Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

Coupang's share price fell 8% in the first-day trading session after the company's 2Q21 results were announced.  Does this present an entry opportunity?  No, I believe there is still a downside to Coupang's story. I believe the results validated my concerns highlighted in my previous two reports ( <a href="https://www.smartkarma.com/insights/coupang-cpng-us-crack-in-the-armor" target="_blank" data-smartkarma-citation="insights:51455" rel="noopener">Coupang (CPNG US): Crack in the Armor</a> and <a href="https://www.smartkarma.com/insights/coupang-cpng-us-going-mano-e-mano-with-jd-com" target="_blank" data-smartkarma-citation="insights:49065" rel="noopener">Coupang (CPNG US): Going Mano E Mano with JD.com</a>): <ol>
<li>
Coupang's revenue growth is sharply decelerating towards 60% in 2H21.  In my "Mano e Mano" report, I highlight what happened to high-growth stocks when their growth slowed to 50% - 60% (e.g.,<a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>, <a href="https://www.smartkarma.com/entities/vipshop-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:1088:1" rel="noopener">Vipshop Holdings (VIPS US)</a>).</li>
<li>
Operating leverage has not been reached yet. In fact, operating losses still doubled even after excluding costs associated with the FC Fire as losses from Eats and Rocket Fresh grocery delivery continues.  </li>
<li>
 Adding new customers is key as revenue per customer growth continues to decelerate. </li>
</ol>Valuations remain uncompelling. Coupang trades at a significant premium to JD.com on EV/revenue and EV/Gross Profit even after considering the difference in growth. The key upside risk is if investors rotate from Chinese platforms to Coupang to mitigate Chinese regulatory risk.  I would note though that Coupang also faces regulatory risk and poor public perception as highlighted in my previous report, <a href="https://www.smartkarma.com/insights/coupang-cpng-us-under-the-regulator-s-microscope" target="_blank" data-smartkarma-citation="insights:54103" rel="noopener">Coupang (CPNG US): Under the Regulator's Microscope.</a>

Coupang's share price fell 8% in the first-day trading session after the company's 2Q21 results were announced.  Does this present an entry opportunity?  No, I believe there is still a downside to Coupang's story. I believe the results validated my concerns highlighted in my previous two reports ( Coupang (CPNG US): Crack in the Armor and Coupang (CPNG US): Going Mano E Mano with JD.com): 

Coupang's revenue growth is sharply decelerating towards 60% in 2H21.  In my "Mano e Mano" report, I highlight what happened to high-growth stocks when their growth slowed to 50% - 60% (e.g.,JD.com Inc (ADR) (JD US), Vipshop Holdings (VIPS US)).

Operating leverage has not been reached yet. In fact, operating losses still doubled even after excluding costs associated with the FC Fire as losses from Eats and Rocket Fresh grocery delivery continues.  

 Adding new customers is key as revenue per customer growth continues to decelerate. 
Valuations remain uncompelling. Coupang trades at a significant premium to JD.com on EV/revenue and EV/Gross Profit even after considering the difference in growth. The key upside risk is if investors rotate from Chinese platforms to Coupang to mitigate Chinese regulatory risk.  I would note though that Coupang also faces regulatory risk and poor public perception as highlighted in my previous report, Coupang (CPNG US): Under the Regulator's Microscope.

Coupang (CPNG US): Heavier Bleeding Takes the Wind Out of Coupang's Sails

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

<ul class="">
<li>A female employee was sexually assaulted by a client and her immediate superior.</li>
<li>TXD is facing severe competition from inside and outside. As a result, it is obviously marginalized before the scandal.</li>
<li>We believe the department TXD took a desperate measure to keep client in order to prevent the department from being closed.</li>
<li>We believe TXD is in a reform plan after the restructuring in July. Therefore, the event will not change BABA's long term financials.</li>
</ul>


A female employee was sexually assaulted by a client and her immediate superior.
TXD is facing severe competition from inside and outside. As a result, it is obviously marginalized before the scandal.
We believe the department TXD took a desperate measure to keep client in order to prevent the department from being closed.
We believe TXD is in a reform plan after the restructuring in July. Therefore, the event will not change BABA's long term financials.


