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.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (TUYA US)</a>  has set the terms for its IPO where it plans to issue 43.6m ADS’ at an indicative IPO price range of US$17-20 per ADS. At the midpoint of the above price range, Tuya will raise net proceeds of US$770.72m (approx. US$887m if underwriter’s exercise their overallotment option) at a market capitalisation of US$10.36bn and a post-money valuation of US$9.4bn.<table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 112.0pt;">TUYA IPO Details</td></tr>
<tr>
<td style="width: 62.0pt;">No. of ADSs Issued</td>
<td style="width: 50.0pt;">43,590,000</td>
</tr>
<tr>
<td style="width: 62.0pt;">Ordinary Shares per ADS</td>
<td style="width: 50.0pt;">1</td>
</tr>
<tr>
<td style="width: 62.0pt;">Shares Outstanding Post IPO</td>
<td style="width: 50.0pt;">559,760,081</td>
</tr>
<tr>
<td style="width: 62.0pt;">Offer as a % of Outstanding Shares</td>
<td style="width: 50.0pt;">7.79%</td>
</tr>
<tr>
<td style="width: 62.0pt;">Price per ADS (US$)</td>
<td style="width: 50.0pt;">17-20</td>
</tr>
<tr>
<td style="width: 62.0pt;">Net Proceeds from IPO (US$m)</td>
<td style="width: 50.0pt;">770.72</td>
</tr>
<tr>
<td style="width: 62.0pt;">Market Capitalisation (US$m)</td>
<td style="width: 50.0pt;">9,516-11,195</td>
</tr>
<tr>
<td style="width: 62.0pt;">Enterprise Value (US$m)</td>
<td style="width: 50.0pt;">8,565-10,245</td>
</tr>
</tbody></table>Source: Company Disclosures, LSR (Net proceeds is at the midpoint of the IPO price of US$18.5 per share, EV is after adjusting for net cash and net IPO proceeds)Tuya plans to use the net proceeds from the IPO on R&amp;D, investing on technology infrastructure, marketing and branding and other general corporate purposes.The company’s IPO also has got a strong line-up of cornerstone investors including Tencent, Hillhouse Capital, Gaoling Fund, Tiger Global Management, etc. who have agreed to subscribe for an aggregate of at least US$500m of the ADS’ offered at the IPO.

Tuya Inc (TUYA US)  has set the terms for its IPO where it plans to issue 43.6m ADS’ at an indicative IPO price range of US$17-20 per ADS. At the midpoint of the above price range, Tuya will raise net proceeds of US$770.72m (approx. US$887m if underwriter’s exercise their overallotment option) at a market capitalisation of US$10.36bn and a post-money valuation of US$9.4bn.
TUYA IPO Details

No. of ADSs Issued
43,590,000


Ordinary Shares per ADS
1


Shares Outstanding Post IPO
559,760,081


Offer as a % of Outstanding Shares
7.79%


Price per ADS (US$)
17-20


Net Proceeds from IPO (US$m)
770.72


Market Capitalisation (US$m)
9,516-11,195


Enterprise Value (US$m)
8,565-10,245

Source: Company Disclosures, LSR (Net proceeds is at the midpoint of the IPO price of US$18.5 per share, EV is after adjusting for net cash and net IPO proceeds)Tuya plans to use the net proceeds from the IPO on R&amp;D, investing on technology infrastructure, marketing and branding and other general corporate purposes.The company’s IPO also has got a strong line-up of cornerstone investors including Tencent, Hillhouse Capital, Gaoling Fund, Tiger Global Management, etc. who have agreed to subscribe for an aggregate of at least US$500m of the ADS’ offered at the IPO.

Tuya IPO Valuation: Market Leadership and China IoT Exposure Justify Expensive Multiples

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Tuya announced its IPO pricing range, which is expected to be between $17 to $20 per share. Tuya plans to raise $806 million offering 43.6 million ADS. At the mid-point of the IPO price range, Tuya's implied market cap would be $10.4 billion. At the high end of the IPO price range of $20 per share, the company would be valued at $11.2 billion. This assumes fully diluted shares outstanding of 562.2 million. <div class="content-highlight">Our base case and high case implied market caps of the company are $11.3 billion ($20.1 per share) and $17.4 billion ($31 per share), respectively. We do believe that there will be a nice first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis ($17.4 billion or $30 per share). 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 ($20.1 to $30 per share). We have a positive view of the Tuya IPO. </div>

Tuya announced its IPO pricing range, which is expected to be between $17 to $20 per share. Tuya plans to raise $806 million offering 43.6 million ADS. At the mid-point of the IPO price range, Tuya's implied market cap would be $10.4 billion. At the high end of the IPO price range of $20 per share, the company would be valued at $11.2 billion. This assumes fully diluted shares outstanding of 562.2 million. Our base case and high case implied market caps of the company are $11.3 billion ($20.1 per share) and $17.4 billion ($31 per share), respectively. We do believe that there will be a nice first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis ($17.4 billion or $30 per share). 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 ($20.1 to $30 per share). We have a positive view of the Tuya IPO. 

Tuya: A Pure-Play IoT PaaS/SaaS Player Announces IPO Pricing Range

<div class="content-highlight">Our comparable companies valuation sensitivity analysis suggests an implied EV range of $6.2 billion to $11.3 billion and implied market cap of $7.3 billion to $12.4 billion for Tuya.</div>The market is likely to attach valuation multiples that are in the high end range of the comps mainly because Tuya's sales growth is higher than the comps' average. Plus, it is difficult to find companies such as Tuya which specializes in the IoT related PaaS/SaaS products and services and investors are likely to put a premium on the company's strengths.Similar to how smartphones and mobile connectivity has changed the world in the past decade, there is a huge amount of interest in IoT (Internet of Things) driven technology which is just starting to get penetrated in businesses around the world. Similar to how smartphones have allowed millions of people to be better "connected", the IoT technology will now enable the "machines to be connected" to the network, enabling greater business efficiencies and new revenue opportunities.

