Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<div class="content-highlight">The <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> IPO has been one of the most successful IPOs for a company whose operations are mainly in Korea. There are likely to be a lot more Korean based companies (both public and private) that will consider listing their shares in the US market after a hugely successfully Coupang IPO. In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to reduce the infamous "Korea discount."</div>14 Korean Companies That May List Their Shares in the US Stock Exchange:<a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">1) Samsung Electronics (005930 KS)</a>2) Kurly (Private)3) SmartStudy (Private)4) Naver Webtoon (Private) 5) Krafton (Private) 6) LG Energy Solution (Private) 7) 11st (Private) 8) SSG.com (Private) 9) <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a>10) <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>11) Kakao Entertainment (Private)  12) <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>13) Tmon (Private) 14) Non private equity firm that acquires Ebay Korea

The Coupang (CPNG US) IPO has been one of the most successful IPOs for a company whose operations are mainly in Korea. There are likely to be a lot more Korean based companies (both public and private) that will consider listing their shares in the US market after a hugely successfully Coupang IPO. In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to reduce the infamous "Korea discount."14 Korean Companies That May List Their Shares in the US Stock Exchange:1) Samsung Electronics (005930 KS)2) Kurly (Private)3) SmartStudy (Private)4) Naver Webtoon (Private) 5) Krafton (Private) 6) LG Energy Solution (Private) 7) 11st (Private) 8) SSG.com (Private) 9) NCSOFT Corp (036570 KS)10) Naver Corp (035420 KS)11) Kakao Entertainment (Private)  12) Kakao Corp (035720 KS)13) Tmon (Private) 14) Non private equity firm that acquires Ebay Korea 

Top 14 Korean Companies That May List in the US Stock Exchanges - Close The "Korea Discount Gap"

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.

<a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>, the largest e-commerce company in South Korea with $12.0bn in annual revenue and 14.9m in quarterly active customers, priced its IPO at $35.0 per share, above the revised offer price range of $32.0-34.0.Shares opened trading at $63.50 per share (up 81.4% from the IPO price) with a market capitalisation of $108.9bn. As IPO investors cashed in, the share price quickly dropped 20% from the day’s open price to end the day at $49.25 per share, 40.7% above the IPO price.Shares were up 4.5% in afterhours trading.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/193/749/original/image_49038917121615529638970.png?1615529634" class="editor-image img-responsive" data-smartkarma-image-id="193749"></figure><div class="content-caption">Source: Trading View</div>Find below the links to our previous coverage on the Coupang IPO:<ul>
<li><a href="https://www.smartkarma.com/insights/coupang-ipo-not-worth-subscribing-at-rumoured-50-0bn-valuation" target="_blank" rel="noopener">Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-ipo-lacks-margin-upside" target="_blank" rel="noopener">Coupang IPO: Lacks Margin Upside</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-ipo-initial-thoughts-on-rumoured-50-0bn-valuation" target="_blank" rel="noopener">Coupang IPO: Initial Thoughts on Rumoured $50.0bn Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-ipo-significantly-overvalued-as-a-lt-investment-too-risky-to-bet-on-the-short-term-upside" target="_blank" rel="noopener">Coupang IPO: Significantly Overvalued As a LT Investment &amp; Too Risky To Bet On The Short Term Upside</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-ups-offer-price-range-by-13-19-as-investors-seem-to-ignore-the-company-s-1p-exposure" target="_blank" rel="noopener">Coupang Ups Offer Price Range by 13-19%, As Investors Seem to Ignore The Company’s 1P Exposure</a></li>
</ul>

Coupang (CPNG US), the largest e-commerce company in South Korea with $12.0bn in annual revenue and 14.9m in quarterly active customers, priced its IPO at $35.0 per share, above the revised offer price range of $32.0-34.0.Shares opened trading at $63.50 per share (up 81.4% from the IPO price) with a market capitalisation of $108.9bn. As IPO investors cashed in, the share price quickly dropped 20% from the day’s open price to end the day at $49.25 per share, 40.7% above the IPO price.Shares were up 4.5% in afterhours trading.Source: Trading ViewFind below the links to our previous coverage on the Coupang IPO:
Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation
Coupang IPO: Lacks Margin Upside
Coupang IPO: Initial Thoughts on Rumoured $50.0bn Valuation
Coupang IPO: Significantly Overvalued As a LT Investment &amp; Too Risky To Bet On The Short Term Upside
Coupang Ups Offer Price Range by 13-19%, As Investors Seem to Ignore The Company’s 1P Exposure


Coupang Popped 41% On Trading Debut, But Could Un-Pop As Lock-Up For 34.0m Shares Ends in Six Days

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> recorded a banner year in 2020 with GMV and active buyer growths re-accelerating from the slower 2019 (see our results highlights). JD too has been a beneficiary of the online consumption burst in 2020.  The stock price more than doubled from 2019 but its valuations do not appear to be stretched unlike some of its peers.  We believe JD's margin expansion story is unwinding.      We are positive on JD’s operating improvements, and we forecast a continued – albeit slightly muted – operating momentum in 2021. Interestingly, <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> IPO sucked up all the oxygen today. Given the similarity between the two business models, we believe Coupang’s rich valuations make a compelling argument for JD shares, in our view.  We favor JD.com even on growth-adjusted valuations.  In our previous report, <a href="https://www.smartkarma.com/insights/coupang-cpng-us-going-mano-e-mano-with-jd-com" target="_blank" data-smartkarma-citation="insights:49065" rel="noopener">Coupang (CPNG US): Going Mano E Mano with JD.com</a>, we compare JD’s historical valuations with Coupang.  Based on our estimates, JD trades at 0.3x ‘21e EV/GMV, 0.9x EV/Revenue, and only 6.1x Gross Profit as well as 23.2x ‘21e earnings (excluding net cash).  These are attractive valuations, in our view.

