Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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 Bottom-Up

<p>Despite 78% and 61% rallies in Ethereum and Bitcoin from the Jul 20 lows, Monex stock has continued to decline, falling 10% in that period. It is possible that this is simply blowback from an extremely strong rally since late 2020 but valuations suggest that Monex is at a severe discount to Coinbase.</p>

Despite 78% and 61% rallies in Ethereum and Bitcoin from the Jul 20 lows, Monex stock has continued to decline, falling 10% in that period. It is possible that this is simply blowback from an extremely strong rally since late 2020 but valuations suggest that Monex is at a severe discount to Coinbase.

Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

Crypto

<p>ABCDE Sector Weekly provides market-moving insights and news for the rapidly transforming digital asset sector with a primary emphasis on their impact on related equities.  More importantly, we keep equity investors informed on how they can invest on the right side of change.   </p>

ABCDE Sector Weekly provides market-moving insights and news for the rapidly transforming digital asset sector with a primary emphasis on their impact on related equities.  More importantly, we keep equity investors informed on how they can invest on the right side of change.   

<h3>Stock Picks</h3>
<p><strong>Coinbase (COIN US) – Growing by leaps and bounds; Initiate with Buy, TP: US$302.62<br></strong>We initiate coverage of Coinbase Global (Coinbase) with a Buy rating and 12-month SOTP-derived target price of US$302.62. As one of the largest digital asset trading platforms with a broad suite of value-added services, we believe Coinbase will benefit from the expanding TAM of the cryptoeconomy, which will drive revenue and user growth. We see current valuations (17.2x 2022E P/E) as attractive relative to its robust growth profile and leading position in the digital asset industry.</p>
<p><strong>BC Tech Group (863 HK) – Pushing the envelope in institutional digital asset; Initiate with Buy; TP: HK$18.53<br></strong>We believe BCG’s shares offer investors exposure to the structural theme of rising institutional demand for digital assets trading and investment solutions. As one of the few publicly listed and licensed players in the digital asset exchange industry, we expect BCG to benefit from strong revenue growth and earnings breakeven in 2022E. We view current valuations (7.6x 2022E P/S) as attractive relative to its regional and global peers, given its robust revenue growth.</p>
<h3>Where we differ</h3>
<p>Sell-side research has been focused narrowly on margin compression and intensifying competition from other exchanges.  Our view is that focusing any discussion of licensed and regulatory compliant digital asset exchanges on commission and margin pressure is overly limiting. Instead, we urge equity investors to take a broader view. In other words, investing in pick and shovel plays will give investors exposure to the future potential of the digital asset phenomenon.</p>

Stock Picks
Coinbase (COIN US) – Growing by leaps and bounds; Initiate with Buy, TP: US$302.62 We initiate coverage of Coinbase Global (Coinbase) with a Buy rating and 12-month SOTP-derived target price of US$302.62. As one of the largest digital asset trading platforms with a broad suite of value-added services, we believe Coinbase will benefit from the expanding TAM of the cryptoeconomy, which will drive revenue and user growth. We see current valuations (17.2x 2022E P/E) as attractive relative to its robust growth profile and leading position in the digital asset industry.
BC Tech Group (863 HK) – Pushing the envelope in institutional digital asset; Initiate with Buy; TP: HK$18.53 We believe BCG’s shares offer investors exposure to the structural theme of rising institutional demand for digital assets trading and investment solutions. As one of the few publicly listed and licensed players in the digital asset exchange industry, we expect BCG to benefit from strong revenue growth and earnings breakeven in 2022E. We view current valuations (7.6x 2022E P/S) as attractive relative to its regional and global peers, given its robust revenue growth.
Where we differ
Sell-side research has been focused narrowly on margin compression and intensifying competition from other exchanges.  Our view is that focusing any discussion of licensed and regulatory compliant digital asset exchanges on commission and margin pressure is overly limiting. Instead, we urge equity investors to take a broader view. In other words, investing in pick and shovel plays will give investors exposure to the future potential of the digital asset phenomenon.