Our comparable companies valuation sensitivity analysis suggests an implied EV range of $6.2 billion to $11.3 billion and implied market cap of $7.3 billion to $12.4 billion for Tuya.The market is likely to attach valuation multiples that are in the high end range of the comps mainly because Tuya's sales growth is higher than the comps' average. Plus, it is difficult to find companies such as Tuya which specializes in the IoT related PaaS/SaaS products and services and investors are likely to put a premium on the company's strengths.Similar to how smartphones and mobile connectivity has changed the world in the past decade, there is a huge amount of interest in IoT (Internet of Things) driven technology which is just starting to get penetrated in businesses around the world. Similar to how smartphones have allowed millions of people to be better "connected", the IoT technology will now enable the "machines to be connected" to the network, enabling greater business efficiencies and new revenue opportunities. 

Tuya IPO - Valuation Sensitivity Analysis

Japan Specialist

Mark Chadwick

Equity Bottom-Up

Cyber Security Cloud Inc / Equity Bottom-Up

<blockquote>Japan Inc IT needs a security patch -The Economist (July 18, 2020). </blockquote>The Economist headline succinctly captures the challenges facing Japan Inc. In January, Mitsubishi Electric (6503) and NEC (6701) reported security breaches. Under COVID-19, the shift to telework from unsecured devices spurned a rise in cyberattacks. Low IT security budgets and ignorance of cybersecurity are hurting corporate Japan. Going forward, these breaches are likely to force a reassessment, towards great awareness and greater spending on Cybersecurity. Enter <a href="https://www.smartkarma.com/entities/cyber-security-cloud-inc" target="_blank" data-smartkarma-citation="entities:29137:1" rel="noopener">Cyber Security Cloud Inc (4493 JP)</a>  (CSC).

Japan Inc IT needs a security patch -The Economist (July 18, 2020). The Economist headline succinctly captures the challenges facing Japan Inc. In January, Mitsubishi Electric (6503) and NEC (6701) reported security breaches. Under COVID-19, the shift to telework from unsecured devices spurned a rise in cyberattacks. Low IT security budgets and ignorance of cybersecurity are hurting corporate Japan. Going forward, these breaches are likely to force a reassessment, towards great awareness and greater spending on Cybersecurity. Enter Cyber Security Cloud Inc (4493 JP)  (CSC).    

Small Cap Growth: Cyber Security Cloud (4493) – Japan's Security Patch

In this insight, we provide a valuation analysis of <a href="https://www.smartkarma.com/entities/saltlux" target="_blank" data-smartkarma-citation="entities:29011:1" rel="noopener">Saltlux (SLTX KS)</a>. In addition, we provide additional fundamental details of the company, competitors, as well as the market outlook for AI &amp; Big Data services.In our view, Saltlux has one of the best technologies in the AI/Big Data sector in Korea. In terms of business model, it is closer to Mindslab and Daumsoft which are privately held. The fact that Saltlux has larger sales than these two competitors is impressive. We think there is likely to be a big acquisition premium on Saltlux going forward.<div class="content-highlight">In terms of valuation multiples, we think that a 10x P/S, using 2019 sales (which is 10% premium to Laon People) is reasonable for Saltlux, which would suggest an implied market cap of 184 billion won or 36,000 won, which is 20% above the high end of the IPO price of 30,000 won. As such, we have a positive view of the Saltlux IPO. We are also adding Saltlux to our model portfolio. </div>

In this insight, we provide a valuation analysis of Saltlux (SLTX KS). In addition, we provide additional fundamental details of the company, competitors, as well as the market outlook for AI &amp; Big Data services.In our view, Saltlux has one of the best technologies in the AI/Big Data sector in Korea. In terms of business model, it is closer to Mindslab and Daumsoft which are privately held. The fact that Saltlux has larger sales than these two competitors is impressive. We think there is likely to be a big acquisition premium on Saltlux going forward.In terms of valuation multiples, we think that a 10x P/S, using 2019 sales (which is 10% premium to Laon People) is reasonable for Saltlux, which would suggest an implied market cap of 184 billion won or 36,000 won, which is 20% above the high end of the IPO price of 30,000 won. As such, we have a positive view of the Saltlux IPO. We are also adding Saltlux to our model portfolio. 

United States

Akamai Technologies, Inc. provides services for accelerating and improving the delivery of content and applications over the Internet; ranging from live and on-demand streaming video capabilities to conventional content on websites, to tools that help people transact business and reach out to new and existing customers.

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Akamai Technologies (AKAM US)

Tuya IPO Valuation: Market Leadership and China IoT Exposure Justify Expensive Multiples

Though Tuya’s implied LTM revenue multiple is at a premium to peers, Tuya’s best years are yet to come as the IoT PaaS and SaaS markets in China...

Shifara Samsudeen, FCMA, CGMA

Tuya: A Pure-Play IoT PaaS/SaaS Player Announces IPO Pricing Range

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 ($20.1...

Douglas Kim

Tuya IPO - Valuation Sensitivity Analysis

Our comparable companies valuation sensitivity analysis suggests an implied EV range of $6.2 billion to $11.3 billion and implied market cap of...

Douglas Kim

Small Cap Growth: Cyber Security Cloud (4493) – Japan's Security Patch

"Japan Inc IT needs a security patch" - The Economist (July 18, 2020).

Mark Chadwick

Saltlux IPO Valuation Analysis

In this insight, we provide a valuation analysis of Saltlux (SLTX KS). In addition, we provide additional fundamental details of the company,...

Douglas Kim

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