Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 14 March, it was reported that Softbank's Vision Fund sold about 1.3 trillion won ($1.04 billion) worth of Coupang (CPNG US) shares on 9 March in a block deal.</li>
<li>The continued selling of Coupang shares by Softbank suggests that Softbank is not confident on the future prospects of the company. We remain negative on Coupang.</li>
<li>Another reason could be because Softbank needs to raise more cash to make up for the losses from its other investments (mainly Chinese tech companies). </li>
</ul>


On 14 March, it was reported that Softbank's Vision Fund sold about 1.3 trillion won ($1.04 billion) worth of Coupang (CPNG US) shares on 9 March in a block deal.
The continued selling of Coupang shares by Softbank suggests that Softbank is not confident on the future prospects of the company. We remain negative on Coupang.
Another reason could be because Softbank needs to raise more cash to make up for the losses from its other investments (mainly Chinese tech companies). 


Softbank Sells $1.0 Billion Additional Worth of Coupang: Continued Overhang Concerns

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>Both Alibaba (-6%) and Didi (-12% pre-market) are down on regulatory pressure </li>
<li>Vision Fund valuation losses are approaching $20bn for Q4 and the current (unrealized) portfolio has turned negative</li>
<li>NAV/Share and the share price are at two-year lows and gains from the post-Covid tech run are largely gone</li>
</ul>


Both Alibaba (-6%) and Didi (-12% pre-market) are down on regulatory pressure 
Vision Fund valuation losses are approaching $20bn for Q4 and the current (unrealized) portfolio has turned negative
NAV/Share and the share price are at two-year lows and gains from the post-Covid tech run are largely gone


Softbank Group - China Worries Re-Surface as Alibaba, Didi Under Pressure

<ul>
<li>Valuation losses in the public portfolio have increased by $6bn over two days on weakness at Coupang, Grab, DoorDash and WeWork.  Total losses for the quarter stand at $17bn.</li>
<li>With Alibaba shares still weak, NAV/share has moved decisively below ¥10,000/share and is back to where it in May/June 2020 when tech was first rebounding from the Covid shock.</li>
<li>The discount to NAV stands at 49% but is likely to expand when markets in Japan have a chance to respond to how stocks traded in the US on Friday.</li>
</ul>


Valuation losses in the public portfolio have increased by $6bn over two days on weakness at Coupang, Grab, DoorDash and WeWork.  Total losses for the quarter stand at $17bn.
With Alibaba shares still weak, NAV/share has moved decisively below ¥10,000/share and is back to where it in May/June 2020 when tech was first rebounding from the Covid shock.
The discount to NAV stands at 49% but is likely to expand when markets in Japan have a chance to respond to how stocks traded in the US on Friday.


Softbank Group - Tough Week for VF as Public Portfolio Falls $6bn over Two Days

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.

<ul>
<li>With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.</li>
<li>
<a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.</li>
<li>With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.</li>
</ul>


With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.

Coupang (CPNG US)’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.
With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.


Coupang: No Substance to The Steady State EBITDA Guidance

<ul>
<li>On 25 February, E Mart Inc (139480 KS) announced that it will buy back 1 million shares, representing 3.6% of its outstanding shares. Currently, Emart has 87,464 treasury shares.</li>
<li>We believe Emart's share price is well positioned to continue to outperform the market in the next several months, driven by the large buyback program. </li>
<li>Emart is currently trading at 0.4x P/B (38% lower than the historical valuation multiples). One could argue that Emart is valued at an excessive discount to the historical valuations.</li>
</ul>


On 25 February, E Mart Inc (139480 KS) announced that it will buy back 1 million shares, representing 3.6% of its outstanding shares. Currently, Emart has 87,464 treasury shares.
We believe Emart's share price is well positioned to continue to outperform the market in the next several months, driven by the large buyback program. 
Emart is currently trading at 0.4x P/B (38% lower than the historical valuation multiples). One could argue that Emart is valued at an excessive discount to the historical valuations.


Emart Announces A Major Share Buyback Program

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)

Softbank Sells $1.0 Billion Additional Worth of Coupang: Continued Overhang Concerns

On 14 March, it was reported that Softbank's Vision Fund sold about 1.3 trillion won ($1.04 billion) worth of Coupang (CPNG US) shares on 9 March...

Douglas Kim

Softbank Group - China Worries Re-Surface as Alibaba, Didi Under Pressure

Softbank shares have given up all the post-Covid gains, pressured most recently by further regulatory weakness at Alibaba and Didi. The latter is...

Kirk Boodry

Softbank Group - Tough Week for VF as Public Portfolio Falls $6bn over Two Days

Vision Fund's public portfolio has been hammered on weakness at Grab, Coupang and WeWork and QTD losses are approaching the record level from Q2...

Kirk Boodry

Coupang: No Substance to The Steady State EBITDA Guidance

Coupang's steady state margin guidance lacked substance and was only slightly better than consensus medium term expectations on the margin side....

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Softbank Sells $1.0 Billion Additional Worth of Coupang: Continued Overhang Concerns

On 14 March, it was reported that Softbank's Vision Fund sold about 1.3 trillion won ($1.04 billion) worth of Coupang (CPNG US) shares on 9 March...

Douglas Kim

Softbank Group - China Worries Re-Surface as Alibaba, Didi Under Pressure

Softbank shares have given up all the post-Covid gains, pressured most recently by further regulatory weakness at Alibaba and Didi. The latter is...

Kirk Boodry

Softbank Group - Tough Week for VF as Public Portfolio Falls $6bn over Two Days

Vision Fund's public portfolio has been hammered on weakness at Grab, Coupang and WeWork and QTD losses are approaching the record level from Q2...

Kirk Boodry

Coupang: No Substance to The Steady State EBITDA Guidance

Coupang's steady state margin guidance lacked substance and was only slightly better than consensus medium term expectations on the margin side....

Oshadhi Kumarasiri

Emart Announces A Major Share Buyback Program

E Mart Inc announced that it will buy back 1 million shares, representing 3.6% of its outstanding shares. We believe Emart is well positioned to...

Douglas Kim