Aug 24, 2015 - 39.2%. 39.2%. -. Changyou. 5,521. 733. 783. 848. 6.7%. 8.3%. 69.7%. 28.5%. 10.3%. 26.8%. NetDragon. 3,299. 155. 191. 240. 22.8%. 25.7%.
August 2015
Recent Developments in China’s Stock Markets Published by: Ali Dagli (Partner), Okan Inaltay (Analyst), Zepeng “Frank” Wu (Intern)
Table of Contents
1
Recent Developments in China’s Stock Markets
2
GP Bullhound Update
2
Executive Summary on China’s Stock Market Developments Margin Balance
After the Global Financial Crisis of 2007-2008, China’s stock market remained stable
China’s markets are too big to ignore: as of May 2015, 3 of the world’s 6 largest stock exchanges are Chinese (including Hong Kong as the 6th largest)
China’s markets started their dramatic rise in November 2014 and after just 7 months in June 2015, reached their highest levels since 2008
This was a $8 trillion (125%+) increase in less than 1 year and half the companies listed on the Shanghai and Shenzhen exchanges were priced above 85x earnings
With the one month plunge in June 2015, China’s stock markets in total lost $4 trillion; >2x the size of India’s entire stock market and >15x of total GDP in Greece
The major cause for the massive decline was the deleveraging process of the colossal amount of margin trading
Shanghai Composite
― When stock prices fell, investors who bought stocks with borrowed money had to either increase their margin or liquidate their positions ― As investors liquidated their positions, the stock prices fell further, which prompted more investors to liquidate their positions, resulting in an ever-accelerating downward spiral
Shenzhen Composite
― The deleveraging process slowed down due to a large number of company trading suspensions and Chinese government’s actions
Hang Seng Index
1 year period
8/24/2014
11/24/2014
2/24/2015
5/24/2015
8/24/2015
After unprecedented levels of Chinese government actions, China’s markets rebounded and stabilized a bit, before crashing again on August 24 dubbed “Black Monday” – Over 80% of the stocks listed in Shanghai were down by more than 10%
China’s stock market developments should draw Western investors’ attention, as declines on China’s exchanges negatively affected US-listed Chinese companies during the last 3 months, especially Sohu (-35%), Youku (-48%), and Sina (-23%)
The increased market volatility also poses question on whether the wave of US-listed Chinese companies delisting in the US and relisting in China will continue
With the recent market volatility and significant decline in valuations, publicly-listed Chinese companies that are aggressive with overseas acquisition plans will likely shift to more cashbased acquisition strategies
Although the GDP in China continues to grow at a healthy rate (7.7% vs 5.0% in India and 2.2% in US) and the amount available for trading is still a relatively small portion of GDP (1/3rd compared with 100%+ in western markets)…
…questions still remain on whether or not state intervention failed, how far this could go, and how badly these recent developments damaged confidence of Chinese (85% is retail) and foreign investors (only 2% of total) in Chinese equity markets – and more importantly confidence in the Chinese government
