. and therefore may not be subject to applicable restrictions under FINRA rules on communications with a subject company, public appearances and trading securities held by a research analyst account.
Important Disclosures Important Disclosures
The following disclosures relate to relationships between China Renaissance Securities (US) Inc., China Renaissance Securities (Hong Kong) Limited (collectively "China Renaissance"), China Renaissance Securities (China) Co., Ltd. and companies covered by research analysts of China Renaissance and referred to in research products. All references in this report to “CRSUS” refer to China Renaissance Securities (US) Inc. CRSUS is registered with the Securities and Exchange Commission (the “SEC”) as a U.S. broker-dealer under Section 15 of the Securities Exchange Act of 1934 and is a member of FINRA and SIPC (http://www.sipc.org). CRSUS is located at 600 Fifth Avenue, 21st Floor, New York, NY 10020. All references in this report to "CRSHK" refer to China Renaissance Securities (Hong Kong) Limited. CRSHK is licensed by the Securities and Futures Commission for the conduct of dealing in securities, advising on securities, and advising on Corporate Finance. CRSHK is located at Units 8107-08, Level 81 International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong. All references in this report to "Huajing Securities" refer to China Renaissance Securities (China) Co., Ltd. Huajing Securities is licensed by the China Securities Regulatory Commission for conducting securities investment consulting business. Huajing Securities is located at 25th Floor, Trinity Tower, No. 575 Wusong Road, Hongkou District, Shanghai, China.
Disclosures required by United States laws and regulations See company-specific regulatory disclosures below for any of the following disclosures required as to companies referred to in this report: manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/co-managed public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. China Renaissance trades or may trade as a principal in debt securities (or in related derivatives) of issuers discussed in this report. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, China Renaissance, its affiliates, and their respective officers, directors or employees, other than the analyst(s) who prepared this report, may have a long position of less than 1% or a short position or make purchases or sales as principal or agent in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.
Unless prohibited by the provisions of Regulation S of the U.S. Securities Act of 1933, this publication is distributed in the U.S. in accordance with the provisions of Rule 15a-6, under the U.S. Securities Exchange Act of 1934 for Major Institutional Investors, as such term is defined in Rule 15a-6. To the extent that this publication is distributed to U.S. Institutional Investors other than Major Institutional Investors, this publication is distributed by CRSUS but not CRSHK or Huajing Securities (whether directly or indirectly). Any transactions by U.S. persons with China Renaissance
China Renaissance Securities (Hong Kong) Limited 44 June 14, 2020 Strategy Focus Securities (Hong Kong) Limited or China Renaissance Securities (China) Co., Ltd. in securities discussed in this publication will be effected through China Renaissance Securities (US) Inc., in compliance with the requirements of paragraph (a)(3) of Rule 15a-6 of the U.S. Securities Exchange Act of 1934. Additional disclosures required under the laws and regulations of jurisdictions other than the United States Distribution in Hong Kong The report is for your information only and is not an invitation or offer to sell, or a solicitation of an offer to buy, the securities described in this report. It has been prepared solely for professional investors (as defined in the Securities and Futures Ordinance of Hong Kong) whose business involves the acquisition, disposal or holding of securities, whether as principal or agent, and is not intended for disclosure to, and should not be relied upon by, any person other than a professional investor. If you are an unintended recipient of this report, you are requested immediately to return this copy of the report directly to China Renaissance Securities (Hong Kong) Limited. For professional investors in Hong Kong, please contact China Renaissance Securities (Hong Kong) Limited for all matters and queries relating to this report. The following disclosures are made by CRSHK as per paragraph 16 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (“SFC Code of Conduct”), and capitalized terms used below bear the same meanings as defined in paragraph 16 of the SFC Code of Conduct. A copy of the SFC Code of Conduct can be found on: www.sfc.hk: Issuers that the Analyst(s) review in this report where the Analyst(s) or his/her Associate have Financial Interest: Nil Financial Interests in relation to the Issuer of the Securities which are reviewed in this research report where CRSHK has an aggregate of such interests amount to 1% or more of the Issuer's market capitalization: Nil Securities of the Issuer that the Analyst(s) review in this report where CRSHK make a market: Nil Individuals who are employed by or associated with CRSHK who are serving as an officer of the Issuer: Nil Any investment banking relationship that CRSHK has with the Issuer (including any compensation or mandate for investment banking services received within the preceding 12 months of this report): See further China Renaissance disclosures below. Global product, jurisdiction and distribution
The research group of China Renaissance produces and distributes research products for clients of China Renaissance on a global basis. Analysts based in China Renaissance offices around the world produce equity research on industries and companies. This research is disseminated in Hong Kong by CRSHK; and in the United States of America by CRSUS. CRSUS has approved and agreed to take responsibility for any research prepared by CRSHK or Huajing Securities if and to the extent CRSUS distributes it in the United States.
