IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/bukalapak" target="_blank" data-smartkarma-citation="entities:33575:1" rel="noopener">Bukalapak (BUKA IJ)</a>, which means 'opening a kiosk' in Indonesian, is a leading e-commerce player in non-Tier 1 cities in Indonesia, with a market share of 35% in 2020 based on GMV (gross merchandise value), according to Frost &amp; Sullivan. Bukalapak carries out its main business activities through the mobile platform <em>Bukalapak</em> and <em>Bukalapak Partners</em>. Bukalapak has increased its IPO size by about a third to $1.5 billion due to strong demand, according to press reports. Bookbuilding will close on 19 July and the shares are set to list on 6 August. </p><p>The COVID-19 pandemic has accelerated the rate of e-commerce adoption in Indonesia as more consumers are reluctant to travel and started changing their shopping habits to online shopping, due to personal preferences or lockdown restrictions. The share of e-commerce of total retail spending in Indonesia has grown from 5.6% in 2017 to around 22% in 2020 and will reach 35.9% in 2025, according to Frost &amp; Sullivan. </p><div class="content-highlight"><p>Like its peers, Bukalapak is benefiting from this market tailwind. Bukalapak’s strategy of focusing on consumers in the non-Tier 1 area and the mass market in the Tier 1 area results in a relatively small overlap (less than 20%) between its customers and customers of other online marketplaces such as <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>'s Shopee, <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/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>'s Lazada. Competitors generally target the affluent segment of the market. Overall, Bukalapak's fundamentals tick all the right boxes of rising monetisation, lower losses and declining cash burn, in our view. We will discuss valuation in our next note. </p></div>

Bukalapak (BUKA IJ), which means 'opening a kiosk' in Indonesian, is a leading e-commerce player in non-Tier 1 cities in Indonesia, with a market share of 35% in 2020 based on GMV (gross merchandise value), according to Frost &amp; Sullivan. Bukalapak carries out its main business activities through the mobile platform Bukalapak and Bukalapak Partners. Bukalapak has increased its IPO size by about a third to $1.5 billion due to strong demand, according to press reports. Bookbuilding will close on 19 July and the shares are set to list on 6 August. The COVID-19 pandemic has accelerated the rate of e-commerce adoption in Indonesia as more consumers are reluctant to travel and started changing their shopping habits to online shopping, due to personal preferences or lockdown restrictions. The share of e-commerce of total retail spending in Indonesia has grown from 5.6% in 2017 to around 22% in 2020 and will reach 35.9% in 2025, according to Frost &amp; Sullivan. Like its peers, Bukalapak is benefiting from this market tailwind. Bukalapak’s strategy of focusing on consumers in the non-Tier 1 area and the mass market in the Tier 1 area results in a relatively small overlap (less than 20%) between its customers and customers of other online marketplaces such as Sea Ltd (SE US)'s Shopee, Tokopedia PT (1087142D IJ) and Alibaba Group (BABA US)'s Lazada. Competitors generally target the affluent segment of the market. Overall, Bukalapak's fundamentals tick all the right boxes of rising monetisation, lower losses and declining cash burn, in our view. We will discuss valuation in our next note. 

Bukalapak IPO Initiation: Island Shopping

<div><p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.</p></div><div><p>Coupang has increased its IPO price range from $27-30 per share to $32-34 per share. The number of the offer shares remains unchanged at 120 million shares and the primary/secondary split remains unchanged. At the upsized IPO price range of $32-34 per share, Coupang will have a market cap of $55-58 billion vs the previous market cap of $46-51 billion. At the mid-point of the IPO price range, the net proceeds from the primary raise are $3.2 billion ($2.8 billion previously). </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/coupang-ipo-initiation-delivering-the-goods" target="_blank" data-smartkarma-citation="insights:48125" rel="noopener">Coupang IPO Initiation: Delivering the Goods</a>, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In <a href="https://www.smartkarma.com/insights/coupang-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:48708" rel="noopener">Coupang IPO: Valuation Insights</a> we noted was attractively priced for its growth potential vs global e-commerce peers at the original IPO price range.</p>
<div class="content-highlight"><p>Our valuation analysis suggests that Coupang remains attractive at the upsized IPO price range of $32-34 per share. Our base-case DCF valuation is $39.35 per share and we would participate in the IPO.</p></div>
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Coupang (CPNG US) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.Coupang has increased its IPO price range from $27-30 per share to $32-34 per share. The number of the offer shares remains unchanged at 120 million shares and the primary/secondary split remains unchanged. At the upsized IPO price range of $32-34 per share, Coupang will have a market cap of $55-58 billion vs the previous market cap of $46-51 billion. At the mid-point of the IPO price range, the net proceeds from the primary raise are $3.2 billion ($2.8 billion previously). 
In Coupang IPO Initiation: Delivering the Goods, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In Coupang IPO: Valuation Insights we noted was attractively priced for its growth potential vs global e-commerce peers at the original IPO price range.
Our valuation analysis suggests that Coupang remains attractive at the upsized IPO price range of $32-34 per share. Our base-case DCF valuation is $39.35 per share and we would participate in the IPO.