Sources: Bloomberg.com, CapitalIQ, Economist.com, FactSet.com, Eastday.com, Forbes.com, FT.com, Money.cnn.com, SSE.com.cn, SZSE.cn, and WSJ.com Notes: $ represents USD
3
Overview of Largest Chinese Stock Exchanges & Nasdaq Shanghai Stock Exchange
Shenzhen Stock Exchange
China’s largest stock exchange by market capitalization; world’s $5.90 trillion (end of May 2015)
China’s 2nd largest stock exchange by market capitalization; world’s 5th largest: $4.37 trillion (end of May 2015)
Industrials and financials are 2 largest sectors by market cap, at 27% and 26% of aggregate stock exchange market cap, respectively
IT is largest sector by market cap, at 20% of aggregate stock exchange market cap; 2nd largest by number of companies, at 18% of total number of companies
Has the Shanghai-Hong Kong Stock Connect, a cross-boundary investment channel that advances Chinese government’s goal of gradually liberalizing capital flows by allowing investors in each market to trade shares on the other
Hotbed for tech companies as it has the ChiNext board, a NASDAQ-type board for high-growth, high-tech start-ups
Market Cap EV Cash
3rd
largest:
$21,914
$6,729
$7,512
$3,289
$2,913
64,151
6,784
9,707
3,156
2,981
4,048
359
1.084
219
50
Hong Kong Stock Exchange
Market Cap EV Cash
$10,962
$9,912
$3,523
$5,667
$4,447
11,472
11,918
3,450
5,537
4,773
113
3,050
242
159
340
NASDAQ
China’s 3rd largest stock exchange by market capitalization; world’s 6th largest: $4.00 trillion (end of May 2015)
US’ 2nd largest stock exchange by market capitalization; world’s 2nd largest: $7.38 trillion (end of May 2015)
50.5% Mainland enterprises; 43.8% Hong Kong enterprises; 5.7% other region enterprises
IT is the largest sector, at 45% of aggregate stock exchange market cap
Financials is the largest sector by market cap, at 43% of aggregate stock exchange market cap
Recently experiencing a wave of Chinese technology companies delisting in the US with the goal of relisting in China
Market Cap EV Cash
$243,817
$149,973
$45,395
$9,311
$2,385
171,216
147,487
56.3393
10,087
1,862
73,784
10,580
3,774
2,896
1,253
Sources: CapitalIQ, HKEX.com.hk, HSI.com.hk, Nasdaq.com, SSE.com.cn, SZSE.cn Notes: $ represents USD
$53,681
$34,261
$14,927
$9,011
$4,153
EV
47,988
30,636
11,604
9,775
4,052
Cash
12,089
3,840
3,694
3,117
102
Market Cap
4
Overview of the Recent Developments in China’s Stock Market 1
¥5,500
Fall of $4 trillion in less than a month; global markets are not negatively affected
¥5,000
Huge increase in retail/small-time day traders: reaches 90m retail accounts; 2/3 of new Chinese investors in 2014 did not complete high school
Leverage has soared: outstanding loans to stock investors reached a record 1.67 trillion yuan ($269Bn) as of April 13, 2015, up 300% from a year earlier
Stock transaction volume in China surged: turnover on China’s stock exchanges surged past the US in May 2015 to a record $380Bn
Trading at increasingly higher multiples: ChiNext, China’s small-cap board, had a PE ratio of 90, 2x that of internet stocks at peak of America’s dotcom bubble in 2000
Government-induced optimism: financial reforms supported share prices and government strategy of “Entrepreneurship Across Country” backed high expectations of high-growth tech companies
Huge surge in buying on margin: due to doubling in price; Loans to investors rose 300% in a year
