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

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Capital Markets

Affirm Holdings  / Equity Capital Markets

Founded in 2012 by PayPal co-founder Max Levchin, Affirm is mobile-first non-bank lender with innovative business model offering “Buy Now, Pay Later” (BNPL) lending products for consumers and effective commerce solutions for merchants. Peloton, Casper Sleep, Walmart, Gucci, The RealReal, Expedia and Priceline.com have merchant partnership agreements with Affirm. A number of such high traffic e-commerce platforms as Shopify, Magento, WooCommerce and BigCommerce can be integrated within the Affirm’s network seamlessly. Morgan Stanley, Goldman Sachs and Allen &amp; Company are lead underwriters on the upcoming IPO, that could come early next year. Affirm raised more than $1.5 billion in funding over 9 rounds, according to Pitchbook and Crunchbase. Their latest $500 million Series G round was led by GIC, Durable Capital Partners and brought Affirm’s private valuation to ~$5 billion.

Founded in 2012 by PayPal co-founder Max Levchin, Affirm is mobile-first non-bank lender with innovative business model offering “Buy Now, Pay Later” (BNPL) lending products for consumers and effective commerce solutions for merchants. Peloton, Casper Sleep, Walmart, Gucci, The RealReal, Expedia and Priceline.com have merchant partnership agreements with Affirm. A number of such high traffic e-commerce platforms as Shopify, Magento, WooCommerce and BigCommerce can be integrated within the Affirm’s network seamlessly. Morgan Stanley, Goldman Sachs and Allen &amp; Company are lead underwriters on the upcoming IPO, that could come early next year. Affirm raised more than $1.5 billion in funding over 9 rounds, according to Pitchbook and Crunchbase. Their latest $500 million Series G round was led by GIC, Durable Capital Partners and brought Affirm’s private valuation to ~$5 billion.

Affirm Holdings Pre-IPO Analysis. Follow The Most Famous "Buy Now, Pay Later" Trend

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

On 8 December, <a href="https://www.smartkarma.com/entities/cafe24-corp" target="_blank" data-smartkarma-citation="entities:25912:1" rel="noopener">Cafe24 Corp (042000 KS)</a> (Korea's Shopify) announced that it will integrate the new products uploaded to online stores in real time for Facebook users world-wide. This is a major event for Cafe24, one that could significantly increase its sales and profits. Thousands of SMEs and large companies in Korea are likely to use more services and products from Cafe24 due to this partnership program with Facebook. In our base case valuation, we use an estimated EBITDA of 48 billion won in 2021 and apply an EV/EBITDA multiple of 19x (an average of EV/EBITDA multiples in 2020 and 2021) to derive an implied EV of 912 billion won and implied market cap of 959 billion won. This results in an implied price of 101,697 won per share, which represents a 50% upside from current levels. Given the strong upside, we have a positive view of Cafe24 at current valuation levels.

On 8 December, Cafe24 Corp (042000 KS) (Korea's Shopify) announced that it will integrate the new products uploaded to online stores in real time for Facebook users world-wide. This is a major event for Cafe24, one that could significantly increase its sales and profits. Thousands of SMEs and large companies in Korea are likely to use more services and products from Cafe24 due to this partnership program with Facebook. In our base case valuation, we use an estimated EBITDA of 48 billion won in 2021 and apply an EV/EBITDA multiple of 19x (an average of EV/EBITDA multiples in 2020 and 2021) to derive an implied EV of 912 billion won and implied market cap of 959 billion won. This results in an implied price of 101,697 won per share, which represents a 50% upside from current levels. Given the strong upside, we have a positive view of Cafe24 at current valuation levels. 

Cafe24 (Korea's Shopify) Integrates Facebook Shops In Real-Time

Wish is getting ready to complete its IPO in the U.S. by the end of this year. Wish is among the four major U.S. tech related IPOs, including Airbnb, DoorDash, and Roblox that are trying to complete their IPOs by the end of this year. All four of these IPOs are outstanding companies with superior business models. DoorDash and Airbnb are seeking $30 billion or more in valuation. Wish is seeking valuation in the $25 billion to $30 billion or more, and Roblox's IPO could fetch at least $10 billion to $15 billion or more. In other words, the U.S. tech IPO market is likely to end with a Bang rather than a Whimper. Wish has put an IPO placeholder at $1 billion but this figure is likely to be revised up materially.Wish is an e-commerce platform founded by an ex-Google engineer Piotr Szulczewski (CEO) and Danny Zhang (former CTO). These two founders are college buddies from the University of Waterloo.<a href="https://www.forbes.com/sites/parmyolson/2019/03/13/meet-the-billionaire-who-defied-amazon-and-built-wish-the-worlds-most-downloaded-e-commerce-app/" target="_blank" rel="noopener"> Szulczewski</a> was 11 years old when his parents immigrated to Canada from Poland when the Soviet Union collapsed. Early on his career, the founder Piotr Szulczewski worked at Google for about a decade, including spending some time in South Korea. Szulczewski left Google in 2009 and formed Wish a year later. Back in 2016, Amazon gave an interest to acquire Wish (amount unspecified) but Szulczewski turned it down. Good for him since he is now worth a lot more than if he had taken that offer.Wish's is focused on serving customers whose number one priority is price.

