Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Equity Bottom-Up

Trip.com's customer satisfaction just hit an all-time high as travel agencies around the world struggle from the COVID-19 outbreak. We believe the Company's successful navigation of the Chinese market - building brand loyalty through expedited &amp; generous refund policies while providing cash flow support to its hotel partners - provides a template and guide to other global OTAs that are now struggling as the virus outbreak accelerates outside of China.While the Company guided an adjusted net loss of ~RMB1.8bn for the next quarter, we believe the Company's balance sheet is well-positioned to weather the current crisis and reap the rewards of its investments in brand equity.

Trip.com's customer satisfaction just hit an all-time high as travel agencies around the world struggle from the COVID-19 outbreak. We believe the Company's successful navigation of the Chinese market - building brand loyalty through expedited &amp; generous refund policies while providing cash flow support to its hotel partners - provides a template and guide to other global OTAs that are now struggling as the virus outbreak accelerates outside of China.While the Company guided an adjusted net loss of ~RMB1.8bn for the next quarter, we believe the Company's balance sheet is well-positioned to weather the current crisis and reap the rewards of its investments in brand equity.

Lessons for Global OTAs: Trip.com Customer Satisfaction Just Soared to All-Time High Amidst Crisis

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

While 2020 began on an optimistic note, sentiment has changed significantly with the outbreak of the COVID-19 coronavirus, which has spread rapidly across continents.آ  In our view, key concerns include: [1] potential demand impact on industries with significant human interaction; [2] potential impact on the economy if consumer sentiment deteriorates materially; [3] potential impact on labour force productivity; [4] potential impact on the supply chains of industries; and [5] potential impact on financial markets. We are cautious on companies which are highly levered, cyclical, have limited liquidity or significant debt maturities in the near term. In the report, we assess the impact of COVID-19 on: [1] Europe, China/Asia and the Americas; [2] supply chains; and [3] the sectors and companies under our coverage.

  While 2020 began on an optimistic note, sentiment has changed significantly with the outbreak of the COVID-19 coronavirus, which has spread rapidly across continents.آ    In our view, key concerns include: [1] potential demand impact on industries with significant human interaction; [2] potential impact on the economy if consumer sentiment deteriorates materially; [3] potential impact on labour force productivity; [4] potential impact on the supply chains of industries; and [5] potential impact on financial markets. We are cautious on companies which are highly levered, cyclical, have limited liquidity or significant debt maturities in the near term.   In the report, we assess the impact of COVID-19 on: [1] Europe, China/Asia and the Americas; [2] supply chains; and [3] the sectors and companies under our coverage. 

COVID-19: Impact On Global High Yield - Lucror Analytics

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.

This note is a followup to our recent long idea on IAC. The quarter was mostly supportive of our long thesis and the NAV discount has even widened out in the past few weeks. We have become more positive on IAC’s ability to generate significant value from the Care.com asset once the deal closes in the next few months. There seems to be a lot of low hanging optimization/monetization fruit which IAC’s experience can immediately translate to.<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>

This note is a followup to our recent long idea on IAC. The quarter was mostly supportive of our long thesis and the NAV discount has even widened out in the past few weeks. We have become more positive on IAC’s ability to generate significant value from the Care.com asset once the deal closes in the next few months. There seems to be a lot of low hanging optimization/monetization fruit which IAC’s experience can immediately translate to.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.

This note is a follow-up to our recent long idea on ANGI Homeservices. The quarter was mostly supportive of our long thesis.Best Working Thesis: ANGI HomeServices, the leading online home services marketplace, is poised to see accelerating revenue growth and margin expansion as it shifts its business model from lead generation towards fixed price. Fixed price dramatically improving the value proposition for customers’ service requests (SRs) and service providers (SPs), accelerating ANGI’s scale-based moat. Fixed price’s unit economics are potentially 8-10x better than the existing lead gen business. The transition will more than offset the 2Q19 spike in customer acquisition costs injected by Google algo changes as fixed price will translate into long term margin accretion from increasing customer repeat rate, reduction of unfilled service requests, and an increase in the supply of service providers on the platform.

