Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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Our base case valuation of DoorDash is $45 billion or $116 per share, which is 37% higher than the high end of the IPO price range of $75 per $85 per share. Given the attractive upside, we have positive view of the DoorDash IPO. In our comparable companies valuation analysis, we used <a href="https://www.smartkarma.com/entities/grubhub-inc" target="_blank" data-smartkarma-citation="entities:5881:1" rel="noopener">Grubhub Inc (GRUB US)</a>, <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>, and <a href="https://www.smartkarma.com/entities/just-eat-takeaway-908587b0-d4c9-488a-801b-2910cf29e24b" target="_blank" data-smartkarma-citation="entities:28360:1" rel="noopener">Just Eat Takeaway (TKWY NA) </a>to value DoorDash.
To derive our target market cap of $45 billion, we used a P/S multiple of 8.7x based on our estimated sales of $5.2 billion in 2021. Our target price valuation multiple of 8.7x is based on a 75% premium to Just Eat Takeaway's P/S multiple of 5.0x, which is at the high end of the comps' valuation multiple in 2021.
We believe this valuation multiple premium to DoorDash is appropriate versus its comps mainly due to DoorDash's higher sales growth rate, more dominant market share, higher operating margins, and a more aggressive improvement in operating margins in the past two years.
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Our base case valuation of DoorDash is $45 billion or $116 per share, which is 37% higher than the high end of the IPO price range of $75 per $85 per share. Given the attractive upside, we have positive view of the DoorDash IPO. In our comparable companies valuation analysis, we used Grubhub Inc (GRUB US), Delivery Hero SE (DHER GY), and Just Eat Takeaway (TKWY NA) to value DoorDash.
To derive our target market cap of $45 billion, we used a P/S multiple of 8.7x based on our estimated sales of $5.2 billion in 2021. Our target price valuation multiple of 8.7x is based on a 75% premium to Just Eat Takeaway's P/S multiple of 5.0x, which is at the high end of the comps' valuation multiple in 2021.
We believe this valuation multiple premium to DoorDash is appropriate versus its comps mainly due to DoorDash's higher sales growth rate, more dominant market share, higher operating margins, and a more aggressive improvement in operating margins in the past two years.


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.

<a href="https://www.smartkarma.com/entities/dada-nexus-ltd" target="_blank" data-smartkarma-citation="entities:28961:1" rel="noopener">Dada Nexus Ltd (DADA US)</a> is seeking to raise as much as $521 million (at the last close price) through an issue of 9 million ADSs. The funds will be used for implementing its marketing initiatives and growing its user base, for investing in technology and research and development, as well as for general corporate purposes.The follow-on offering comes just five months from the June IPO, where Dada Nexus raised net proceeds of $297.9 million at $16 per ADS. The shares have been of a tear and have risen 3.6x since the IPO. The net cash including lease liabilities stood at $450 million at the end of 9M20. <div class="content-highlight">We remain bullish on Dada Nexus’ prospects and believe that the company remains on track to combine its fast-paced growth with profitability. Notwithstanding, the strong share price run, the shares continue to look attractive for the growth on offer. Overall, we would participate in the placement.</div>

Dada Nexus Ltd (DADA US) is seeking to raise as much as $521 million (at the last close price) through an issue of 9 million ADSs. The funds will be used for implementing its marketing initiatives and growing its user base, for investing in technology and research and development, as well as for general corporate purposes.The follow-on offering comes just five months from the June IPO, where Dada Nexus raised net proceeds of $297.9 million at $16 per ADS. The shares have been of a tear and have risen 3.6x since the IPO. The net cash including lease liabilities stood at $450 million at the end of 9M20. We remain bullish on Dada Nexus’ prospects and believe that the company remains on track to combine its fast-paced growth with profitability. Notwithstanding, the strong share price run, the shares continue to look attractive for the growth on offer. Overall, we would participate in the placement.

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

In a new filing on Monday, US online food delivery giant DoorDash disclosed additional details of its planned IPO. The company hopes to sell 33 mn new shares at between US$75 and US$85 per share, raising over US$2.4 bn and valuing the company at US$25 bn or more. In this note we compare it to other listed online food delivery firms, and discuss which factors could justify either higher valuation multiples (strong revenue growth) or lower valuation multiples (US restaurant closures) versus global peers.

In a new filing on Monday, US online food delivery giant DoorDash disclosed additional details of its planned IPO. The company hopes to sell 33 mn new shares at between US$75 and US$85 per share, raising over US$2.4 bn and valuing the company at US$25 bn or more. In this note we compare it to other listed online food delivery firms, and discuss which factors could justify either higher valuation multiples (strong revenue growth) or lower valuation multiples (US restaurant closures) versus global peers. 

DoorDash IPO: First Take on Proposed IPO Price Range of US$75-85 Per Share

US-based online food delivery company <a href="https://www.smartkarma.com/entities/doordash-inc" target="_blank" data-smartkarma-citation="entities:28881:1" rel="noopener">DoorDash Inc (0881510D US)</a> has filed to go public. In this note we describe the company's operations and compare its scale and efficiency to other online food delivery companies in the US and around the globe. 
Intensely focused and increasingly dominant in its home market, DoorDash has made admirable progress toward profitability by focusing on smaller cities and suburban areas in the US. This approach is the opposite of conventional wisdom, which suggests that only a handful of large US cities can generate the order density necessary to make online food delivery economically viable. 
DoorDash is seeking growth from new market segments adjacent to its core operation even as it faces the threat of a large, disruptive new entrant in US online food delivery. Last valued at US$16 bn in June 2020, we believe DoorDash's unorthodox approach deserves to be thoroughly understood by investors. We will write more about DoorDash as the IPO process moves forward.

