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

DoorDash’s first earnings call confirmed many of the concerns from our initiation. The key point for 2021? We think estimates that came up to reflect the easy COVID comp for 1Q21 will fall the rest of the year as COVID recedes, which will result in the rising customer acquisition costs cited in 4Q and 2021 meeting falling LTVs as customers return to dining out. DoorDash is likely to continually underperform expectations.Why do we think DoorDash is worth maybe half its current valuation?We’ll leave it to “NEUTRAL” rated Goldman Sachs to sum it up, “With the stock trading near 20x 2022E EV/Gross Profit vs. GSe 28% 3-year Gross Profit CAGR compared to the peer average of 10x on 30% growth we believe much of that opportunity is reflected in the current valuation. Therefore, we remain Neutral rated, while our 12-month price target goes to $145 from $135 to reflect revised estimates and current comp multiples.”As always, if you can’t explain why one company is worth 2x more then all its peers…it’s a neutral.<div class="content-highlight">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.</div>

DoorDash’s first earnings call confirmed many of the concerns from our initiation. The key point for 2021? We think estimates that came up to reflect the easy COVID comp for 1Q21 will fall the rest of the year as COVID recedes, which will result in the rising customer acquisition costs cited in 4Q and 2021 meeting falling LTVs as customers return to dining out. DoorDash is likely to continually underperform expectations.Why do we think DoorDash is worth maybe half its current valuation?We’ll leave it to “NEUTRAL” rated Goldman Sachs to sum it up, “With the stock trading near 20x 2022E EV/Gross Profit vs. GSe 28% 3-year Gross Profit CAGR compared to the peer average of 10x on 30% growth we believe much of that opportunity is reflected in the current valuation. Therefore, we remain Neutral rated, while our 12-month price target goes to $145 from $135 to reflect revised estimates and current comp multiples.”As always, if you can’t explain why one company is worth 2x more then all its peers…it’s a neutral.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.

DoorDash 4Q20 Earnings: This Is a Business Worth $50B?

DoorDash is one of our highest conviction shorts for 2021. It has a massively unprofitable business model with unstable market share that must be protected through unlimited spending. We think this is a $60-70 stock eventually.

DoorDash is one of our highest conviction shorts for 2021. It has a massively unprofitable business model with unstable market share that must be protected through unlimited spending. We think this is a $60-70 stock eventually.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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In this insight, we provide our earnings estimates and key assumptions of Coupang from 2021 to 2025. 
We forecast the company to generate net revenue of $16.5 billion in 2021 (up 38% YoY) and $19.9 billion in 2022 (up 20.8% YoY). We have assumed the company's sales growth rate to decline gradually in the ensuing years and we estimate Coupang to generate sales of $28.5 billion in 2025. From 2020 to 2025, we have assumed the company's sales to increase by 18.9% CAGR. 
We also estimate the company's operating margin to improve from -4.4% in 2020 to -2.6% in 2021 and 4.7% in 2025, driven by lower operating expenses and cost of sales as a percentage of sales. We estimate Coupang to have an operating profit of $1.3 billion and a net profit of $1.4 billion in 2025. 
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In this insight, we provide our earnings estimates and key assumptions of Coupang from 2021 to 2025. 
We forecast the company to generate net revenue of $16.5 billion in 2021 (up 38% YoY) and $19.9 billion in 2022 (up 20.8% YoY). We have assumed the company's sales growth rate to decline gradually in the ensuing years and we estimate Coupang to generate sales of $28.5 billion in 2025. From 2020 to 2025, we have assumed the company's sales to increase by 18.9% CAGR. 
We also estimate the company's operating margin to improve from -4.4% in 2020 to -2.6% in 2021 and 4.7% in 2025, driven by lower operating expenses and cost of sales as a percentage of sales. We estimate Coupang to have an operating profit of $1.3 billion and a net profit of $1.4 billion in 2025. 


Coupang IPO - Key Assumptions & Earnings Estimates

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) were able to shrug off recent news of a more contagious Covid variant that popped-up in the UK. Additionally, Covid fears have done nothing to derail ongoing positive market dynamics. As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying opportunity. Actionable Themes in today's report: Services, Technology, Manufacturing, and Materials.

Broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) were able to shrug off recent news of a more contagious Covid variant that popped-up in the UK. Additionally, Covid fears have done nothing to derail ongoing positive market dynamics. As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying opportunity. Actionable Themes in today's report: Services, Technology, Manufacturing, and Materials.

Global Equity Strategy: Support Levels Holding; Bullish Outlook Intact

Event-Driven

<div class="content-highlight">It was announced on 28 December that <a href="https://www.smartkarma.com/entities/delivery-hero-se" target="_blank" data-smartkarma-citation="entities:24416:1" rel="noopener">Delivery Hero SE (DHER GY)</a> has agreed to acquire <a href="http://www.asiae.co.kr/article/2020122817593874094" target="_blank" rel="noopener">Woowa Brothers</a> and sell Yogiyo. Woowa Brothers (Baemin) and Yogiyo are the first and second largest players in the food delivery services in Korea. About a year ago, Delivery Hero announced that it wanted to acquire Woowa Brothers. However, a few weeks ago, the Korean FTC ruled that in order for Delivery Hero to acquire Woowa Brothers, it would need to sell Yogiyo due to anti-competitive reasons.</div>

It was announced on 28 December that Delivery Hero SE (DHER GY) has agreed to acquire Woowa Brothers and sell Yogiyo. Woowa Brothers (Baemin) and Yogiyo are the first and second largest players in the food delivery services in Korea. About a year ago, Delivery Hero announced that it wanted to acquire Woowa Brothers. However, a few weeks ago, the Korean FTC ruled that in order for Delivery Hero to acquire Woowa Brothers, it would need to sell Yogiyo due to anti-competitive reasons.

Korea M&A Spotlight: Delivery Hero Agrees to Acquire Woowa Brothers & Sell Yogiyo

Germany

Delivery Hero SE offers e-commerce services. The Company provides online food ordering services. Delivery Hero serves customers Germany.

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Delivery Hero SE (DHER GR)

DoorDash 4Q20 Earnings: This Is a Business Worth $50B?

DoorDash's 4Q20 earnings confirmed our bearish thesis. The company is continuing to spend higher and higher amounts on customer acquisition due to...

Aaron Gabin

DoorDash: Run for the Exits

DoorDash is one of our top short picks for 2021. We think the earnings implosion is just the start as it fails to comp its outrageously fortunate...

Aaron Gabin

Coupang IPO - Key Assumptions & Earnings Estimates

In this insight, we provide our earnings estimates and key assumptions of Coupang from 2021 to 2025. We forecast the company to generate net...

Douglas Kim

Global Equity Strategy: Support Levels Holding; Bullish Outlook Intact

As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying...

Vermilion Research

Korea M&A Spotlight: Delivery Hero Agrees to Acquire Woowa Brothers & Sell Yogiyo

Delivery Hero SE (DHER GY) has agreed to acquire Woowa Brothers and sell Yogiyo. Woowa Brothers and Yogiyo are the 1st and 2nd largest players in...

Douglas Kim

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