Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Coinbase Global  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/coinbase-global-inc" target="_blank" data-smartkarma-citation="entities:32227:1" rel="noopener">Coinbase (COIN US) </a>plans to complete its direct public listing in April. Coinbase is an operator of one of the largest digital currency exchanges in the world. Established in 2012, Coinbase currently has more than 43 million retail users and 7,000 institutional investors. </p><p>According to the prospectus, the Coinbase shares have traded hands at prices from $200 to $375. The volume weighted average price per share was $343.58 from January to 15 March. Coinbase has recently been valued as high as <a href="https://www.etftrends.com/crypto-channel/coinbase-valued-at-100-billion-ipo-approaches/" target="_blank" rel="noopener">$100 billion</a>, which is a significant increase from its private market value of $8 billion in October 2018. Early investors in Coinbase include Tiger Global Management, Y Combinator Continuity, New York Stock Exchange, and Andreessen Horowitz.</p><div class="content-highlight">
<h2>A $100 Billion Valuation?</h2>
<p>Numerous media sources have cited that Coinbase is seeking about <a href="https://www.bloomberg.com/opinion/articles/2021-03-02/coinbase-ipo-coin-the-crypto-exchange-is-a-100-billion-cult" target="_blank" rel="noopener">$100 billion</a> in valuation at its direct public listing. Despite the numerous positive factors (such as surging sales growth and turn to profitability), it is difficult to argue for this high of a valuation. At $100 billion valuation, it would represent a whopping 78x P/S multiple (using 2020 sales). It certainly helps that Bitcoin and Ethereum have been surging in prices in the past year.</p>
<p>Nonetheless, even Coinbase itself has pointed out in its prospectus that Bitcoin has experienced four major cycles since its launch (the fourth cycle is still ongoing). We would argue that for the prudent investors, there is no rush to buy Coinbase while Bitcoin price is near at its all time highs. The prudent investor should wait until there is a major correction in the Bitcoin price to see how the Coinbase's financials are able to withstand such correction. </p>
<p><strong>In addition, we would argue that as the Bitcoin and crypto trading become more mainstream, the trading fees for the cryptos WILL GO DOWN much more significantly, which is likely to negatively impact Coinbase.  </strong></p>
</div>

Coinbase (COIN US) plans to complete its direct public listing in April. Coinbase is an operator of one of the largest digital currency exchanges in the world. Established in 2012, Coinbase currently has more than 43 million retail users and 7,000 institutional investors. According to the prospectus, the Coinbase shares have traded hands at prices from $200 to $375. The volume weighted average price per share was $343.58 from January to 15 March. Coinbase has recently been valued as high as $100 billion, which is a significant increase from its private market value of $8 billion in October 2018. Early investors in Coinbase include Tiger Global Management, Y Combinator Continuity, New York Stock Exchange, and Andreessen Horowitz.
A $100 Billion Valuation?
Numerous media sources have cited that Coinbase is seeking about $100 billion in valuation at its direct public listing. Despite the numerous positive factors (such as surging sales growth and turn to profitability), it is difficult to argue for this high of a valuation. At $100 billion valuation, it would represent a whopping 78x P/S multiple (using 2020 sales). It certainly helps that Bitcoin and Ethereum have been surging in prices in the past year.
Nonetheless, even Coinbase itself has pointed out in its prospectus that Bitcoin has experienced four major cycles since its launch (the fourth cycle is still ongoing). We would argue that for the prudent investors, there is no rush to buy Coinbase while Bitcoin price is near at its all time highs. The prudent investor should wait until there is a major correction in the Bitcoin price to see how the Coinbase's financials are able to withstand such correction. 
In addition, we would argue that as the Bitcoin and crypto trading become more mainstream, the trading fees for the cryptos WILL GO DOWN much more significantly, which is likely to negatively impact Coinbase.  


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/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (1569395D CH)</a> is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. </p></div><div><p>At the proposed IPO price range of HK$26.50-31.80 per share, Bairong will have a market cap of HK$13,125.2-15,750.2 million ($1.7-2.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$3,440.7 million ($443 million). Three cornerstone investors will purchase $220 million worth of the offer shares (47.29% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are Cederberg (a London-based fund manager), China Structural Reform Fund and Franchise Fund. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/bairong-ipo-initiation-creditworthy" target="_blank" data-smartkarma-citation="insights:49249" rel="noopener">Bairong IPO Initiation: Creditworthy</a>, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. </p></div></div></div>

Bairong (1569395D CH) is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. At the proposed IPO price range of HK$26.50-31.80 per share, Bairong will have a market cap of HK$13,125.2-15,750.2 million ($1.7-2.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$3,440.7 million ($443 million). Three cornerstone investors will purchase $220 million worth of the offer shares (47.29% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are Cederberg (a London-based fund manager), China Structural Reform Fund and Franchise Fund. In Bairong IPO Initiation: Creditworthy, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. 

