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.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.</p></div><div><p>Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.</p></div><div><p>I've covered various aspects of the deal in my earlier insights: </p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-positives-fast-growth-sticky-customers" target="_blank" rel="noopener">Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers</a>, </li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-negatives-horrendous-data-disclosures-including-no-mention-of-ott-launch" target="_blank" rel="noopener">Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-fair-bit-of-competition-but-it-s-doing-better-than-most-local-peers" target="_blank" rel="noopener">Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers</a></li>
</ul></div><div><p>In this insight, I'll talk about our earnings forecast and thoughts on valuations.</p></div>

Coupang (CPNG US) , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.I've covered various aspects of the deal in my earlier insights: 

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, 
Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch
Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers
In this insight, I'll talk about our earnings forecast and thoughts on valuations.

Coupang Pre-IPO - Earnings Forecast and Valuation

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<p>Supermarkets were much better prepared for Japan’s second state of emergency compared to the first last Spring. Most now have systems in place, both to make shopping safe and quick in stores, but also to offer a robust online ordering model.</p><p>There is now an opportunity for the best mid-sized chains to shine, with companies like Yaoko suggesting those customers used to ordering at the bigger online stores are switching to ordering from local chains.</p>

Supermarkets were much better prepared for Japan’s second state of emergency compared to the first last Spring. Most now have systems in place, both to make shopping safe and quick in stores, but also to offer a robust online ordering model.There is now an opportunity for the best mid-sized chains to shine, with companies like Yaoko suggesting those customers used to ordering at the bigger online stores are switching to ordering from local chains.

2nd Emergency Means New Opportunities for Supermarkets

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

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

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> has launched the Shopee App for Mexico to offer online sales in what would be its second foray in the Americas after a pilot initiative in 2019 in Brazil, which has been scaling up operations.</p>
<p>The expansion to Mexico, Latin America's second-largest economy, could mark a major new growth opportunity in cross-border sales but it will also mean more cash burn and a longer runway to profitability.</p>
<div>
<div id="sda-INARTICLE">Shopee will offer free shipping throughout Mexico, offering items including electronics, clothes, toys, and home goods, which would suggest immediate cash burn. The features will be similar to its South East Asia Shopee App, which has been a huge success. </div>
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<div>The company has already had huge success with its gaming business in Latin America through Garena but its e-commerce business has more moving parts and has yet to be tested in a big way in Latin America, which does introduce an element of uncertainty to this latest move. </div>
<div></div>
<div>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> faces the challenge of facing off against <a href="https://www.smartkarma.com/entities/mercadolibre-inc" target="_blank" data-smartkarma-citation="entities:27954:1" rel="noopener">MercadoLibre Inc (MELI US)</a>, which is a formidable adversary that has seen off <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> on its doorstep already. </div>
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<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> does have a track record of winning share quickly seemingly "against all odds" in unseating <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a> in Indonesia. </div>
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<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> trades on a lofty 15.5x FY21E EV/sales and 11.1x FY22E EV/Sales with forecast sales growth of +56% and +30.3% for FY21E and FY22E respectively but is not expected to breakeven until 2023 under current estimates. We continue to like <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> over the long-term for its leading position and rapid growth in gaming and e-commerce in South East Asia but this recent move may provide further leg to its long term growth. We would look to buy on any further weakness.</div>

Sea Ltd (SE US) has launched the Shopee App for Mexico to offer online sales in what would be its second foray in the Americas after a pilot initiative in 2019 in Brazil, which has been scaling up operations.
The expansion to Mexico, Latin America's second-largest economy, could mark a major new growth opportunity in cross-border sales but it will also mean more cash burn and a longer runway to profitability.

Shopee will offer free shipping throughout Mexico, offering items including electronics, clothes, toys, and home goods, which would suggest immediate cash burn. The features will be similar to its South East Asia Shopee App, which has been a huge success. 


The company has already had huge success with its gaming business in Latin America through Garena but its e-commerce business has more moving parts and has yet to be tested in a big way in Latin America, which does introduce an element of uncertainty to this latest move. 


