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 Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a>, the most downloaded food and drinks application in India in each of the last three years, filed for an IPO with The Securities and Exchange Board of India (SEBI) on 28th April 2021. The offer comprises INR 75,000m ($1.0bn) worth new shares and INR 7,500m ($102m) worth secondary shares.</li>
<li>Zomato made an operating loss of INR 3.6bn in 9MFY21 (serving only about 50% of the FY20 monthly active customers) compared to INR 22.7bn in FY20. Even though this seems like a significant improvement, it is more an indication that Zomato is incapable of generating a profit even from its most loyal customers.</li>
<li>With the recent unprofitable online food delivery IPO, <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (ROO LN)</a> trading about 33% below the IPO price, we see little potential in Zomato, unless it is priced at a discount to peers.</li>
</ul>



Zomato (ZOM IN), the most downloaded food and drinks application in India in each of the last three years, filed for an IPO with The Securities and Exchange Board of India (SEBI) on 28th April 2021. The offer comprises INR 75,000m ($1.0bn) worth new shares and INR 7,500m ($102m) worth secondary shares.
Zomato made an operating loss of INR 3.6bn in 9MFY21 (serving only about 50% of the FY20 monthly active customers) compared to INR 22.7bn in FY20. Even though this seems like a significant improvement, it is more an indication that Zomato is incapable of generating a profit even from its most loyal customers.
With the recent unprofitable online food delivery IPO, Deliveroo (ROO LN) trading about 33% below the IPO price, we see little potential in Zomato, unless it is priced at a discount to peers.


Zomato IPO: Improving Unit Economics Could Be Misleading & There Could Be Goodwill Write-Offs

One of London’s most anticipated tech IPOs in recent history, <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (ROO LN)</a>, tumbled 26.3% on first day after pricing its shares at £3.90 per share, at bottom end of the lowered IPO price range. The share price went down to £2.71 per share in early trading before eventually ending the day at £2.87 per share.Deliveroo managed to narrow losses last year, however if Deliveroo is requested to treat its riders as employees, all that could be easily undone. Therefore, we expect shares to remain under pressure medium term with additional pressure from retail selling towards mid next week as shares bought via the Deliveroo app becomes tradable from 7th April.

One of London’s most anticipated tech IPOs in recent history, Deliveroo (ROO LN), tumbled 26.3% on first day after pricing its shares at £3.90 per share, at bottom end of the lowered IPO price range. The share price went down to £2.71 per share in early trading before eventually ending the day at £2.87 per share.Deliveroo managed to narrow losses last year, however if Deliveroo is requested to treat its riders as employees, all that could be easily undone. Therefore, we expect shares to remain under pressure medium term with additional pressure from retail selling towards mid next week as shares bought via the Deliveroo app becomes tradable from 7th April.

Deliveroo IPO First Day Trading: Too Risky to Hold Long Term

Equity Bottom-Up

The US Customs and Border Protection Agency (CBP) ordered its ports to begin seizing all disposable gloves produced in Malaysia by <a href="https://www.smartkarma.com/entities/top-glove-corp-bhd" target="_blank" data-smartkarma-citation="entities:20759:1" rel="noopener">Top Glove Corp (TOPG MK)</a>, citing that CBP has found sufficient evidence to determine that the imported goods were produced using forced labour practices. Top Glove shares sank 5.3% yesterday and another 5.4% today to close at MYR 4.52 per share.Even though the immediate financial impact from the above order is some what limited, we believe the order to have a significant impact on Top Glove’s financial performance in the post COVID era. Moreover, it could affect the company’s proposed Hong Kong Offering and also risk getting thrown out of ESG indices.

The US Customs and Border Protection Agency (CBP) ordered its ports to begin seizing all disposable gloves produced in Malaysia by Top Glove Corp (TOPG MK), citing that CBP has found sufficient evidence to determine that the imported goods were produced using forced labour practices. Top Glove shares sank 5.3% yesterday and another 5.4% today to close at MYR 4.52 per share.Even though the immediate financial impact from the above order is some what limited, we believe the order to have a significant impact on Top Glove’s financial performance in the post COVID era. Moreover, it could affect the company’s proposed Hong Kong Offering and also risk getting thrown out of ESG indices.