Alibaba (BABA): Sexual Harassment Just Before Department Reform

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Several news media outlets reported today that the Chinese antitrust regulators are preparing to impose a fine of US$1bn on the country’s food delivery giant <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> for abusing its market position. The above fine is supposed to be announced over the coming weeks and Meituan will be ordered to make changes to its business operations.An antitrust fine of US$1bn will account for approx. 5.7% of Meituan’s FY12/2020 revenues whereas <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>  record antitrust fine of US$2.75bn in April this year was around 3.6% of its consolidated FY2020 revenues. If Meituan is imposed with an antitrust fine of US$1bn, it will mark the second largest antitrust fine in China after Alibaba’s US$2.75bn (Qualcomm was imposed a fine of US$975m in 2015).

Several news media outlets reported today that the Chinese antitrust regulators are preparing to impose a fine of US$1bn on the country’s food delivery giant Meituan (3690 HK) for abusing its market position. The above fine is supposed to be announced over the coming weeks and Meituan will be ordered to make changes to its business operations.An antitrust fine of US$1bn will account for approx. 5.7% of Meituan’s FY12/2020 revenues whereas Alibaba Group (BABA US)  record antitrust fine of US$2.75bn in April this year was around 3.6% of its consolidated FY2020 revenues. If Meituan is imposed with an antitrust fine of US$1bn, it will mark the second largest antitrust fine in China after Alibaba’s US$2.75bn (Qualcomm was imposed a fine of US$975m in 2015).

Meituan: Is the US$1bn Fine the End of the Regulatory Probe on Meituan?

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. Companies mentioned this week:<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/flipkart-online-services-private-limited" target="_blank" data-smartkarma-citation="entities:31076:1" rel="noopener">Flipkart Online Services (1398508D IN)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. Companies mentioned this week:Tencent (700 HK), Flipkart Online Services (1398508D IN), Meituan (3690 HK)

Global Emerging Markets Weekly: 6 August 2021

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Quantitative Analysis

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Semiconductor Manufacturing International Corporation (981 HK), Cosco Shipping Holdings Co., Ltd. (1919 HK), Wuxi Biologics (Cayman) Inc. (2269 HK), Geely Automobile Holdings Limited (175 HK), as well as outflows from Tencent Holdings Limited (700 HK), and Meituan (3690 HK).

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Semiconductor Manufacturing International Corporation (981 HK), Cosco Shipping Holdings Co., Ltd. (1919 HK), Wuxi Biologics (Cayman) Inc. (2269 HK), Geely Automobile Holdings Limited (175 HK), as well as outflows from Tencent Holdings Limited (700 HK), and Meituan (3690 HK).

Hong Kong Connect Flows: Inflows into SMIC & Autos

China

Meituan operates as a web based shopping platform for locally found consumer products and retail services. The Company offers deals of the day by selling vouchers on local services and entertainment, dining, delivery, and other services. Meituan provides its services throughout China.

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Meituan (3690 HK)

Coupang (CPNG US): Heavier Bleeding Takes the Wind Out of Coupang's Sails

Coupang's share price fell 8% after the company's 2Q21 results were announced. Does this present an entry opportunity? I believe there is still a...

Mitchell Kim

Alibaba (BABA): Sexual Harassment Just Before Department Reform

A female employee was sexually assaulted by a client and her immediate superior. TXD has been marginalized before the scandal. We believe the...

Ming Lu

Meituan: Is the US$1bn Fine the End of the Regulatory Probe on Meituan?

The Chinese antitrust regulators are preparing to impose a fine of US$1bn (about 5.7% of FY12/2020 revenues) on the country’s food delivery giant...

Shifara Samsudeen, FCMA, CGMA

Global Emerging Markets Weekly: 6 August 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Hong Kong Connect Flows: Inflows into SMIC & Autos

We will highlight weekly top inflows into SMIC (981 HK), Cosco Shipping (1919 HK), Wuxi Biologics (2269 HK), Geely Automobile Holdings Limited (175...

Ke Yan, CFA, FRM

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