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The following are additional required disclosures: Ownership and material conflicts of interest: China Renaissance’s policy prohibits its analysts, professionals reporting to analysts and members of their households from owning positions in securities of any company in the analyst's area of coverage. Analyst compensation: Analysts are paid in part based on overall revenues of China Renaissance, which includes investment banking revenues. Analyst as officer or director: China Renaissance’s policy prohibits its analysts, persons reporting to analysts or members
China Renaissance Securities (Hong Kong) Limited 45 June 14, 2020 Strategy Focus of their households from serving as an officer, director, advisory board member or employee of any company in the analyst's area of coverage. Non-U.S. Analysts: Non-U.S. analysts are not registered or qualified as research analysts with FINRA. They may not be associated persons of CRSUS and therefore may not be subject to FINRA Rule 2241or FINRA Rule 2242 restrictions on communications with subject company, public appearances and trading securities held by the analysts.
Potential Conflicts of Interest
Analyst Conflict of Interest: The research analyst(s) responsible for the preparation of this report receives compensation based upon a variety of factors, including the quality and accuracy of research, internal/client feedback, and overall firm revenues, which include investment banking revenues. Research analysts do not receive compensation based upon revenues from specific investment banking transactions.
Additional Conflicts of Interest: China Renaissance managed or co-managed a public offering of the securities for I-Mab (IMAB) and JD.com, Inc. (JD) in the past twelve months. China Renaissance received compensation for investment banking services from 360 Finance (QFIN), Grab Holdings Inc., I-Mab (IMAB), JD.com, Inc. (JD), LexinFintech Holdings Ltd. (LX), Maoyan Entertainment (1896 HK), MOGU Inc. (MOGU), SF Holdings Group Co Ltd (002352 CH), Tencent Music (TME), and WuXi AppTec Co Ltd (2359 HK, 603259 CH) in the past twelve months. China Renaissance expects to receive or intends to seek compensation for investment banking services from companies referenced in this report in the next three months. China Renaissance owns more than 1% interests in 360 Finance (QFIN) and LexinFintech Holdings Ltd. (LX) referenced in this report. China Renaissance does not make markets in the companies referenced in this report.
Distribution of Ratings and Investment Banking Below is the distribution of research recommendations as of June 13, 2020 Rating Count Percent IB Count IB% Buy 91 65.47% 91 100.00% Hold 43 30.94% 43 100.00% Sell 5 3.60% 5 100.00% China Renaissance Ratings as of December 31, 2016: Stock Ratings: Ratings of Buy, Hold and Sell have a time horizon of twelve to eighteen months from the date of publishing the initiation or subsequent rating/price target change report issued for the subject company. The ratings are as follows: Buy – The expected return on the subject company’s stock price should outperform the typical benchmark market index for the subject company's primary listing exchange (e.g. the S&P 500 for US-listed stocks) over the above-defined time horizon from the publishing date of the initiation of coverage or subsequent report announcing a rating change. Hold – The stock price of the subject company is not expected to either appreciate or depreciate meaningfully from the typical benchmark market index for the subject company's primary listing exchange (e.g. the S&P 500 for US-listed stocks) during the above-stated time horizon.
China Renaissance Securities (Hong Kong) Limited 46 June 14, 2020 Strategy Focus Sell – The expected return on the subject company’s stock price should underperform the typical benchmark market index for the subject company's primary listing exchange (e.g. the S&P 500 for US-listed stocks) over the above-defined time horizon from the publishing date of the initiation of coverage or subsequent report announcing a rating change. Not Rated – China Renaissance has removed the rating and, if applicable, the price target, for the subject company's stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, should no longer be relied upon. An NR designation is not a recommendation or a rating. Not Covered – a company for which China Renaissance research has not been published. China Renaissance Ratings as of January 19, 2019: Sector Ratings: Ratings of Overweight, Neutral and Underweight are applied to the designated sector coverage group with a time horizon of twelve to eighteen months from the date of report publication. The ratings are as follows: Overweight – Expect sector to outperform the relevant market. Neutral – Expect sector to perform in line with the relevant market. Underweight – Expect sector to underperform the relevant market.
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China Renaissance Securities (Hong Kong) Limited 48