DOYU - Zhihu IPO: China's Quora With Surging Sales Growth

• Zhihu is expected to complete its IPO in the next few days. Zhihu is basically China's Quora with surging sales growth.
• Zhihu has become the largest online question and answer community in China.
• The company generated a strong sales growth of 101.7% YoY to reach 1,352.2 million RMB in 2020. Operating margins improved from -157.9% in 2019 to -44.6% in 2020.
• Our base case and high case implied market caps of the company are $7.1 billion ($12 per share) and $9.0 billion ($15.2 per share), respectively.
• In the first few days of trading post-IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($12 to $15.2 per share). We have a positive view of the Zhihu IPO.

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