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.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.</p></div><div><p>Coupang is seeking to raise up to $2 billion at a $50 billion valuation, according to Reuters. The rumoured valuation is a significant increase to the December 2018 fundraising at a $9 billion valuation, according to press reports. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/coupang-ipo-initiation-delivering-the-goods" target="_blank" data-smartkarma-citation="insights:48125" rel="noopener">Coupang IPO Initiation: Delivering the Goods</a>, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In this note, we take a first look at Coupang's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.</p></div></div></div>

Coupang (CPNG US) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.Coupang is seeking to raise up to $2 billion at a $50 billion valuation, according to Reuters. The rumoured valuation is a significant increase to the December 2018 fundraising at a $9 billion valuation, according to press reports. In Coupang IPO Initiation: Delivering the Goods, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In this note, we take a first look at Coupang's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>A surge in domestic eCommerce took that segment to its highest profitability in four years but accelerating mobile losses were much higher and hopes for a recovery in that segment have been pushed out to FY22. In addition to operational losses, network investment plans have also been raised by up to ¥240bn, although this should be less surprising as the original plans were always too optimistic despite all the cloud virtualization talk.  Lastly, fintech results were mixed as top-line growth slowed from previous quarters and profitability slipped on higher marketing spend for its credit card and payments business.</p>

A surge in domestic eCommerce took that segment to its highest profitability in four years but accelerating mobile losses were much higher and hopes for a recovery in that segment have been pushed out to FY22. In addition to operational losses, network investment plans have also been raised by up to ¥240bn, although this should be less surprising as the original plans were always too optimistic despite all the cloud virtualization talk.  Lastly, fintech results were mixed as top-line growth slowed from previous quarters and profitability slipped on higher marketing spend for its credit card and payments business.

Rakuten Q4 20 Results: Mobile Losses Accelerate as Cash Requirements Become Clear

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<p>Zozo promised significant category expansion 18 months ago and it has delivered.</p><p>Last year, the online mall added a dedicated footwear section complete with measuring tool and then a new section offering a large line up of DtoC brands.</p><p>This Spring it will add cosmetics alongside yet another data collection tool, this time for skin analysis, as well as a new premium and luxury section with 70 brands.</p><p>Zozo expects to become the biggest online cosmetics store within a year, a realistic goal (Zozo customers spend<strong> ¥82,200 a year on cosmetics, 2.2 times the average for Japan as a whole).</strong></p><p>In the meantime, GMVs and OP are improving strongly – while Zozo still has some headwinds in the form of competition and falling shipment values, the strong impetus from the consumer shift to digital, a decent management team, and its category and territory expansion bode well for the immediate future.</p>

Zozo promised significant category expansion 18 months ago and it has delivered.Last year, the online mall added a dedicated footwear section complete with measuring tool and then a new section offering a large line up of DtoC brands.This Spring it will add cosmetics alongside yet another data collection tool, this time for skin analysis, as well as a new premium and luxury section with 70 brands.Zozo expects to become the biggest online cosmetics store within a year, a realistic goal (Zozo customers spend ¥82,200 a year on cosmetics, 2.2 times the average for Japan as a whole).In the meantime, GMVs and OP are improving strongly – while Zozo still has some headwinds in the form of competition and falling shipment values, the strong impetus from the consumer shift to digital, a decent management team, and its category and territory expansion bode well for the immediate future.

<p><a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a>  posted a sharp improvement in sales at Rakuten Ichiba in 2020 as customers flocked to the e-commerce platform in lieu of shopping at physical stores. Based on our estimates, Rakuten and Amazon are pretty much neck and neck for leadership in e-commerce in Japan.</p>
<p>Going forward, Rakuten is hoping that the growth in cross-use of its e-commerce service by its new mobile subscriber base will continue as it works further to improve fulfilment reliability and coverage both alone and through its new joint venture with Japan Post.</p>
<p>In recognition of the increasing diversity of the company’s businesses, Rakuten will change its name to Rakuten Group from April.</p>

Rakuten Inc (4755 JP)  posted a sharp improvement in sales at Rakuten Ichiba in 2020 as customers flocked to the e-commerce platform in lieu of shopping at physical stores. Based on our estimates, Rakuten and Amazon are pretty much neck and neck for leadership in e-commerce in Japan.
Going forward, Rakuten is hoping that the growth in cross-use of its e-commerce service by its new mobile subscriber base will continue as it works further to improve fulfilment reliability and coverage both alone and through its new joint venture with Japan Post.
In recognition of the increasing diversity of the company’s businesses, Rakuten will change its name to Rakuten Group from April.

<p>Softbank has lifted its full-year guidance for revenue and operating profit after a second consecutive solid quarter, driven by growth in sales to enterprise customers and a smaller budget for coronavirus-related expenses. Looking past Q4, the outlook for FY21 appears positive despite anticipated revenue erosion from reductions in consumer mobile pricing. <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a>  shares trade at a premium to the sector thanks to heavier Internet exposure from Z Holdings but this year it is delivering leading financial momentum too.  </p>

Softbank has lifted its full-year guidance for revenue and operating profit after a second consecutive solid quarter, driven by growth in sales to enterprise customers and a smaller budget for coronavirus-related expenses. Looking past Q4, the outlook for FY21 appears positive despite anticipated revenue erosion from reductions in consumer mobile pricing. Softbank Corp (9434 JP)  shares trade at a premium to the sector thanks to heavier Internet exposure from Z Holdings but this year it is delivering leading financial momentum too.  

Softbank Corp. Q3 20 Results: Full-Year Guidance up After Second Clear Financial Beat

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Coupang IPO: Valuation First Look

Coupang is seeking a $50 billion valuation, according to Reuters. Overall, based on our valuation analysis, we think that the rumoured IPO...

Arun George

Rakuten Q4 20 Results: Mobile Losses Accelerate as Cash Requirements Become Clear

For Q4, Rakuten eCommerce gains have been overshadowed by cash burn in mobile. Unfortunately, guidance calls for more losses in FY21 and higher...

Kirk Boodry

Zozo on the March Again

Zozo is back with a stronger, more cohesive and collegiate management team, clear focus and the backing of Softbank to make it happen. The future...

Michael Causton

Rakuten Surges in 2020

Rakuten's Ichiba online shopping platform had a great year based on early numbers coming from CEO Mikitani and looks to have plenty to look forward...

Michael Causton

Softbank Corp. Q3 20 Results: Full-Year Guidance up After Second Clear Financial Beat

Softbank has lifted its full-year guidance for revenue and operating profit after a second consecutive solid quarter and appears optimistic on the...

Kirk Boodry

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