JD.com Inc (ADR) (JD US) recorded a banner year in 2020 with GMV and active buyer growths re-accelerating from the slower 2019 (see our results highlights). JD too has been a beneficiary of the online consumption burst in 2020.  The stock price more than doubled from 2019 but its valuations do not appear to be stretched unlike some of its peers.  We believe JD's margin expansion story is unwinding.      We are positive on JD’s operating improvements, and we forecast a continued – albeit slightly muted – operating momentum in 2021. Interestingly, Coupang (CPNG US) IPO sucked up all the oxygen today. Given the similarity between the two business models, we believe Coupang’s rich valuations make a compelling argument for JD shares, in our view.  We favor JD.com even on growth-adjusted valuations.  In our previous report, Coupang (CPNG US): Going Mano E Mano with JD.com, we compare JD’s historical valuations with Coupang.  Based on our estimates, JD trades at 0.3x ‘21e EV/GMV, 0.9x EV/Revenue, and only 6.1x Gross Profit as well as 23.2x ‘21e earnings (excluding net cash).  These are attractive valuations, in our view. 

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<div><a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> plans to raise around US$3bn in its secondary listing in Hong Kong. I have covered most aspects of the deal in my earlier note, <a href="https://www.smartkarma.com/insights/baidu-secondary-listing-early-look-will-be-one-of-the-largest-secondary-listings-this-year" target="_blank" rel="noopener">Baidu Secondary Listing Early Look - Will Be One of the Largest Secondary Listings This Year</a>.</div><div>In this note, I'll only touch upon the updates since my last note.</div>

Baidu (BIDU US) plans to raise around US$3bn in its secondary listing in Hong Kong. I have covered most aspects of the deal in my earlier note, Baidu Secondary Listing Early Look - Will Be One of the Largest Secondary Listings This Year.In this note, I'll only touch upon the updates since my last note.

Baidu Secondary Listing - Smaller than Expected, Doing the Bare Minimum

<a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US) </a>is set for IPO on 11 March 2021 at a revised-up range of USD32-34.  This is one of the blockbuster listings among the Korean companies and thrusting Coupang to the five largest companies in Korea.  There have been healthy debates on this IPO with a consensus that the valuation is very expensive, yet, Coupang appears to be set to fetch close to USD50 billion valuation.We are on the “expensive” camp and willing to wait for a better entry price. We arrived at this conclusion by focusing on direct head-to-head growth and valuation comparisons with its peer, JD.com, instead of comparing with a broad base of peers. Simply put, would you rather have JD.com or Coupang shares?  They are both mostly online retailers with nearly 90% of revenues from retail.     Coupang’s market value is priced at 67% premium to JD.com’s market value in 2015 when the latter was in a similar growth stage but with higher upside potential for online consumption outlook.  The only explanation is the outlook for better growth and other considerations we discuss in this report.   In this report, we highlight the following:<ol>
<li>How does Coupang stack up against JD.com at the past similar growth stage?</li>
<li>Is Coupang expensive?  Yes, on most multiples including EV/Sales and EV/Gross Profit.</li>
<li>How can the market justify paying such a premium? High growth expectation.</li>
<li>Is Coupang’s growth in 2020 sustainable?  Unlikely.</li>
</ol>

Coupang (CPNG US) is set for IPO on 11 March 2021 at a revised-up range of USD32-34.  This is one of the blockbuster listings among the Korean companies and thrusting Coupang to the five largest companies in Korea.  There have been healthy debates on this IPO with a consensus that the valuation is very expensive, yet, Coupang appears to be set to fetch close to USD50 billion valuation.We are on the “expensive” camp and willing to wait for a better entry price. We arrived at this conclusion by focusing on direct head-to-head growth and valuation comparisons with its peer, JD.com, instead of comparing with a broad base of peers. Simply put, would you rather have JD.com or Coupang shares?  They are both mostly online retailers with nearly 90% of revenues from retail.     Coupang’s market value is priced at 67% premium to JD.com’s market value in 2015 when the latter was in a similar growth stage but with higher upside potential for online consumption outlook.  The only explanation is the outlook for better growth and other considerations we discuss in this report.   In this report, we highlight the following:
How does Coupang stack up against JD.com at the past similar growth stage?
Is Coupang expensive?  Yes, on most multiples including EV/Sales and EV/Gross Profit.
How can the market justify paying such a premium? High growth expectation.
Is Coupang’s growth in 2020 sustainable?  Unlikely.


Coupang (CPNG US): Going Mano E Mano with JD.com

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Coupang (CPNG US)

Top 14 Korean Companies That May List in the US Stock Exchanges - Close The "Korea Discount Gap"

In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to...

Douglas Kim

Coupang Popped 41% On Trading Debut, But Could Un-Pop As Lock-Up For 34.0m Shares Ends in Six Days

If share price returns to the $58.0-60.0 range over the next few days, there could be another pushback, unless investors may have to wait for the...

Oshadhi Kumarasiri

JD.com (JD US): The Better-Looking Twin?

We remain positive on JD's accelerating growth and its margin expansion story. In this report, we make a compelling argument for JD's value by...

Mitchell Kim

Baidu Secondary Listing - Smaller than Expected, Doing the Bare Minimum

Baidu plans to raise around US$3bn in its secondary listing in Hong Kong. I have covered most aspects of the deal in my earlier note. In this note,...

Sumeet Singh

Coupang (CPNG US): Going Mano E Mano with JD.com

Coupang (CPNG US) is set for IPO on 11 March 2021 at a revised-up range of USD32-34. Our unique one-on-one comparison with JD.com should help...

Mitchell Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)