2
Many stocks bought on debt: the unwinding of these massive loans helps explain why the government has been unable to stop the rout
Retail investors’ panic was also a major factor to market plunge: China’s markets are dominated by retail investors as 85% of all trades are retail
Foreign speculation was likely not the cause of this plunge as less than 2% of Chinese shares are owned by foreigners
¥4,500 Market selloff continues
4 5
¥4,000
Market seems to have stabilized ¥3,500
3
¥3,000
¥2,500
¥2,000
¥1,500
Largest 1-day rise since March 2009
3 6
Largest 1-day fall since Feb 2007; Global markets negatively affected
Frequent rates cuts: since November 2014, People's Bank of China has been cutting interest rate and reserve requirement ratios and at shorter intervals
Over 50% of all Chinese stocks have suspended from trading
Chinese stocks tumbled even as actual GDP growth (7% YoY in Q2 2015) surpassed Beijing’s expectation; possibility that China’s stock prices are in part disconnected from economic fundamentals
Unprecedented government actions—trading and IPO suspensions, loose credit policies, and stimulus packages—boosted the market
4
More weak economic data on China’s economy triggered shares in mainland China to record increasing losses across its four major stock exchanges
The lack of confidence in government measures and the worry of government withdrawal of these support began causing more volatility
5
Government support begins to show signs of working: stock markets show signs of stabilization
Securities Regulatory Commission begins investigating “malicious” short sellers – it began demanding trading records from brokerage houses
Chinese government plans to pump new liquidity into market: cash infusion is to offset its initial move in devaluing tightly controlled Yuan currency
6
Chinese stock market continues to severely decline, recording largest 1-day loss since February 2007 (8.7%); Global markets across Asia, Europe, and US are sent into a tailspin amidst uncertainty
Sources: Bloomberg.com, CapitalIQ, Economist.com, Forbes.com, FT.com, Money.cnn.com, SSE.com.cn, SZSE.cn, and WSJ.com Notes: Blue line represents Shanghai Stock Exchange Composite Index; rise and fall figures represents the total market valuation of the Shanghai, Shenzhen, and Hong Kong Stock exchanges $ represents USD
5
Stock Price Performance – by Exchange Shanghai Stock Exchange Composite Index ¥5,500
1
2 3
4
5
6
7 8
Shenzhen Stock Exchange Composite Index 9 10
¥3,500
1
2 3
4
5
6
7 8
Key Events in China
9 10
1 ¥5,000
rates for first time since 2012
¥3,000
¥4,500 ¥2,500
¥4,000 ¥3,500
¥2,000
¥3,000
Nov 22, 2014: People's Bank of China (PBOC) cuts interest
2
Feb 25, 2015: PBOC cuts reserve ratio requirement (-0.5%)
3
Mar 1, 2015: PBOC cuts interest rates (-0.25%)
4
Apr 20, 2015: PBOC cuts reserve ratio requirement (-1%)
5
May 11, 2015: PBOC cuts interest rates (-0.25%)
6
Jun 12, 2015: Highest peak of Chinese stock markets
¥1,500
¥2,500 ¥1,000
¥2,000
since 2009. $8 trillion increase from July 11, 2014 to June
¥500
¥1,500
12, 2015 (125% increase) 7
Hang Seng Index 1 $30,000 $29,000
2 3
June 12, 2015 to July 7, 2015 in three major Chinese
Nasdaq Composite Index 4
5
6
7 8
1
9 10
2 3
4
5
6
7 8
exchanges
9 10
$5,400 $5,200
8
$26,000