Wish is getting ready to complete its IPO in the U.S. by the end of this year. Wish is among the four major U.S. tech related IPOs, including Airbnb, DoorDash, and Roblox that are trying to complete their IPOs by the end of this year. All four of these IPOs are outstanding companies with superior business models. DoorDash and Airbnb are seeking $30 billion or more in valuation. Wish is seeking valuation in the $25 billion to $30 billion or more, and Roblox's IPO could fetch at least $10 billion to $15 billion or more. In other words, the U.S. tech IPO market is likely to end with a Bang rather than a Whimper. Wish has put an IPO placeholder at $1 billion but this figure is likely to be revised up materially.Wish is an e-commerce platform founded by an ex-Google engineer Piotr Szulczewski (CEO) and Danny Zhang (former CTO). These two founders are college buddies from the University of Waterloo. Szulczewski was 11 years old when his parents immigrated to Canada from Poland when the Soviet Union collapsed. Early on his career, the founder Piotr Szulczewski worked at Google for about a decade, including spending some time in South Korea. Szulczewski left Google in 2009 and formed Wish a year later. Back in 2016, Amazon gave an interest to acquire Wish (amount unspecified) but Szulczewski turned it down. Good for him since he is now worth a lot more than if he had taken that offer.Wish's is focused on serving customers whose number one priority is price.

Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

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.

<a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> plans to raise around $5bn through an issue of ADS and convertible bonds. PDD will offer $1.75bn worth of 5-year bonds convertible from 2023-25 and around 22m ADS worth around $3bn (at the market price of $132.4 as of 17/11/2020).
Proceeds from the placement will be used to invest in agricultural logistics infrastructure and responsive manufacturing as a part of the company’s broader strategy to take on e-commerce giants like <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> by tapping into the emerging online grocery shopping market.
In this note, we revisit our thesis on PDD ahead of the proposed placement.
PDD’s valuation looks bit of a stretch against Chinese e-commerce peers, however, not so much against other high-growth large-cap names. PDD’s share price has increased by more than 200% YTD and the momentum is still quite strong. With PDD potentially nearing profitability, we believe there could be further gains to be made on good news over the next few quarters. We would participate in the placement at the current valuation.

Pinduoduo (PDD US) plans to raise around $5bn through an issue of ADS and convertible bonds. PDD will offer $1.75bn worth of 5-year bonds convertible from 2023-25 and around 22m ADS worth around $3bn (at the market price of $132.4 as of 17/11/2020).
Proceeds from the placement will be used to invest in agricultural logistics infrastructure and responsive manufacturing as a part of the company’s broader strategy to take on e-commerce giants like Alibaba Group (BABA US) and JD.com Inc (ADR) (JD US) by tapping into the emerging online grocery shopping market.
In this note, we revisit our thesis on PDD ahead of the proposed placement.
PDD’s valuation looks bit of a stretch against Chinese e-commerce peers, however, not so much against other high-growth large-cap names. PDD’s share price has increased by more than 200% YTD and the momentum is still quite strong. With PDD potentially nearing profitability, we believe there could be further gains to be made on good news over the next few quarters. We would participate in the placement at the current valuation.  

Pinduoduo Placement: As Expensive As It May Seem, There Could Be More Upside

Canada

Shopify Inc. provides a cloud-based commerce platform. The Company offers a platform for merchants to create an omni-channel experience that helps showcase the merchant's brand. Shopify serves customers in Canada.

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Shopify (SHOP US)

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

Affirm Holdings Pre-IPO Analysis. Follow The Most Famous "Buy Now, Pay Later" Trend

We forecast substantial post-IPO upside for shares of Affirm in long-awaited IPO and believe fintech decacorn may become a clear leader with 30%+...

Andrei Zakharov

Cafe24 (Korea's Shopify) Integrates Facebook Shops In Real-Time

On 8 December, Cafe24 Corp (042000 KS) (Korea's Shopify) announced that it will integrate the new products uploaded to online stores in real time...

Douglas Kim

Wish IPO Preview

Wish has become the most downloaded global shopping app for each of the last three years. Wish is one of the most highly anticipated IPOs in the...

Douglas Kim

Pinduoduo Placement: As Expensive As It May Seem, There Could Be More Upside

Pinduoduo (PDD US) plans to raise around $5bn through an issue of ADS and convertible bonds. In this note, we revisit our thesis on PDD ahead of...

Supun Walpola

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