Corporate Access: BC Tech Group & Coinbase Coverage

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Robinhood Markets  / Equity Capital Markets

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<p>Our base case valuation of Robinhood is implied market cap of US$25.1 billion or US$29.8 per share, which is 25% lower than the mid-point of the IPO price range (US$40). Given the downside risk, we would AVOID this IPO. </p>
<ul><li>Our valuation of Robinhood is based on an EV/S multiple of 10.7x using our estimated sales of US$2.1 billion in 2022. <ul>
<li>The EV/S multiple of 10.7x is based on the average multiple of the comps in 2022.</li>
<li>The valuation multiple is higher than the those of online brokers Charles Schwab and Interactive Brokers Group.</li>
<li>However, it is lower than the valuation multiples of the fintech comps including Coinbase and Affirm.</li>
</ul>
</li></ul>
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Our base case valuation of Robinhood is implied market cap of US$25.1 billion or US$29.8 per share, which is 25% lower than the mid-point of the IPO price range (US$40). Given the downside risk, we would AVOID this IPO. 
Our valuation of Robinhood is based on an EV/S multiple of 10.7x using our estimated sales of US$2.1 billion in 2022. 
The EV/S multiple of 10.7x is based on the average multiple of the comps in 2022.
The valuation multiple is higher than the those of online brokers Charles Schwab and Interactive Brokers Group.
However, it is lower than the valuation multiples of the fintech comps including Coinbase and Affirm.




<div class="content-highlight">
<p>In this insight, we revisit our valuation of <a href="https://www.smartkarma.com/entities/coinbase-global-inc" target="_blank" data-smartkarma-citation="entities:32227:1" rel="noopener">Coinbase (COIN US)</a> post the Bitcoin plunge. Among many calls on IPOs/direct listings this year,<strong> Coinbase has been our most bearish call.</strong></p>
<p>On the first day of direct listing, Coinbase's share price reached as high as $112 billion ($429.5). Coinbase's share price has fallen to $224.8 per share (market cap of $58.9 billion). Although Coinbase's share price has fallen more than 40% since the highs in the first day of trading, we believe there is a further downside risk to this story. <strong>Our base valuation suggests a further 30%+ downside risk to Coinbase from current levels. </strong></p>
</div>


In this insight, we revisit our valuation of Coinbase (COIN US) post the Bitcoin plunge. Among many calls on IPOs/direct listings this year, Coinbase has been our most bearish call.
On the first day of direct listing, Coinbase's share price reached as high as $112 billion ($429.5). Coinbase's share price has fallen to $224.8 per share (market cap of $58.9 billion). Although Coinbase's share price has fallen more than 40% since the highs in the first day of trading, we believe there is a further downside risk to this story. Our base valuation suggests a further 30%+ downside risk to Coinbase from current levels. 


Revisiting Our Valuation of Coinbase Post Bitcoin Plunge

United States

Coinbase Global, Inc. provides financial solutions. The Company offers platform to buy and sell cryptocurrencies. Coinbase Global serves clients worldwide.

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Coinbase Global (COIN US)

Monex – Refreshing Valuations

The news of Coinbase's entry into Japan hurt sentiment for Monex but examining valuations, we feel the risk reward is starting to become extremely...

Mio Kato

CTS Research: Digital Asset Thematic

Initiate COIN and BC Tech Group (863 HK) with Buy | Sign up for BC Tech Group NDR 20/8 | US infra bill passage; Poly Hack; Tencent NFT

Quam Securities

Corporate Access: BC Tech Group & Coinbase Coverage

We published a thematic sector report on Digital Asset Exchanges and initiated coverage on the Global Digital Exchange Sector with Buy ratings on...

Quam Securities

Robinhood IPO Valuation Analysis

Our base case valuation of Robinhood is implied market cap of US$25.1 billion or US$29.8 per share, which is 25% lower than the mid-point of the...

Douglas Kim

Revisiting Our Valuation of Coinbase Post Bitcoin Plunge

In this insight, we revisit our valuation of Coinbase (COIN US) post the Bitcoin plunge. Among many calls on IPOs/direct listings this year,...

Douglas Kim

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