Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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 Bottom-Up

<ul>
<li>Leading into 2Q22 results (due 10th August 2022), we are short <a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> with expectations of around 5% and 27% downside to consensus 2022 and 2023 revenue estimates.</li>
<li>Consensus has just about reached the halfway stage of a long correction process with current revenue estimates standing significantly above the pre-COVID trend.</li>
<li>Meanwhile, Coupang is under a lot of pressure to cut losses in the short term and attain the targeted long-term EBITDA margin of 7-10%.</li>
</ul>


Leading into 2Q22 results (due 10th August 2022), we are short Coupang (CPNG US) with expectations of around 5% and 27% downside to consensus 2022 and 2023 revenue estimates.
Consensus has just about reached the halfway stage of a long correction process with current revenue estimates standing significantly above the pre-COVID trend.
Meanwhile, Coupang is under a lot of pressure to cut losses in the short term and attain the targeted long-term EBITDA margin of 7-10%.


Coupang: Just About Halfway in Correction

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>In this insight, we discuss a pair trade between E Mart Inc (long) and Coupang (short). At current valuations and business outlook, we like the risk/reward of this pair trade.</li>
<li>The end of the mandatory shut down rules on major hypermarkets is likely to have a major positive impact on Emart and negative impact on Coupang and Kurly.</li>
<li>Although this has not been made into law, we think there is relatively high probability that this will eventually be made into law sometime this year. </li>
</ul>


In this insight, we discuss a pair trade between E Mart Inc (long) and Coupang (short). At current valuations and business outlook, we like the risk/reward of this pair trade.
The end of the mandatory shut down rules on major hypermarkets is likely to have a major positive impact on Emart and negative impact on Coupang and Kurly.
Although this has not been made into law, we think there is relatively high probability that this will eventually be made into law sometime this year. 


A Pair Trade Between Emart & Coupang (Potential End of Mandatory Shut Down Rules for Hypermarkets)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> has bounced sharply following a 13G filling which indicated a change of heart from the pre-IPO investor, Maverick Capital with the purchase of an additional 7.7m Coupang shares.</li>
<li>Maverick seems to be expecting a significant improvement in profitability, in line with Q1. However, we think this is unrealistic, given Coupang’s marginal cost trends.</li>
<li>Maverick’s investment decisions on Coupang lack objectivity and its supersized exposure create too big of a risk to Coupang’s share price.</li>
</ul>



Coupang (CPNG US) has bounced sharply following a 13G filling which indicated a change of heart from the pre-IPO investor, Maverick Capital with the purchase of an additional 7.7m Coupang shares.
Maverick seems to be expecting a significant improvement in profitability, in line with Q1. However, we think this is unrealistic, given Coupang’s marginal cost trends.
Maverick’s investment decisions on Coupang lack objectivity and its supersized exposure create too big of a risk to Coupang’s share price.


Coupang: Maverick Capital's Supersized Exposure Is Too Big of a Risk

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Vision Fund head Rajeev Misra will step down from Vision Fund 2 to take a new gig managing money for Midde Eastern partners. His VF1 role is unchanged for now</li>
<li>Structurally, this does not change very much as Son-san has always been the decision maker on investments and we never considered Misra as a candidate for succession</li>
<li>After surviving $47bn in public equity losses over the last year, it surprisingly looks like Misra's departure is voluntary</li>
</ul>


Vision Fund head Rajeev Misra will step down from Vision Fund 2 to take a new gig managing money for Midde Eastern partners. His VF1 role is unchanged for now
Structurally, this does not change very much as Son-san has always been the decision maker on investments and we never considered Misra as a candidate for succession
After surviving $47bn in public equity losses over the last year, it surprisingly looks like Misra's departure is voluntary


Private Capital Markets

<ul>
<li>Kurly is the number one player in Korea focusing on e-commerce of fresh foods. Kurly's most recent valuation was about 4 trillion won in December 2021.</li>
<li>Coupang is trading at P/S and P/GP multiples of 1.2x and 7.4x (2021), respectively. Using these valuation multiples, Kurly's valuation would be from 1.9 trillion won to 2.2 trillion won.</li>
<li>These valuations would represent nearly half of the 4 trillion won in private market valuation it received in December 2021.</li>
</ul>


Kurly is the number one player in Korea focusing on e-commerce of fresh foods. Kurly's most recent valuation was about 4 trillion won in December 2021.
Coupang is trading at P/S and P/GP multiples of 1.2x and 7.4x (2021), respectively. Using these valuation multiples, Kurly's valuation would be from 1.9 trillion won to 2.2 trillion won.
These valuations would represent nearly half of the 4 trillion won in private market valuation it received in December 2021.


Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea

South Korea

Coupang, Inc. operates as an e-commerce company. The Company offers dynamic end-to-end e-commerce and logistic solutions. Coupang serves customers worldwide.

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Coupang (CPNG US)

Coupang: Just About Halfway in Correction

Leading into 2Q22 results (due 10th August 2022), we are short Coupang with expectations of around 5% and 27% downside to consensus 2022 and 2023...

Oshadhi Kumarasiri

A Pair Trade Between Emart & Coupang (Potential End of Mandatory Shut Down Rules for Hypermarkets)

The end of the mandatory shut down rules on major hypermarkets is likely to have a major positive impact on Emart and negative impact on Coupang...

Douglas Kim

Coupang: Maverick Capital's Supersized Exposure Is Too Big of a Risk

Coupang has bounced sharply following a 13G filling which indicated a change of heart from the pre-IPO investor, Maverick Capital with the purchase...

Oshadhi Kumarasiri

Softbank Group - Business as Usual

Vision Fund head Rajeev Misra is departing to run Middle Eastern money. Operationally, not much changes as Son-san has always been the Softbank...

Kirk Boodry

Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea

Kurly is the number one player in Korea focusing on e-commerce of fresh foods in Korea. Kurly's most recent valuation was about 4 trillion won in...

Douglas Kim

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