Ant Group Lifts IPO Valuation Target to USD 280 Billion

Briefing Oct 16, 2020 03:40 pm EqualOcean

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Research EO

Updated 31 minutes ago ·

Equity Research Report: Ant Group

Background Ant Group (formerly Ant Financial), a spinoff of Alibaba Group (BABA:NYSE, 09988:HK), is planning a dual listing on the Hong Kong Stock Exchange and the Shanghai Star Market at a projected valuation ranging from USD 380 billion to 461 billion. According to some sources, the proceeds volume is estimated at USD 35 billion – if this happens to be the case, it will make the fintech behemoth's IPO the largest in history. The scale, however, is not the only reason. Much of the attention comes from what the firm is equipped with. The tech giant runs its businesses in the fields of digital payments, digital financial services and other technology-focused areas. The strong performance in payments and financial services has been the firm's key growth driver. It has also been increasingly deploying technology-based services within its main product – Alipay platform, leveraging a combination of blockchain, AI and computing, which pushed it to the top position in the Chinese fintech industry. In this report… EqualOcean presents a comprehensive outlook of Ant Group's businesses, analyzing the company's financial performance within key market segments. We delve into aspects such as competitive environments, regulations and technology, paying special attention to Ant's global expansion strategy. In the two distinct chapters, we dissect the main growth drivers and challenges facing the company in the short and medium term. A result of months of research, expert interviews and thorough analysis, this report is a one-stop solution for global investors trying to assess the real value of Ant Group. Key takeaways ► As the prospectus revealed, Alipay has evolved from a payment tool to a financial supermarket, delivering a digital infrastructure that is increasingly embedded in people's daily lives. ► Behind the massive figures, Ant Group has placed itself on the technological edge, which is driving the company's long-term development. Its technology advancements are reflected in the business performance. One indicator is the ever-growing transaction volumes during the 'Singles-day' shopping festivals every year. ► Now, Ant is among the most active blockchain researchers globally, with the highest number of related patents; its risk management capabilities keep the fraud loss rate of Alipay below 0.000064‰, ranking it first globally, compared to the figures of 0.0001‰ for WeChat Pay and 1.5‰ for PayPal. ► The integrated business mix mediated by Alipay platform, as the only user-facing channel, differentiates it from the competition. ► Overseas, Ant Group is not only exploring the users through the international version of Alipay but is also utilizing technologies to globalize payment markets across regions. ► With over 1.2 billion monthly active users globally, Tencent's WeChat has a significantly larger user base than Alipay’s 700 million (as of June 30, 2020). WeChat Pay has a strong competitive advantage in this regard. ► The DCEP, the Chinese government's new project, will digitalize cash in circulation, becoming an alternative to and challenging Alipay. ► In the global market, PayPal, with a more balanced user structure and even geographical distribution in advanced economies, is more competitive than Alipay. ► Regulations targeting the payment and financial services areas in different countries are getting stricter as both the magnitude of fintech disruption and the likes of Ant Group become larger.

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News · 2

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Updated 16 hours ago ·

Ant Group's Star Market and Hong Kong IPOs Set at CNY 68.80 and HKD 80

On October 27, Ant Group officially announced the issuance prices for its A share in Shanghai and H share in Hong Kong as CNY 68.80 and HKD 80 respectively. The total offerings reached USD 34.5 billion, around CNY 240 billion with the market capitalization of CNY 2.1 trillion, becoming the largest IPO worldwide ever. Further details have also been decided. The tickers are addressed '688688:SH' for Star Market and '6688:HK' for the Hong Kong bourse. What is more, November 5 will be the first day for Ant Group to be publicly listed in Hong Kong. The company also released the list of 29 strategic investors for Star Market's IPO, including Sovereign wealth funds like China Investment Corp., Government of Singapore Investment Corp., Abu Dhabi Investment Authority; some domestic insurance companies like China Life Insurance and the People's Insurance; large state-owned firms like PetroChina, China Merchants and China Minmetals Corp. After the announcement, the stock price of Alibaba (BABA:NYSE) surged 1.62% in 10 minutes.

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Updated 24 hours ago ·

Ant Group's Shanghai IPO Priced at CNY 68-69 per Share, Industry Sources Say

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Oct 22, 2020 03:03 pm ·

Sources: Ant Group's IPO Valuation Range Hits USD 380 Bn to USD 461 Bn

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Oct 21, 2020 09:58 pm ·

Ant Group's IPO Moves into the Pricing Period

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Oct 20, 2020 09:39 pm ·

Trillions of HKD Might be Frozen During Ant's IPO in Hong Kong

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Oct 20, 2020 12:34 pm ·

Investors: Ant Group's Dual-IPO Will Happen in Early November 2020

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Oct 19, 2020 09:37 am ·

CSRC Approves Ant Group's Hong Kong IPO

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Oct 15, 2020 10:51 am ·

US Pondering Over Ant Group Ban, Sino-American Tensions Remain High

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Oct 13, 2020 11:19 pm ·

Roadblocks in the Ant Group's IPO Path

Ant Group's IPO progress has been dormant for a while. Since the last update on September 18, when it was approved by the listing committee of the Shanghai Stock Exchange, it has remained mostly static. Some reasons for this are now coming to light. According to Reuters, the China Securities Regulatory Commission is probing possible interest conflicts with regard to Ant's Alipay, which is the only third-party platform with the five mutual funds that include the company's IPO shares offered to retail investors. The progress of this huge IPO with its valuation of USD 35 billion might be postponed further because of this regulatory issue. What is more, the US is also playing a part. The Republican Party senator Marco Rubio, who successfully persuaded President Trump to look into TikTok before, encouraged the Trump government to impede the Ant Group’s IPO. The argument from the US side says that the payment system is endangering national security. Ant Group has accumulated a huge database with information on 1.2 billion users, a significant part of the population of this planet. 95% of these are in mainland China. However, it is unclear how the US will limit an IPO that takes place outside of the country. All the accumulated roadblocks have conspired to put back the IPO, which was supposed to be in mid-to-end October, according to market rumors. Ant Group has stated that the date is still undecided and that conjectures about terminal delays are untrue.

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Updated 24 hours ago ·

Ant Group's Shanghai IPO Priced at CNY 68-69 per Share, Industry Sources Say

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Oct 22, 2020 03:03 pm ·

Sources: Ant Group's IPO Valuation Range Hits USD 380 Bn to USD 461 Bn

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Oct 21, 2020 09:58 pm ·

Ant Group's IPO Moves into the Pricing Period

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Oct 20, 2020 09:39 pm ·

Trillions of HKD Might be Frozen During Ant's IPO in Hong Kong

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Oct 20, 2020 12:34 pm ·

Investors: Ant Group's Dual-IPO Will Happen in Early November 2020

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Oct 19, 2020 02:59 pm · IT Home

Xiaomi's Fintech Arm Rebrands as Airstar Data

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Oct 19, 2020 01:50 pm ·

Insurance Platform Waterdrop to Seek USD 500 Mn New York IPO in 1Q 2021

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Oct 19, 2020 09:37 am ·

CSRC Approves Ant Group's Hong Kong IPO

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Oct 15, 2020 10:51 am ·

US Pondering Over Ant Group Ban, Sino-American Tensions Remain High

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Oct 15, 2020 09:52 am ·

SaaS Provider Nanyan Insurtech Bags CNY 250 Mn from Cenova, SIG, BlueRun

ANALYST

Ivan Platonov

Technology

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