$5,000
$23,000
9
Aug 17, 2015: Last peak; Market seems to have stabilized
10
Aug 24, 2015: Sell-off accelerates, largest 1-day fall since
$4,800
$25,000 $24,000
Jul 8, 2015: Chinese gov’t begins intervention to stop market fall; 50%+ of listed companies suspend trading
$28,000 $27,000
Jul 7, 2015: Massive plunge ~$4 trillion of value lost from
$4,600
Feb 2007 wiping out most of the gains
$4,400
$22,000 $21,000 $20,000
$4,200 $4,000
Sources: CapitalIQ, HKEX.com.hk, HSI.com.hk, Nasdaq.com, SSE.com.cn, SZSE.cn Notes: Hang Seng Index is in HKD; Nasdaq Composite Index is in USD; ¥ represents CNY
6
Benchmarking Analysis Exchange / Index / Company
Market Cap/LTM Rev(3)
Market Cap ($ in millions) 7/11/2014
6/12/2015
7/8/2015
8/17/2015
8/24/2015
P/E(3)
7/11/2014
6/12/2015
7/8/2015
8/17/2015
8/24/2015
7/11/2014
6/12/2015
7/8/2015
8/17/2015
8/24/2015
Shenzhen Stock Exchange
$1,398,028
$4,241,334
$2,102,921
$2,829,656
$2,245,634
6.9x
19.0x
11.3x
12.6x
10.9x
49.3x
92.6x
65.5x
75.4x
70.1x
Shanghai Stock Exchange
1,472,262
4,579,369
2,669,367
3,390,372
2,652,128
3.3x
9.3x
5.4x
6.9x
6.2x
30.0x
59.0x
36.7x
49.1x
45.8x
Hong Kong Stock Exchange
3,750,570
5,663,768
4,645,685
4,717,119
4,058,602
4.0x
5.5x
4.9x
5.1x
5.2x
15.0x
19.5x
15.3x
16.1x
14.8x
(1)
6,620,860
14,484,471
9,417,973
10,937,146
8,956,365
4.5x
9.9x
6.6x
8.2x
7.4x
27.3x
47.1x
33.4x
46.9x
43.6x
(2)
894,999
2,111,438
1,223,566
1,677,212
1,407,521
8.7x
20.4x
12.8x
14.5x
12.4x
46.5x
77.2x
59.2x
82.6x
68.4x
1,255,686
1,404,827
1,367,150
1,512,281
1,323,851
8.6x
7.4x
7.4x
7.7x
7.1x
55.9x
48.5x
48.6x
57.8x
52.2x
18,452,570
19,513,673
19,189,096
19,677,070
17,706,559
3.4x
3.5x
3.5x
3.7x
3.5x
24.5x
27.6x
27.0x
26.7x
25.0x
Apple
574,145
732,630
706,129
668,131
588,065
3.3x
3.5x
3.3x
3.0x
2.6x
16.0x
15.8x
15.2x
13.6x
12.2x
Google
393,174
368,425
361,163
464,405
413,934
6.3x
5.4x
5.3x
6.7x
5.9x
32.4x
27.2x
26.9x
34.6x
32.1x
China Mobile
200,765
268,572
237,576
266,404
243,817
1.9x
2.6x
2.3x
2.6x
2.3x
10.0x
15.2x
13.4x
15.1x
14.3x
Tencent
145,106
188,168
161,406
170,379
149,973
13.8x
14.1x
12.1x
12.2x
10.7x
50.8x
48.6x
41.6x
41.4x
40.0x
8,195
19,867
11,291
13,013
9,912
0.7x
1.5x
0.8x
0.9x
0.7x
30.4x
47.2x
26.0x
28.5x
24.1x
GPB China Composite
GPB China Tech Index Nasdaq Internet S&P 500
ZTE
Selected dates: 7/11/2014: 6/12/2015: 17/8/2015: 24/8/2015:
1 Year before 07/13/2015; also prior to the surge in stock prices later in November 2014 Highest peak of SSE Composite Index & SZSE Composite Index since 2009; companies were trading normally Last peak of Chinese stock market exchanges Most current date; Largest 1-day drop of SSE Composite Index since February 2007; 900 of 1,114 stocks listed on SSE Composite Index lost more than 10% during trading
Notes: 1 - GPB China Composite consists of all companies listed on SESZ, SSE, and SEHK 2 - GPB China Tech Index consists of all technology, telecom, media companies listed on SESZ, SSE, and SEHK 3 - Used market cap weighted average
Source: CapitalIQ
7
Details on Chinese Government Actions on Stabilizing Stock Market Shanghai Stock Exchange Composite Index ¥5,500
¥5,000
1
2
3
4 5 6
7
8
9
10
June 12 2015: Highest index value since May 2008
¥4,500
¥4,000
¥3,500
¥3,000
1 27 June 2015
6 5 July 2015
− People’s Bank of China (PBOC) cuts interest rate by 25 basis points and cuts required reserve ratio
