TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>Kind of a mediocre underwhelming analyst presentation by one of our favorite software companies, but the larger long term picture remains intact: a huge pool of legacy incumbent endpoint providers that Crowdstrike will feast on for years to come.</p><p></p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity. </p></div>

Kind of a mediocre underwhelming analyst presentation by one of our favorite software companies, but the larger long term picture remains intact: a huge pool of legacy incumbent endpoint providers that Crowdstrike will feast on for years to come.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity. 

Crowdstrike Analyst Day: Really, Just $3B in ARR?

<p>Crowdstrike continues to put up impressive quarterly results and guidance that blows away even heightened expectations. The two high profile cyber hacks in the past few months have given a major tailwind to FY2022...and despite guiding 1000bps ahead of consensus revenue growth, we expect 50% growth to be conservative. We remain long. </p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p></div>

Crowdstrike continues to put up impressive quarterly results and guidance that blows away even heightened expectations. The two high profile cyber hacks in the past few months have given a major tailwind to FY2022...and despite guiding 1000bps ahead of consensus revenue growth, we expect 50% growth to be conservative. We remain long. Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p>Tuya announced its IPO pricing range, which is expected to be between $17 to $20 per share. Tuya plans to raise $806 million offering 43.6 million ADS. At the mid-point of the IPO price range, Tuya's implied market cap would be $10.4 billion. At the high end of the IPO price range of $20 per share, the company would be valued at $11.2 billion. This assumes fully diluted shares outstanding of 562.2 million. </p><div class="content-highlight"><p>Our base case and high case implied market caps of the company are $11.3 billion ($20.1 per share) and $17.4 billion ($31 per share), respectively. <strong>We do believe that there will be a nice first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis ($17.4 billion or $30 per share).</strong> In the first few days of trading post IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($20.1 to $30 per share). We have a positive view of the Tuya IPO. </p></div>

Tuya announced its IPO pricing range, which is expected to be between $17 to $20 per share. Tuya plans to raise $806 million offering 43.6 million ADS. At the mid-point of the IPO price range, Tuya's implied market cap would be $10.4 billion. At the high end of the IPO price range of $20 per share, the company would be valued at $11.2 billion. This assumes fully diluted shares outstanding of 562.2 million. Our base case and high case implied market caps of the company are $11.3 billion ($20.1 per share) and $17.4 billion ($31 per share), respectively. We do believe that there will be a nice first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis ($17.4 billion or $30 per share). In the first few days of trading post IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($20.1 to $30 per share). We have a positive view of the Tuya IPO. 

Tuya: A Pure-Play IoT PaaS/SaaS Player Announces IPO Pricing Range

<div class="content-highlight"><p><strong>Our comparable companies valuation sensitivity analysis suggests an implied EV range of $6.2 billion to $11.3 billion and implied market cap of $7.3 billion to $12.4 billion for Tuya.</strong></p></div><p>The market is likely to attach valuation multiples that are in the high end range of the comps mainly because Tuya's sales growth is higher than the comps' average. Plus, it is difficult to find companies such as Tuya which specializes in the IoT related PaaS/SaaS products and services and investors are likely to put a premium on the company's strengths.</p><p>Similar to how smartphones and mobile connectivity has changed the world in the past decade, there is a huge amount of interest in IoT (Internet of Things) driven technology which is just starting to get penetrated in businesses around the world. Similar to how smartphones have allowed millions of people to be better "connected", the IoT technology will now enable the "machines to be connected" to the network, enabling greater business efficiencies and new revenue opportunities. </p>

Our comparable companies valuation sensitivity analysis suggests an implied EV range of $6.2 billion to $11.3 billion and implied market cap of $7.3 billion to $12.4 billion for Tuya.The market is likely to attach valuation multiples that are in the high end range of the comps mainly because Tuya's sales growth is higher than the comps' average. Plus, it is difficult to find companies such as Tuya which specializes in the IoT related PaaS/SaaS products and services and investors are likely to put a premium on the company's strengths.Similar to how smartphones and mobile connectivity has changed the world in the past decade, there is a huge amount of interest in IoT (Internet of Things) driven technology which is just starting to get penetrated in businesses around the world. Similar to how smartphones have allowed millions of people to be better "connected", the IoT technology will now enable the "machines to be connected" to the network, enabling greater business efficiencies and new revenue opportunities. 