<div><p><a href="https://www.smartkarma.com/entities/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (1569395D CH)</a> is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. Bairong is aiming to launch its $300-500 million HKEx IPO as soon as this Friday, according to press reports. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/bairong-ipo-initiation-creditworthy" target="_blank" data-smartkarma-citation="insights:49249" rel="noopener">Bairong IPO Initiation: Creditworthy</a>, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. In this note, we present our forecasts and take the first look at Bairong's potential valuation. </p></div></div></div>

Bairong (1569395D CH) is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. Bairong is aiming to launch its $300-500 million HKEx IPO as soon as this Friday, according to press reports. In Bairong IPO Initiation: Creditworthy, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. In this note, we present our forecasts and take the first look at Bairong's potential valuation. 

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

Palantir Technologies  / Equity Bottom-Up

<p>Palantir generated $93M more revenues this quarter then a year ago. From that $93M, the company generated $174M more in operating income, which swung its EBIT margins from (31%) to 32% YoY…adjusted EBITDA margins of course (there was $1B in incremental SBC). In any case, that is some sort of remarkable business. Especially for a software company that is building a direct sales force and theoretically needs to be investing heavily in R&amp;D to keep up with the competition. Palantir talks about generating insight through the fog of war, but in our short time analyzing this company, we can’t find our way through the fog.</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>

Palantir generated $93M more revenues this quarter then a year ago. From that $93M, the company generated $174M more in operating income, which swung its EBIT margins from (31%) to 32% YoY…adjusted EBITDA margins of course (there was $1B in incremental SBC). In any case, that is some sort of remarkable business. Especially for a software company that is building a direct sales force and theoretically needs to be investing heavily in R&amp;D to keep up with the competition. Palantir talks about generating insight through the fog of war, but in our short time analyzing this company, we can’t find our way through the fog.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.

Palantir 4Q20 Earnings: The Greatest Operating Leverage Story Ever Told

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Palantir Technologies  / Equity Capital Markets

<p>Palantir dropped after releasing earnings as the company offered relatively downbeat guidance for 2021 revenue growth (over 30% YoY). This would be a marked deceleration from the +40% YoY in 4Q20, 47% YoY growth for 2020 overall and the 45% growth guided for 1Q. Profitability metrics excluding SBC, if anything improved from already impressive levels but SBC expense was high and if this continues, it could affect the attractiveness of the stock.</p>

Palantir dropped after releasing earnings as the company offered relatively downbeat guidance for 2021 revenue growth (over 30% YoY). This would be a marked deceleration from the +40% YoY in 4Q20, 47% YoY growth for 2020 overall and the 45% growth guided for 1Q. Profitability metrics excluding SBC, if anything improved from already impressive levels but SBC expense was high and if this continues, it could affect the attractiveness of the stock.

Palantir – Stock Based Compensation Costs Still High as Lockups Expire

United States

Palantir Technologies Inc. develops software to analyze information. The Company offers solutions support many kinds of data including structured, unstructured, relational, temporal, and geospatial. Palantir Technologies serves customers worldwide.

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Palantir Technologies (PLTR US)

Coinbase Direct Public Listing Preview

We would argue that as the Bitcoin and crypto trading become more mainstream, the trading fees for the cryptos WILL GO DOWN much more...

Douglas Kim

Bairong IPO: Valuation Insights

Bairong has launched its IPO to raise net proceeds of $443m at the mid-point of the IPO price range of HK$26.50-31.80 per share. Our valuation...

Arun George

Bairong IPO: Valuation First Look

Bairong is aiming to launch its $300-500m HKEx IPO as soon as this Friday, according to press reports. In this note, we present our forecasts and...

Arun George

Palantir 4Q20 Earnings: The Greatest Operating Leverage Story Ever Told

Palantir's quarter, much like the rest of the company was perplexing. We believe the stock is overvalued even in the high 20s, and the coming...

Aaron Gabin

Palantir – Stock Based Compensation Costs Still High as Lockups Expire

Palantir beat consensus revenue estimates but provided tepid guidance prompting a sell off ahead of lockup expiry. Long-term prospects remain...

Mio Kato

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