− IPO issuance suspended
2 29 June 2015
− PBOC injects an undisclosed amount of capital to provide liquidity to China Securities Finance Corp, a state-owned company that makes margin loans to brokers
− Regulators allow pension funds to invest 30% of their net assets (equivalent to over $100Bn) in equities for the first time
7 6 July 2015 3 1 July 2015 − China Securities Regulatory Commission relaxes collateral rules to allow investors use homes as collateral for margin trades and allows margin loans to be extended 4 3 July 2015
− Executives from mutual funds pledge to support the markets with their own capital 8 7 July 2015 − China Securities Finance Corp pledges to buy more small-cap stocks 9
8 July 2015
− Futures Exchange suspends 19 accounts from short selling
− State-owned Assets Supervision and Administration Commission (SASAC) orders state-owned enterprises not to sell shares
− Central Hujin, a state-owned investment fund, starts buying index ETFs
− China Securities Finance Corp gives $45Bn line to brokers
− China Securities Regulatory Commission slows the pace of A-share IPOs
− Cap on qualified insurers investment in a single stock lifted to 10% of assets from 5%
− Qualified Foreign Institutional Investor (QFII) quota raised from $80Bn to $150Bn − PBOC extends a $40Bn, 6-month loan to state owned banks to encourage banks to increase support to weak parts of the economy 5 4 July 2015 − 21 brokerages, led by CITIC Securities, commit to investing $19.3Bn in a new blue-chip fund to stabilize the market, and vow not to sell any of their own equity holdings
− 111 state-owned enterprises commit not to cut holdings 10 9 July 2015
− China Securities Regulatory Commission bans officers, directors and listed company shareholders with stakes of 5% or more from selling any shares for 6 months − China Banking Regulatory Commission allows banks to use stock as collateral for loans to companies and eases margin requirements for wealth management customers
− 28 companies “voluntarily” suspend IPOs
Sources: Bloomberg.com, CapitalIQ, Economist.com, Forbes.com, FT.com, Money.cnn.com, SSE.com.cn, SZSE.cn, and WSJ.com Notes: $ represents USD
8
China’s Dragons Coming Home – Or Maybe Not? Chinese Companies’ Take-Private Deal Values $35
Bn
$30
New York has long been the preferred destination for Chinese technology companies to list shares, as the US market has traditionally been steadier than market in China
In recent years, however, China’s booming stock market has prompted a wave of Chinese chief executives to take their US-traded companies private in order to relist at home for higher valuations
Technology is the most active sector for Chinese delistings in the US so far in 2015
Executives of US-listed, Chinese technology companies expressed that the higher valuations for companies at home are in part due to Western investors’ inability to fully understand Chinese companies’ business models
With the recent volatile developments in the Chinese market, the trend of delistings may slow down
$25
$20
$15
$10
Famous Chinese Technology Companies that Delisted in US in 2015:
$5
$0 2009
2010
2011
2012
2013
2014
1
4
6
13
12
1
2015
Home Inns
Renren
YTD
21Vianet
Perfect World
23