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<p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.</p>
<p>At the proposed IPO price range of $27-30 per share, Coupang will have a market cap of $46-51 billion. The IPO which comprises of a primary and secondary offering will raise total gross proceeds up to $3.6 billion.  At the mid-point of the IPO price range, the net proceeds from the primary raise are $2.8 million. </p>
</div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/coupang-ipo-initiation-delivering-the-goods" target="_blank" data-smartkarma-citation="insights:48125" rel="noopener">Coupang IPO Initiation: Delivering the Goods</a>, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. Coupang is a new-economy growth story and at the IPO price range, is attractively priced for its growth potential vs global e-commerce peers. Consequently, we would participate in the IPO. </p></div></div></div>


Coupang (CPNG US) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.
At the proposed IPO price range of $27-30 per share, Coupang will have a market cap of $46-51 billion. The IPO which comprises of a primary and secondary offering will raise total gross proceeds up to $3.6 billion.  At the mid-point of the IPO price range, the net proceeds from the primary raise are $2.8 million. 
In Coupang IPO Initiation: Delivering the Goods, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. Coupang is a new-economy growth story and at the IPO price range, is attractively priced for its growth potential vs global e-commerce peers. Consequently, we would participate in the IPO. 

<div><p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.</p></div><div><p>Coupang is seeking to raise up to $2 billion at a $50 billion valuation, according to Reuters. The rumoured valuation is a significant increase to the December 2018 fundraising at a $9 billion valuation, according to press reports. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/coupang-ipo-initiation-delivering-the-goods" target="_blank" data-smartkarma-citation="insights:48125" rel="noopener">Coupang IPO Initiation: Delivering the Goods</a>, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In this note, we take a first look at Coupang's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.</p></div></div></div>

Coupang (CPNG US) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.Coupang is seeking to raise up to $2 billion at a $50 billion valuation, according to Reuters. The rumoured valuation is a significant increase to the December 2018 fundraising at a $9 billion valuation, according to press reports. In Coupang IPO Initiation: Delivering the Goods, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In this note, we take a first look at Coupang's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

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<p><strong>Our base case valuation of Wish is an implied EV of $12.3 billion, implied market cap of $14.4 billion, and implied price per share of $24.50 per share. This represents just a 2% upside to the high end of the IPO price range of $24 per share. Given such a low upside, we would pass on this IPO.</strong></p>
<p><strong>One of the long-term concerns we have about Wish is the fact that the number one priority of the company is price. This is a double-edged sword.</strong> By focusing on price as the number one priority, the company has been able to gain a tremendous number of customers that put price as their number one importance. Nonetheless, it may be difficult for the company to generate relatively high profit margins in the long run since Wish may have difficulties in gaining customers that value quality over price when purchasing products through mobile or online platforms.</p>
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Our base case valuation of Wish is an implied EV of $12.3 billion, implied market cap of $14.4 billion, and implied price per share of $24.50 per share. This represents just a 2% upside to the high end of the IPO price range of $24 per share. Given such a low upside, we would pass on this IPO.
One of the long-term concerns we have about Wish is the fact that the number one priority of the company is price. This is a double-edged sword. By focusing on price as the number one priority, the company has been able to gain a tremendous number of customers that put price as their number one importance. Nonetheless, it may be difficult for the company to generate relatively high profit margins in the long run since Wish may have difficulties in gaining customers that value quality over price when purchasing products through mobile or online platforms.


Wish IPO Valuation Analysis: Focus on Price Is a Double-Edged Sword

United States

ContextLogic Inc., doing business as Wish, operates as an online marketplace. The Company provides apparel, bags, toys, mobile phones and covers, hand and power tools, cosmetics, drinking games, home decor, bathroom fixtures, building supplies, and other accessories. Wish serves customers worldwide.

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ContextLogic (LOGC US)

Bukalapak IPO Initiation: Island Shopping

Bukalapak has increased its IPO size by about a third to $1.5 billion due to strong demand. Its fundamentals tick all the right boxes of rising...

Arun George

Coupang IPO: Upsized Deal Size

Coupang has increased its IPO price range from $27-30 per share to $32-34 per share. Our base-case DCF valuation is $39.35 per share and we would...

Arun George

Coupang IPO: Valuation Insights

The $27-30 price range implies gross proceeds up to $3.6 billion and values Coupang at $46-51 billion. At the price range, Coupang is attractively...

Arun George

Coupang IPO: Valuation First Look

Coupang is seeking a $50 billion valuation, according to Reuters. Overall, based on our valuation analysis, we think that the rumoured IPO...

Arun George

Wish IPO Valuation Analysis: Focus on Price Is a Double-Edged Sword

Our base case valuation of Wish is an implied price per share of $24.50 per share. This represents just a 2% upside to the high end of the IPO...

Douglas Kim

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