TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>We have been longtime fans of Netflix the product and Netflix’s management team can rightfully be described as visionary. They had the vision to have the public markets fund an experiment in business models that appears now set to breakeven on FCF in 2021. We have said since last year that Netflix is a good relative short given the extreme pull-in of demand from COVID, and the fact that Netflix’s stock performance tracks the pace of sub growth, and the shockingly weak guidance for 2Q21 implies this stock will continue to be the #1 large cap funding short for the foreseeable future. But for how long?</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

We have been longtime fans of Netflix the product and Netflix’s management team can rightfully be described as visionary. They had the vision to have the public markets fund an experiment in business models that appears now set to breakeven on FCF in 2021. We have said since last year that Netflix is a good relative short given the extreme pull-in of demand from COVID, and the fact that Netflix’s stock performance tracks the pace of sub growth, and the shockingly weak guidance for 2Q21 implies this stock will continue to be the #1 large cap funding short for the foreseeable future. But for how long?Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<p>On 13th Apr 2021, <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> announced that it plans to go public in the US in partnership with Altimeter Growth Corp (AGC US) at an equity valuation of US$39.6bn. It will raise around US$4.5bn cash through the transaction. </p><p>In this note, I'll take a quick look at the numbers and implied valuations.</p>

On 13th Apr 2021, Grab (0967655D SP) announced that it plans to go public in the US in partnership with Altimeter Growth Corp (AGC US) at an equity valuation of US$39.6bn. It will raise around US$4.5bn cash through the transaction. In this note, I'll take a quick look at the numbers and implied valuations.

Grab SPAC Listing - High on Ambition, Very High on Valuation

Thematic (Sector/Industry)

<p>So many datapoints in the past week speak to how strong earnings should be for the biggest online advertising players. Our order of preference for 1Q21: Facebook, Amazon, Google, Snap, eBay, Pinterest.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

So many datapoints in the past week speak to how strong earnings should be for the biggest online advertising players. Our order of preference for 1Q21: Facebook, Amazon, Google, Snap, eBay, Pinterest.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

TMT Weekly 4/9/2021: Be Long Online Advertising for Earnings

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>Founded in 2011, <a href="https://www.smartkarma.com/entities/applovin-corp" target="_blank" data-smartkarma-citation="entities:32989:1" rel="noopener">AppLovin Corp (APP US)</a> is getting ready to complete its IPO in 2Q 2021. The company is aiming to raise about $1 billion in this IPO. KKR purchased a minority stake in the company in 2018 at about $2 billion valuation. The IPO valuation is likely to be much higher.</li>
<li>The <a href="https://www.cityindex.co.uk/market-analysis/applovin-ipo-background-guide/" target="_blank" rel="noopener">company</a> originally started its business helping customers to improve the smartphone customer experiences for all the users. In recent years, the company has become a much bigger player in the mobile gaming segment and it also helps developers to grow their users and improve monetization of their apps. </li>
<li>AppLovin's income statement shows strong sales growth in the past three years but declining profit margins. AppLovin generated sales of $1,451.1 million and an operating loss of $62.1 million in 2020. The company's sales have nearly tripled from 2018 to 2020. Despite the company's strong sales growth, one of the things that is not so clear in the prospectus is what percentage of the company's sales growth in the past three years has been driven by organic growth versus acquisitions.</li>
</ul>


Founded in 2011, AppLovin Corp (APP US) is getting ready to complete its IPO in 2Q 2021. The company is aiming to raise about $1 billion in this IPO. KKR purchased a minority stake in the company in 2018 at about $2 billion valuation. The IPO valuation is likely to be much higher.
The company originally started its business helping customers to improve the smartphone customer experiences for all the users. In recent years, the company has become a much bigger player in the mobile gaming segment and it also helps developers to grow their users and improve monetization of their apps. 
AppLovin's income statement shows strong sales growth in the past three years but declining profit margins. AppLovin generated sales of $1,451.1 million and an operating loss of $62.1 million in 2020. The company's sales have nearly tripled from 2018 to 2020. Despite the company's strong sales growth, one of the things that is not so clear in the prospectus is what percentage of the company's sales growth in the past three years has been driven by organic growth versus acquisitions.


Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p>One of the many reasons why drivers were lured to join <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> is that the app provides content that leads to a higher daily order. Grab went on to become a super App, offering a wide range of services from transport, food delivery to finance including insurance. <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> , a listed peer for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> is currently trading at 8.69x PBR, 500% higher than <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> at 1.5x PBR. The taxi business contribution to the group's revenue has been reduced to 13-14% to the group's revenue due to the stiff competition from Grab and Gojek as well as from the pandemic.</p><p>Long being dubbed as the proxy to  Singapore's tourism and residents' transport provider stock, the foray into the EV charging station and Smart and Intelligent Mobility Technologies could shift the market's opinion to Autonomous and Electric Vehicle and the stock may trade at a higher multiple. </p>

One of the many reasons why drivers were lured to join Grab (0967655D SP) and Gojek (1379371D IJ) is that the app provides content that leads to a higher daily order. Grab went on to become a super App, offering a wide range of services from transport, food delivery to finance including insurance. Uber (UBER US) , a listed peer for Grab (0967655D SP) and Gojek (1379371D IJ) is currently trading at 8.69x PBR, 500% higher than Comfortdelgro Corp (CD SP) at 1.5x PBR. The taxi business contribution to the group's revenue has been reduced to 13-14% to the group's revenue due to the stiff competition from Grab and Gojek as well as from the pandemic.Long being dubbed as the proxy to  Singapore's tourism and residents' transport provider stock, the foray into the EV charging station and Smart and Intelligent Mobility Technologies could shift the market's opinion to Autonomous and Electric Vehicle and the stock may trade at a higher multiple. 

Comfort Delgro (CD): Zig and EV Charging Station

United States

Alphabet, Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

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Alphabet (GOOG US)

Netflix 1Q21: We Ran Out of Content

Netflix just issued its weakest guidance in years. We think subscriber growth will reaccelerate in a few quarters, making Netflix a sneaky long by...

Aaron Gabin

Grab SPAC Listing - High on Ambition, Very High on Valuation

On 13th Apr 2021, Grab announced that it plans to go public in the US in partnership with Altimeter Growth Corp at an equity valuation of...

Sumeet Singh

TMT Weekly 4/9/2021: Be Long Online Advertising for Earnings

Online Advertising and eCommerce is still buoyed by secular tailwinds despite the fears on tough pandemic driven comps. We prefer Amazon, Facebook,...

Aaron Gabin

AppLovin IPO Preview

AppLovin Corp (APP US) is getting ready to complete its IPO in 2Q 2021. The company is aiming to raise about $1 billion in this IPO.

Douglas Kim

Comfort Delgro (CD): Zig and EV Charging Station

Dubbed as the proxy to Singapore's tourism and residents' transport provider stock, the foray into the EV charging station and Smart and...

Henry Soediarko

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