This note is a follow-up to our recent long idea on ANGI Homeservices. The quarter was mostly supportive of our long thesis.Best Working Thesis: ANGI HomeServices, the leading online home services marketplace, is poised to see accelerating revenue growth and margin expansion as it shifts its business model from lead generation towards fixed price. Fixed price dramatically improving the value proposition for customers’ service requests (SRs) and service providers (SPs), accelerating ANGI’s scale-based moat. Fixed price’s unit economics are potentially 8-10x better than the existing lead gen business. The transition will more than offset the 2Q19 spike in customer acquisition costs injected by Google algo changes as fixed price will translate into long term margin accretion from increasing customer repeat rate, reduction of unfilled service requests, and an increase in the supply of service providers on the platform. 

Thematic (Sector/Industry)

Evidence of an impending global slowdown continues to accumulate as stores remain closed across China, factories reduce capacity, and workers are put on unpaid leave. Moreover, should the virus truly spread to other countries in the west like the USA or in Europe, we see heightened risks of similar measures being implemented there - putting further strain on global growth.We believe investors should use the current market recovery to reduce equity exposure and shift into defensive or digital economy <a href="https://www.smartkarma.com/insights/surging-chinese-demand-for-contactless-delivery-will-accelerate-drone-adoption-in-e-commerce" target="_blank" rel="noopener">"contactless" businesses</a>in order to position prudently for a potential worsening of the epidemic.We cover this in more detail in our note <a href="https://www.smartkarma.com/insights/tencent-the-best-anchor-for-your-portfolio-in-the-coming-coronavirus-storm" target="_blank" data-smartkarma-citation="insights:36346" rel="noopener">Tencent: The Best Anchor for Your Portfolio In the Coming Coronavirus Storm</a>.

Evidence of an impending global slowdown continues to accumulate as stores remain closed across China, factories reduce capacity, and workers are put on unpaid leave. Moreover, should the virus truly spread to other countries in the west like the USA or in Europe, we see heightened risks of similar measures being implemented there - putting further strain on global growth.We believe investors should use the current market recovery to reduce equity exposure and shift into defensive or digital economy "contactless" businessesin order to position prudently for a potential worsening of the epidemic.We cover this in more detail in our note Tencent: The Best Anchor for Your Portfolio In the Coming Coronavirus Storm.

Evidence of Global Slowdown Accumulates as Stores Remain Closed and Supply Chains Are Crippled

United States

Expedia Group, Inc. provides branded online travel services for leisure and small business travelers. The Company offers a wide range of travel shopping and reservation services, providing real-time access to schedule, pricing and availability information for airlines, hotels, and car rental companies.

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Expedia Group, Inc. (EXPE US)

Lessons for Global OTAs: Trip.com Customer Satisfaction Just Soared to All-Time High Amidst Crisis

Trip.com's customer satisfaction just hit an all-time high as travel agencies around the world struggle from the COVID-19 outbreak. We believe the...

Vincent Fernando, CFA

COVID-19: Impact On Global High Yield - Lucror Analytics

While 2020 began on an optimistic note, sentiment has changed significantly with the outbreak of the COVID-19 coronavirus, which has spread...

Lucror Analytics

IAC: A Care-Full Quarter.

This note is a followup to our recent long idea on IAC. The quarter was mostly supportive of our long thesis and the NAV discount has even widened...

Aaron Gabin

ANGI: Still Working to Fix the Price

This note is a follow-up to our recent long idea on ANGI Homeservices. The quarter was mostly supportive of our long thesis.Best Working Thesis:...

Aaron Gabin

Evidence of Global Slowdown Accumulates as Stores Remain Closed and Supply Chains Are Crippled

Evidence of an impending global slowdown continues to accumulate as stores remain closed across China, factories reduce capacity, and workers are...

Vincent Fernando, CFA

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