# of Take Privates
Top 3 Delisted Chinese Technology Companies from US Exchanges in 2015 YTD – by M&A Bid Value Company
Date
Deal Value (m)
Exchange
Share Price on M&A Date
Market Cap on M&A Date (m)
IPO Date
IPO Offer Price
Market Value at IPO (m)
Qihoo 360
6/17/15
$9,141
NYSE
$70.15
$8,517
3/29/11
$14.50
$1,701
Momo
6/23/15
2,650
Nasdaq
17.24
2,963
12/10/14
13.50
2,550
7/9/15
2,520
Nasdaq
59.31
3,141
11/20/12
10.50
571
YY
Sources: CapitalIQ, Dealogic.com and WSJ.com Notes: $ represents USD
9
Chinese Technology Companies – Trading Comps Share Price (USD) Company Name
Stock Exchange
Tencent
Hong Kong
Netease
NASDAQ
ZTE
Shenzhen
Huayi Brothers Media
Shenzhen
Qihoo 360
NYSE
Ourpalm
Shenzhen
37 Games
Shenzhen
Youku
NYSE
Kingsoft
Hong Kong
Shanda
24-08-15
Market Cap
EV
Cash
(m)
(m)
(m)
Revenue Multiple CY14A
CY15E
EBITDA Multiple
CY16E
CY14A
CY15E
PE Multiple CY16E
16.14
149,973
147,487
10,580
12.0x
9.6x
7.5x
29.7x
21.6x
107.14
14,005
10,682
3,694
5.7x
3.5x
2.9x
13.4x
2.55
9,912
11,918
3,050
0.9x
0.8x
0.8x
13.8x
6.18
7,918
8,138
311
23.1x
16.1x
13.0x
50.82
6,553
6,670
1,628
4.9x
3.4x
2.23
5,667
5,537
159
44.4x
29.3x
4.98
4,365
4,297
119
44.8x
6.5x
15.99
3,122
2,224
1,110
3.3x
1.83
2,385
1,862
1,253
3.4x
NASDAQ
6.55
1,771
1,736
176
Changyou
NASDAQ
19.37
1,007
875
NetDragon
Hong Kong
2.02
995
555
ZQGame
Shenzhen
3.44
921
iDreamSky
NASDAQ
11.36
Tian Ge Interactive
Hong Kong
0.36
Ourgame
Hong Kong
Kongzhong Linekong Interactive TaoMee
CY14A
CY15E
Share Price Performance CY16E
LTM
L1M
L1W
17.3x
56.9x
30.4x
22.8x
(4.3%)
(17.4%)
(11.8%)
10.8x
8.6x
25.8x
13.8x
11.4x
22.1%
(27.9%)
(13.6%)
10.6x
10.1x
36.2x
20.5x
17.7x
31.5%
(25.8%)
(24.0%)
55.9x
37.7x
29.6x
NM
43.2x
33.7x
58.5%
(12.7%)
(0.1%)
2.5x
19.4x
11.2x
8.1x
44.4x
14.9x
10.7x
(50.1%)
(21.1%)
(19.2%)
19.6x
NM
57.4x
43.9x
NM
64.8x
50.6x
64.4%
(14.1%)
(0.1%)
4.8x
NM
46.0x
40.8x
NM
62.4x
47.0x
81.3%
(2.0%)
(24.0%)
2.2x
1.6x
26.9x
NM
NM
NM
NM
NM
(16.2%)
(20.6%)
(13.1%)
2.2x
1.5x
18.8x
22.3x
7.1x
45.2x
26.5x
12.9x
(37.5%)
(38.2%)
(26.8%)
2.9x
-
-
7.5x
-
-
13.4x
-
-
0.6%
(2.1%)
(3.7%)
551
1.2x
1.1x
1.0x
11.6x
4.2x
4.2x
25.8x
5.8x
6.2x
(19.1%)
(17.1%)
(3.5%)
528
3.6x
2.9x
2.3x
15.5x
12.8x
9.3x
39.7x
53.8x
35.9x
1.0%
(33.8%)
(22.7%)
956
28
12.1x
-
-
55.7x
-
-
NM
-
-
(28.3%)
(3.0%)
(0.1%)
494
395
120
2.5x
1.4x
1.1x
NM
7.8x
4.9x
NM
13.1x
9.1x
(46.9%)
(4.7%)
(9.1%)
446
255
194
2.3x
2.2x
1.7x
8.2x
4.4x
4.4x
15.4x
10.4x
9.0x
(52.4%)
(31.2%)
(19.8%)
0.42
331
294
57
3.8x
2.5x
1.8x
14.8x
8.0x
6.5x
22.3x
11.8x
8.7x
(16.8%)
(32.7%)
(24.7%)
NASDAQ
6.21
292
155
188
0.7x
-
-
3.8x
-
-
17.3x
-
-
(25.0%)
(13.4%)
(13.0%)
Hong Kong
0.75
253
107
146
1.0x
0.8x
0.5x
60.3x
-
-
NM
10.5x
6.6x
-
(27.4%)
(28.2%)
NYSE
2.93
104
32
72
0.8x
0.7x
0.7x
NM
NM
10.6x
NM
NM
48.8x
(38.8%)
(7.0%)
(7.3%)
Average
9.1x
5.3x
4.0x
23.7x
19.6x
14.7x
31.1x
27.3x
22.1x
(4.2%)
(18.5%)
(13.9%)
Median
3.4x
2.4x
1.8x
15.5x
11.2x
8.9x
25.8x
17.7x
12.9x
(16.5%)
(17.4%)
(13.1%)
Sources: CapitalIQ Notes: $ represents USD
10
Chinese Technology Companies – Operating Metrics
Revenue Company Name
Employees
CY14A
CY Revenue Growth
CY15E
CY16E
15/14
LTM Margins
16/15
Gross
EBITDA Margin
EBITDA
CY14
CY15
Tencent
28,072
12,314
15,301
19,700
24.3%
28.8%
61.4%
41.8%
40.3%
44.7%
Netease
10,504
1,889
3,025
3,730
60.2%
23.3%
68.1%
36.4%
42.2%
32.6%
ZTE
75,609
13,068
