Removal of overhang: One of Beisen's major shareholders, Sequoia Capital, has announced the completion of the sale of its shareholdings, totaling 39mn shares at HKD3.3 per share, to Gaocheng Capital on 27 December 2023. The transaction took place at a slight premium to Beisen's last close price of HKD3.05 the day before the trade. We believe this move removes a major overhang for Beisen's share price after it suffered from sustained selling pressure from major shareholders after the lockup period. After the transactions, Gaocheng's shareholding increases to 6.14%.

Multiple recovery underway. Beisen's share price has increased 60.3% since 15 December, vs -0.9% for the HSI, reflecting the positive development. Beisen's 1.7x 2024E EV/sales still marks a significant discount to HK-listed ERP peer, Kingdee (4.9x), with its slightly lower 3-year revenue CAGR and similar breakeven timetable. We expect Beisen's share price to see better performance soon and further multiple recovery is underway. We remain OW.