US-based online food delivery company DoorDash Inc (0881510D US) has filed to go public. In this note we describe the company's operations and compare its scale and efficiency to other online food delivery companies in the US and around the globe. 
Intensely focused and increasingly dominant in its home market, DoorDash has made admirable progress toward profitability by focusing on smaller cities and suburban areas in the US. This approach is the opposite of conventional wisdom, which suggests that only a handful of large US cities can generate the order density necessary to make online food delivery economically viable. 
DoorDash is seeking growth from new market segments adjacent to its core operation even as it faces the threat of a large, disruptive new entrant in US online food delivery. Last valued at US$16 bn in June 2020, we believe DoorDash's unorthodox approach deserves to be thoroughly understood by investors. We will write more about DoorDash as the IPO process moves forward.

DoorDash IPO Context: What It Is & How It Compares to Online Food Delivery Universe

We hope <a href="https://www.smartkarma.com/entities/dida-inc" target="_blank" data-smartkarma-citation="entities:29701:1" rel="noopener">Dida (DIDA HK)</a> will publish another set of updated financial statements (from Q3 2020) before it lists in Hong Kong later this year. If and when those results are published, investors should study them carefully to detect signs of a resurgent <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (1284375D CH)</a> , the ride-hailing giant that exited the car pool market in late 2018 but quietly re-entered about a year ago.
The two most telling signs of a DiDi ChuXing resurgence in the car pool segment would be: 
<ol>
<li>Dida Inc's car pool revenue growing slower than its car pool ride volume or GTV</li>
<li>A sharp rise in Sales &amp; Marketing expenses relative to DiDa Inc's overall revenue</li>
</ol>
Both of the above metrics would be reflected in DiDa Inc's car pool 'take rate': the net revenue it earns on booking car pool rides after deducting any incentives paid to drivers, payments that have likely diminished dramatically in the two years since Didi ChuXing exited the market. 
We suspect that in the absence of a large, savvy competitor (like DiDi ChuXing), DiDa Inc's 'take rate' is higher and its spending on Sales &amp; Marketing is lower than it would be otherwise. Signs that DiDi ChuXing is aggressively pushing its way back into this market -- which it used to dominate, and not so long ago -- would be negative for DiDa Inc, in our view.
In fact, the 'free ride' DiDa Inc has enjoyed as the dominant (and quite profitable) player in the growing car pool segment could come to an end.

We hope Dida (DIDA HK) will publish another set of updated financial statements (from Q3 2020) before it lists in Hong Kong later this year. If and when those results are published, investors should study them carefully to detect signs of a resurgent DiDi Chuxing (1284375D CH) , the ride-hailing giant that exited the car pool market in late 2018 but quietly re-entered about a year ago.
The two most telling signs of a DiDi ChuXing resurgence in the car pool segment would be: 

Dida Inc's car pool revenue growing slower than its car pool ride volume or GTV
A sharp rise in Sales &amp; Marketing expenses relative to DiDa Inc's overall revenue

Both of the above metrics would be reflected in DiDa Inc's car pool 'take rate': the net revenue it earns on booking car pool rides after deducting any incentives paid to drivers, payments that have likely diminished dramatically in the two years since Didi ChuXing exited the market. 
We suspect that in the absence of a large, savvy competitor (like DiDi ChuXing), DiDa Inc's 'take rate' is higher and its spending on Sales &amp; Marketing is lower than it would be otherwise. Signs that DiDi ChuXing is aggressively pushing its way back into this market -- which it used to dominate, and not so long ago -- would be negative for DiDa Inc, in our view.
In fact, the 'free ride' DiDa Inc has enjoyed as the dominant (and quite profitable) player in the growing car pool segment could come to an end. 

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

United Kingdom

Just Eat Takeaway.com N.V. is an online food ordering company. The Company offers mobile application for ordering and delivering of food and beverages. Just Eat Takeaway.com serves customers worldwide.

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Just Eat Takeaway.com NV (TKWY NA)

DoorDash IPO Valuation Analysis

Our base case valuation of DoorDash is $45 billion or $116 per share, which is 37% higher than the high end of the IPO price range of $75 to $85...

Douglas Kim

Dada Nexus Placement: Ascend and Deliver

Dada Nexus is seeking to raise as much as $521 million through an issue of 9 million ADSs. Overall, we would participate in the placement.

Arun George

DoorDash IPO Context: What It Is & How It Compares to Online Food Delivery Universe

US-based on-demand food delivery company DoorDash plans to list soon. In this note we show investors how DoorDash differs from some of its peers in...

Tracking Traffic

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

DiDa Inc has carved out a niche for itself in China's growing car pool segment. But should ride-hailing giant DiDi ChuXing re-emerge as a player,...

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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DoorDash IPO Valuation Analysis

Our base case valuation of DoorDash is $45 billion or $116 per share, which is 37% higher than the high end of the IPO price range of $75 to $85...

Douglas Kim

Dada Nexus Placement: Ascend and Deliver

Dada Nexus is seeking to raise as much as $521 million through an issue of 9 million ADSs. Overall, we would participate in the placement.

Arun George

DoorDash IPO: First Take on Proposed IPO Price Range of US$75-85 Per Share

On some metrics, US-based online food delivery company looks reasonably priced at the mid-point of its IPO range. We highlight some factors that...

Tracking Traffic

DoorDash IPO Context: What It Is & How It Compares to Online Food Delivery Universe

US-based on-demand food delivery company DoorDash plans to list soon. In this note we show investors how DoorDash differs from some of its peers in...

Tracking Traffic

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

DiDa Inc has carved out a niche for itself in China's growing car pool segment. But should ride-hailing giant DiDi ChuXing re-emerge as a player,...

Tracking Traffic