14,447
15,506
10.6%
7.3%
37.3%
6.2%
6.6%
7.8%
Huayi Brothers Media
200
Qihoo 360
5,738
Ourpalm
352
505
624
43.7%
23.5%
60.4%
39.7%
41.4%
42.7%
1,371
1,971
2,647
43.8%
34.3%
77.8%
26.2%
25.1%
30.1%
NA
125
189
282
51.7%
49.2%
63.5%
49.9%
47.8%
50.9%
37 Games
390
96
664
889
592.5%
33.8%
55.3%
15.9%
15.9%
14.1%
Youku
2,797
681
990
1,357
45.4%
37.0%
22.6%
8.2%
12.2%
(16.5%)
Kingsoft
5,687
540
860
1,283
59.2%
49.2%
79.2%
15.8%
18.3%
9.7%
Shanda
2,546
592
NA
NA
-
-
74.7%
39.2%
39.2%
-
Changyou
5,521
733
783
848
6.7%
8.3%
69.7%
28.5%
10.3%
26.8%
NetDragon
3,299
155
191
240
22.8%
25.7%
87.8%
11.8%
23.1%
22.8%
ZQGame
-
79
NA
NA
-
-
56.6%
11.7%
21.8%
-
iDreamSky
756
158
274
352
72.9%
28.3%
39.9%
12.1%
1.7%
18.4%
Tian Ge Interactive
768
112
118
147
5.9%
24.0%
83.5%
30.8%
28.1%
49.3%
Ourgame
767
77
118
167
53.7%
41.3%
57.4%
24.3%
25.9%
31.0%
Kongzhong
1,022
228
NA
NA
NA
NA
40.8%
20.7%
17.9%
-
Linekong Interactive
612
109
129
196
17.9%
51.7%
43.1%
(17.0%)
1.6%
-
TaoMee
626
42
43
47
2.5%
9.7%
71.2%
(8.3%)
(1.8%)
0.7%
Average (All)
69.6%
29.7%
60.5%
20.7%
22.0%
24.3%
Median (All)
43.7%
28.5%
61.4%
20.7%
21.8%
26.8%
Sources: CapitalIQ Notes: $ represents USD
11
Table of Contents
1
Recent Developments in China’s Stock Markets
2
GP Bullhound Update
12
190+
8,500+
Successful transactions
In contact with GP Bullhound team annually
NO.1
1,000+
35
VC / PE contacts
Dedicated tech bankers
Dealmakers in Technology
5
1,500+
Offices
Strategic buyer contacts
60+
16
Events, keynotes & Research reports
Years since inception 13
Our team HUGH CAMPBELL Managing Partner
MANISH MADHVANI Managing Partner
PER ROMAN Managing Partner
SIR MARTIN SMITH Chairman
MATHIAS ACKERMAND Non-Executive Director
MARK SEBBA Non-Executive Director
GRAEME BAYLEY Partner & Group CFO
ROBERT AHLDIN Partner
GUILLAUME BONNETON Partner
ALEC DAFFERNER Partner
ALI DAGLI Partner
ANN GREVELIUS Partner
SIMON NICHOLLS Partner
JULIAN RIEDLBAUER Partner
ANDRE SHORTELL Partner
CLAUDIO ALVAREZ Director
CHRIS GRAVES Director
PER LINDTORP Director
ALEXIS SCORER Director
CARL WESSBERG Director
ALESSANDRO CASARTELLI Vice President
JOAKIM DAL Vice President
MALCOM HORNER Vice President
SEBASTIAN MARKOWSKY Vice President
ADAM RUDD Vice President
RAVI GHEDIA Associate
LENKA KOLAROVA Associate
CHRIS PARK Associate
OLOF RUSTNER Associate
HARRI NEEDHAM Finance Manager
DAVE NISH Technology Manager
KARL BLOMSTERWALL Analyst
JOSHUA BURGE Analyst
MATTHEW FINEGOLD Analyst
OKAN INALTAY Analyst
HARRIET ROSETHORN Analyst
CHRISTIAN LAGERLING Co-founder & Senior Advisor
LORD CLIVE HOLLICK Senior Advisor
MATT ROGERS Senior Advisor
JOHANNES ÅKERMARK IMAN CRISBY Associate Business Development Manager
MARVIN MAERZ Analyst
ORIANE MILLET Analyst
LUKE BURNS Analyst
CECILIA ROMAN Senior Advisor
14
Selected Transactions BELIEVE DIGITAL
13TH LAB
POZITRON
DELIVERY HERO
Private placement
Sold to
Sold to
Private placement
TCV, XANGE, GP BULLHOUND SIDECAR
FACEBOOK
MONITISE
US HEDGE FUND
$60 million
Undisclosed
$100 million
$85 million
STEELSERIES
FJORD
KLARNA
AVITO
Sold to
Sold to
Secondary sale to
Private placement
CATTERTON PARTNERS
ACCENTURE
UNDISCLOSED
BARING VOSTOK, KINNEVIK
Undisclosed
Undisclosed
$72 million
$101 million
15
Latest reports
Events & Speaking
Awards
Offices
EUROPEAN UNICORNS – DO THEY HAVE LEGS?