CBP to Seize Goods Over Forced Labour: The Impact Limited in The Short Run & Severe in The Long Run

The Bureau of Investigative Journalism, a non-profit news organisation based in London, published an article on 25th March 2021, accusing <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (1022770D LN)</a> of exploiting its riders through paying significantly less than the minimum wage requirement in the UK.<a href="https://www.thebureauinvestigates.com/stories/2021-03-25/deliveroo-riders-earning-as-little-as-2-pounds" target="_blank" rel="noopener">https://www.thebureauinvestigates.com/stories/2021-03-25/deliveroo-riders-earning-as-little-as-2-pounds</a>After the release of the news article, several high-profile assets managers have commented that they would not take part in the IPO, which was priced at £3.9-4.6 per share on 22nd March 2021. The decision to avoid the company’s IPO by big investment firms like <a target="_blank">Aviva, Aberdeen, Legal &amp; General, BMO Global, CCLA and M&amp;G Investments </a>could have severe consequences to an IPO as big as Delieveroo (£1.8bn), especially when the listing is expected to take place on 7th April 2021 (just 11 days from now).

The Bureau of Investigative Journalism, a non-profit news organisation based in London, published an article on 25th March 2021, accusing Deliveroo (1022770D LN) of exploiting its riders through paying significantly less than the minimum wage requirement in the UK.https://www.thebureauinvestigates.com/stories/2021-03-25/deliveroo-riders-earning-as-little-as-2-poundsAfter the release of the news article, several high-profile assets managers have commented that they would not take part in the IPO, which was priced at £3.9-4.6 per share on 22nd March 2021. The decision to avoid the company’s IPO by big investment firms like Aviva, Aberdeen, Legal &amp; General, BMO Global, CCLA and M&amp;G Investments could have severe consequences to an IPO as big as Delieveroo (£1.8bn), especially when the listing is expected to take place on 7th April 2021 (just 11 days from now).

Deliveroo IPO Hangs In The Balance: Multiple Asset Managers Opt To Snub The IPO Over Workers’ Rights

We previously examined the industry growth prospects, <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (1022770D LN)</a>’s competitive position and expressed our concerns regarding the company’s ability to be profitable in the next few years. Since then, Deliveroo has announced the price range to its IPO at £3.9-4.6 per share, which implies a market cap range of <a target="_blank">£</a>7.6-8.8bn. Here we the company’s valuation in comparison to peers.

We previously examined the industry growth prospects, Deliveroo (1022770D LN)’s competitive position and expressed our concerns regarding the company’s ability to be profitable in the next few years. Since then, Deliveroo has announced the price range to its IPO at £3.9-4.6 per share, which implies a market cap range of £7.6-8.8bn. Here we the company’s valuation in comparison to peers.

United Kingdom

Deliveroo is a British online food delivery company that connects consumers with local restaurants, grocery stores, and retailers through its online platform and mobile app. The company offers on-demand delivery services, including restaurant meals, groceries, and retail products, and operates a subscription program called Deliveroo Plus. Deliveroo also utilizes 'dark kitchens' (Deliveroo Editions) for delivery-only meals and provides data insights to partner businesses to optimize their offerings. Headquartered in London, United Kingdom, Deliveroo was founded in 2013.

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Deliveroo (ROO LN)

Zomato IPO: Improving Unit Economics Could Be Misleading & There Could Be Goodwill Write-Offs

Even though Zomato's 9MFY21 results seems like a significant improvement in unit economics, it is more an indication that Zomato is incapable of...

Oshadhi Kumarasiri

Deliveroo IPO First Day Trading: Too Risky to Hold Long Term

If Deliveroo is requested to treat its riders as employees, the company's path to profitability is going to get impaired significantly. Therefore,...

Oshadhi Kumarasiri

CBP to Seize Goods Over Forced Labour: The Impact Limited in The Short Run & Severe in The Long Run

The immediate financial impact from the CBP order is limited. Yet we believe it to have a significant impact on Top Glove’s financial performance...

Oshadhi Kumarasiri

Deliveroo IPO Hangs In The Balance: Multiple Asset Managers Opt To Snub The IPO Over Workers’ Rights

The decision to avoid the Deliveroo IPO by big investment firms could have severe consequences to an IPO as big as Delieveroo (£1.8bn), especially...

Oshadhi Kumarasiri

Deliveroo IPO Valuation:

Competition is intense in this high growth industry and Deliveroo’s business model does not seem attractive enough get excited about the long-term...

Oshadhi Kumarasiri

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