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>
<a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> was mispriced during the IPO process as the market forgot to take in to account Coupang’s excessive 1P exposure.</li>
<li>After the first day pop, share price has declined more than 60% to partially correct the mispricing that happened during the IPO.</li>
<li>We think that the share price could potentially drop another 50% before Coupang’s valuation multiples (on comparable basis) fall in line with regional peers.</li>
</ul>



Coupang (CPNG US) was mispriced during the IPO process as the market forgot to take in to account Coupang’s excessive 1P exposure.
After the first day pop, share price has declined more than 60% to partially correct the mispricing that happened during the IPO.
We think that the share price could potentially drop another 50% before Coupang’s valuation multiples (on comparable basis) fall in line with regional peers.


Coupang: The Mispricing Is Still Significant

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>Coupang reported disappointing results in 3Q 2021. It had sales of $4.6 billion won (up 48.1% YoY but 4.1% below consensus estimates).</li>
<li>One of the most noticeable negative warning sign for Coupang in 3Q 2021 was that its Active Customers declined by 1.2% on a QoQ basis, which is a bad sign.</li>
<li>Another negative on Coupang is the overhang from Softbank's sales of its shares and Softbank could sell more shares of Coupang in the coming months. We remain negative on Coupang. </li>
</ul>


Coupang reported disappointing results in 3Q 2021. It had sales of $4.6 billion won (up 48.1% YoY but 4.1% below consensus estimates).
One of the most noticeable negative warning sign for Coupang in 3Q 2021 was that its Active Customers declined by 1.2% on a QoQ basis, which is a bad sign.
Another negative on Coupang is the overhang from Softbank's sales of its shares and Softbank could sell more shares of Coupang in the coming months. We remain negative on Coupang. 


Coupang - Decline in Active Customers & Lower Than Expected Sales

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

<div>There is a saying in Korea that amounts to master/servant and it's something that even in Korea is now said quietly away from the spotlight.  I bring this up as <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>  have been under heavy scrutiny for their monopoly position which has led to many regulation changes (and more to come) to level the playing field.  If <a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>  was nervous and hoped the attention was focused solely on Kakao and Naver well, they were sadly mistaken.</div>

There is a saying in Korea that amounts to master/servant and it's something that even in Korea is now said quietly away from the spotlight.  I bring this up as Naver Corp (035420 KS) and Kakao Corp (035720 KS)  have been under heavy scrutiny for their monopoly position which has led to many regulation changes (and more to come) to level the playing field.  If Coupang (CPNG US)  was nervous and hoped the attention was focused solely on Kakao and Naver well, they were sadly mistaken.

Coupang's Rights Offering - Cash Burn to Increase

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.

Equity Capital Markets

<div><p>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.</p></div><div></div><div>
<p>We have covered most aspects of the deal in our earlier notes:</p>
<ul>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-guided-by-ant-financial-to-be-a-mini-ant" target="_blank" rel="noopener">Kakao Pay IPO - Guided by Ant Financial to be a mini Ant, </a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-peer-comparison-local-and-international" target="_blank" rel="noopener">Kakao Pay IPO - Peer comparison - local and international, and</a></li>
</ul>
</div><ul><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-valuation-and-likely-impact-of-latest-announcement" target="_blank" rel="noopener">Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement</a></li></ul><div><p>As the company is slated to be in front of investors again and finally launch its bookbuilding next week, in this note we will talk about the updates from the refiled prospectus and have a relook at valuations.</p></div>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.
We have covered most aspects of the deal in our earlier notes:

Kakao Pay IPO - Guided by Ant Financial to be a mini Ant, 
Kakao Pay IPO - Peer comparison - local and international, and

Kakao Pay IPO - Valuation and Likely Impact of Latest AnnouncementAs the company is slated to be in front of investors again and finally launch its bookbuilding next week, in this note we will talk about the updates from the refiled prospectus and have a relook at valuations.

Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment

<p><a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>, the largest e-commerce company in South Korea with <a target="_blank">US$ 15.6bn in trailing twelve months revenue</a>, has seen its share price drop more than 61% from the post IPO peak of $69.0 per share to $26.65. Coupang is currently trading 24% below its IPO price despite beating the street revenue and EBITDA estimates over the last two quarters.</p><p>Coupang’s demise after the first day pop could be down to factors such as the antitrust investigations, legal disputes with vendors, employee health and safety concerns and the disposals of 57.0m shares by the majority owner, Softbank.</p><p>The extent of the drop in the share price suggests that there could be another factor at play here, which is the excessive IPO valuation. Coupang was able to ride the IPO wave to obtain an IPO valuation of 2.8x FY+2 revenue. During our Coupang IPO coverage, we mentioned that Coupang’s 1P heavy business model makes Coupang’s revenue multiples incomparable to peers posing significant downside risks once the market comes to realise this situation.</p>

Coupang (CPNG US), the largest e-commerce company in South Korea with US$ 15.6bn in trailing twelve months revenue, has seen its share price drop more than 61% from the post IPO peak of $69.0 per share to $26.65. Coupang is currently trading 24% below its IPO price despite beating the street revenue and EBITDA estimates over the last two quarters.Coupang’s demise after the first day pop could be down to factors such as the antitrust investigations, legal disputes with vendors, employee health and safety concerns and the disposals of 57.0m shares by the majority owner, Softbank.The extent of the drop in the share price suggests that there could be another factor at play here, which is the excessive IPO valuation. Coupang was able to ride the IPO wave to obtain an IPO valuation of 2.8x FY+2 revenue. During our Coupang IPO coverage, we mentioned that Coupang’s 1P heavy business model makes Coupang’s revenue multiples incomparable to peers posing significant downside risks once the market comes to realise this situation.

Coupang: Down 61% From the Peak, Further 60% Downside Is a Possibility

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: The Mispricing Is Still Significant

With revenue expected to decelerate, we calculate that there’s significant further downside potential to Coupang shares as its valuation remains...

Oshadhi Kumarasiri

Coupang - Decline in Active Customers & Lower Than Expected Sales

Coupang had poor results in 3Q 2021. One of the most noticeable negative warning sign for Coupang in 3Q 2021 was that its Active Customers declined...

Douglas Kim

Coupang's Rights Offering - Cash Burn to Increase

Ahead of Coupang's 3Q earnings, we will need to focus on days turnover for payables and of course the spend on new businesses.

Ken S. Kim

Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment

Kakao Pay aims to raise up to US$1.3bn in its South Korean IPO. In this note, we will look at the recent updates and revisit our valuation.

Sumeet Singh

Coupang: Down 61% From the Peak, Further 60% Downside Is a Possibility

At 0.80x, Coupang’s EV/ (Gross Merchandise Value + Retail Revenue) remains 0.58x, 0.66x and 0.64x above Alibaba’s, JD.com’s and Pinduoduo’s EV/...

Oshadhi Kumarasiri

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