Tuya IPO - Valuation Sensitivity Analysis

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

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.

<div><p><a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (1869782D US)</a> provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.</p></div><div><p>At the proposed IPO price range of $17-20 per ADS, Tuya will have a market cap of $9.5-11.2 billion. At the mid-point of the IPO price range, the net proceeds are $770.72 million. Tuya has received indications of interest from existing investors (<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management) for a total of $500 million worth of ADSs in the offering.</p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/tuya-ipo-initiation-connected-future" target="_blank" data-smartkarma-citation="insights:48695" rel="noopener">Tuya IPO Initiation: Connected Future</a>, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive.</p>
<div class="content-highlight"><p>The mid-point of the IPO price range of $17-20 per ordinary share (each ADS represents one Class A ordinary share) is a 48% and 28% premium to the valuation of the ordinary shares at the last raise ($12.48 - $200 million raise on 1/2 February 2021) and the last valuation exercise ($14.46 - 21 February 2021). While these juicy IPO premiums in a short space of time may turn off potential investors, our valuation analysis suggests that the IPO price range is reasonable but full at the high-end. Overall, we would participate in the IPO. </p></div>
</div>

Tuya Inc (1869782D US) provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.At the proposed IPO price range of $17-20 per ADS, Tuya will have a market cap of $9.5-11.2 billion. At the mid-point of the IPO price range, the net proceeds are $770.72 million. Tuya has received indications of interest from existing investors (Tencent Holdings (700 HK) and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management) for a total of $500 million worth of ADSs in the offering.
In Tuya IPO Initiation: Connected Future, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive.
The mid-point of the IPO price range of $17-20 per ordinary share (each ADS represents one Class A ordinary share) is a 48% and 28% premium to the valuation of the ordinary shares at the last raise ($12.48 - $200 million raise on 1/2 February 2021) and the last valuation exercise ($14.46 - 21 February 2021). While these juicy IPO premiums in a short space of time may turn off potential investors, our valuation analysis suggests that the IPO price range is reasonable but full at the high-end. Overall, we would participate in the IPO. 


United States

CrowdStrike Holdings, Inc. provides cybersecurity products and services to stop breaches. The Company offers cloud-delivered protection across endpoints, cloud workloads, identity and data, and leading threat intelligence, managed security services, IT operations management, threat hunting, Zero Trust identity protection, and log management. CrowdStrike serves customers worldwide.

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Crowdstrike Holdings (CRWD US)

Crowdstrike Analyst Day: Really, Just $3B in ARR?

Crowdstrike Analyst Day was underwhelming with easily reached ARR and Operating Model Targets introduced. We like the stock anyway, especially with...

Aaron Gabin

Crowdstrike 4Q21: Scaling the Heights

Crowdstrike retains its place as the highest quality high valuation software company, once again beating and raising by a wide margin.

Aaron Gabin

Tuya: A Pure-Play IoT PaaS/SaaS Player Announces IPO Pricing Range

In the first few days of trading post IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($20.1...

Douglas Kim

Tuya IPO - Valuation Sensitivity Analysis

Our comparable companies valuation sensitivity analysis suggests an implied EV range of $6.2 billion to $11.3 billion and implied market cap of...

Douglas Kim

Tuya IPO: Valuation Insights

At the mid-point of the IPO price range of $17-20 per ADS, Tuya will raise net proceeds of $771 million. Our analysis suggests that the IPO price...

Arun George

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