Sea Ltd (SE US) faces the challenge of facing off against MercadoLibre Inc (MELI US), which is a formidable adversary that has seen off Amazon.com Inc (AMZN US) on its doorstep already. 


Sea Ltd (SE US) does have a track record of winning share quickly seemingly "against all odds" in unseating Tokopedia PT (1087142D IJ) and Lazada Group (LAZADA SP) in Indonesia. 


Sea Ltd (SE US) trades on a lofty 15.5x FY21E EV/sales and 11.1x FY22E EV/Sales with forecast sales growth of +56% and +30.3% for FY21E and FY22E respectively but is not expected to breakeven until 2023 under current estimates. We continue to like Sea Ltd (SE US) over the long-term for its leading position and rapid growth in gaming and e-commerce in South East Asia but this recent move may provide further leg to its long term growth. We would look to buy on any further weakness.

Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">
<p><strong>Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. </strong></p>
<p>We have used EV/GP as our primary method of valuing Coupang. We believe this is a better method than EV/S since Coupang has lower gross margins than its peers and its sales have a greater component of COGS than its peers. We used the average EV/GP of he comps (on a TTM) basis which is 19.3x. We then applied our estimated gross profit of $2.9 billion for Coupang in 2021 which resulted in an EV of $55.6 billion. Adjusting for net cash of $4.5 billion, this also suggests an implied market cap of $60.1 billion, which is over a 6-12 month view. </p>
<p><strong>First day pop</strong> - We believe there will be a first day pop for Coupang given the intensely bullish environment for high quality global tech stocks. We believe that the first day pop could lead to Coupang's <strong>market cap rising as high as</strong><strong>$81 billion</strong>, which would be 35% higher than our base case value of $60.1 billion. </p>
</div>


Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. 
We have used EV/GP as our primary method of valuing Coupang. We believe this is a better method than EV/S since Coupang has lower gross margins than its peers and its sales have a greater component of COGS than its peers. We used the average EV/GP of he comps (on a TTM) basis which is 19.3x. We then applied our estimated gross profit of $2.9 billion for Coupang in 2021 which resulted in an EV of $55.6 billion. Adjusting for net cash of $4.5 billion, this also suggests an implied market cap of $60.1 billion, which is over a 6-12 month view. 
First day pop - We believe there will be a first day pop for Coupang given the intensely bullish environment for high quality global tech stocks. We believe that the first day pop could lead to Coupang's market cap rising as high as$81 billion, which would be 35% higher than our base case value of $60.1 billion. 


Event-Driven

<p>On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> reluctantly sold US$10bn worth of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> shares. </p><p>I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next month. </p><p>We have covered the previous placement in our earlier note, <a href="https://www.smartkarma.com/insights/tencent-placement-huge-deal-in-size-small-in-relative-terms-succumbing-to-the-holdco-discount" target="_blank" rel="noopener">Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount</a>. </p><p>In this note, I’ll talk about the upcoming lock-up expiry, its implications and the updates since then.</p>

On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, Naspers (NPN SJ) reluctantly sold US$10bn worth of Tencent Holdings (700 HK) shares. I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next month. We have covered the previous placement in our earlier note, Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount. In this note, I’ll talk about the upcoming lock-up expiry, its implications and the updates since then.

Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon (AMZN US)

Coupang Pre-IPO - Earnings Forecast and Valuation

Coupang, the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing. The company has earlier obtained...

Sumeet Singh

2nd Emergency Means New Opportunities for Supermarkets

Japanese supermarkets suffered from genteel decline in the decade to 2020. And then Covid-19 forced everyone home, resulting in a propensity to...

Michael Causton

Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?

Sea Ltd (SE US) remains the listed key proxy for the explosive growth in e-commerce in South East Asia, fuelled by growing revenues from its gaming...

Angus Mackintosh

Coupang - Valuation Analysis

Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. We have used EV/GP as our primary method of...

Douglas Kim

Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade

On 22nd March 2018, after market close, one of the largest overnight placements was launched. On that day, Naspers reluctantly sold US$10bn worth...

Sumeet Singh

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