TOP TECHNOLOGY PREDICTIONS 2015
THE FUTURE OF ONLINE AND MOBILE PAYMENTS
THE NEW MOBILE APP REALITY
CAN EUROPE CREATE BILLION DOLLAR TECH COMPANIES?
• GP Bullhound Summit
• Red Herring
• CNN
• Investor Allstars
• White Bull
• CNBC
• Northern Tech Awards
• World Internet Conference
• BBC
• Extreme Tech Challenge
• Cebit
• SIME
REAL TIME BIDDING IN ONLINE ADVERTISING
• THE M&A ATLAS AWARDS 2015 M&A Boutique Investment Bank of the Year & Deal of the Year Small Markets
• THE M&A ADVISOR 2014 Financial Services Deal of the Year
• THE BULLY AWARDS 2014 M&A Firm of the year
• THE M&A ADVISOR 2013 Dealmaker of the year 40 under 40 award
• THE M&A ATLAS AWARDS 2010 M&A Boutique Investment Bank of the Year & Green Energy Deal of the Year
• ALTERNATIVE INVESTMENT AWARDS Best Technology Focused Investment Banking Firm 2015
• INSIDER MEDIA 2014 North West 42 under 42
• A.I. M&A AWARDS 2013 Boutique investment bank of the year, UK & Leading adviser of the year
• ROSENBLATT SOLICITORS 2010 Deal of the year & runner-up deal of the year
• THE M&A AWARDS 2010 Corporate finance boutique of the year
LONDON
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The contents of this presentation document ("Presentation") shall not be deemed to be any form of offer or binding commitment on the part of GP Bullhound LLP. This Presentation is provided for use by the intended recipient for information purposes only. It is prepared on the basis that the recipients are sophisticated investors with a high degree of financial sophistication and knowledge. No representation or warranty, express or implied, is or will be made in respect of the information contained in this Presentation and no responsibility or liability is or will be accepted by GP Bullhound LLP in this regard. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the accuracy, completeness or reasonableness of any projections, targets, estimates or forecasts contained in this Presentation or in such other written or oral information that may be provided by GP Bullhound LLP. All liability is expressly excluded to the fullest extent permitted by law. This Presentation may contain forward-looking statements, which involve risks and uncertainties. Actual results may differ significantly from the results described in such forward-looking statements. Any past performance information contained in this Presentation is provided for illustrative purposes only and is not necessarily a guide to future performance and the value of securities may fall as well as rise. In particular, investments in the technology sector can involve a high degree of risk and investors may not get back the full amount invested. This Presentation should not be construed in any circumstances as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction, or to provide any investment advice or service and you should not act or refrain from acting upon any information contained on it without seeking appropriate professional advice. In the event that you should wish to engage GP Bullhound LLP, separate documentation, including an engagement letter, will be provided to you. For the purposes of the rules and guidance issued by the Financial Conduct Authority ("the FCA"), this Presentation has been communicated by GP Bullhound LLP, which is authorised and regulated by the FCA in the United Kingdom under number 527314.
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