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.

Event-Driven

<p>On 28 February, <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> disclosed a privatisation offer from Mr Zhu Ning, the CEO. Mr Ning is taking private China Youzan through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. China Youzan will distribute in-specie its equity holdings in Youzan Technology by offering 0.05077265 Youzan Technology share for every China Youzan share along with HK$0.1352 in cash per scheme share. Youzan Technology will be listed on the Main Board of the HKEx. </p><p>The total privatisation price of HK$2.3088 per share is 30.2% and 28.3% discount to the last trading date price of HK$3.31 (25 February 2021) and the last close price of HK$3.23, respectively. The key pre-conditions are HKEx listing approval for Youzan Technology and shareholder approval at the first SGM. The key conditions precedents are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 4,020.8 million shares or 23.31% of shares outstanding. Disinterested scheme shareholders represent 13,239.3 million shares or 76.69% of shares outstanding, which implies the 10% blocking stake is 1,323.9 million shares or 7.67% of shares outstanding.</p><div class="content-highlight"><p>The privatisation offer is fair in both the distribution in-specie (distribution ratio in line with the control ratio) and the cash consideration (in line with the value of the payments business). The discrepancy between the privatisation bid and the current share price can be explained by Youzan Technology's potential standalone value as a listed entity. If Youzan Technology is valued at <a href="https://www.smartkarma.com/entities/shopify-inc-de74469e-4678-489b-9b50-a80a5790c5ef" target="_blank" data-smartkarma-citation="entities:25906:1" rel="noopener">Shopify Inc (SHOP US)</a>’s current trailing EV/Sales multiple of 53.5x (arguably the closest peer), it would imply a fair value of China Youzan of HK$3.54 per share. Overall, we believe that the privatisation bid will succeed due to the reasonable terms.  </p></div>

On 28 February, China Youzan Limited (8083 HK) disclosed a privatisation offer from Mr Zhu Ning, the CEO. Mr Ning is taking private China Youzan through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. China Youzan will distribute in-specie its equity holdings in Youzan Technology by offering 0.05077265 Youzan Technology share for every China Youzan share along with HK$0.1352 in cash per scheme share. Youzan Technology will be listed on the Main Board of the HKEx. The total privatisation price of HK$2.3088 per share is 30.2% and 28.3% discount to the last trading date price of HK$3.31 (25 February 2021) and the last close price of HK$3.23, respectively. The key pre-conditions are HKEx listing approval for Youzan Technology and shareholder approval at the first SGM. The key conditions precedents are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 4,020.8 million shares or 23.31% of shares outstanding. Disinterested scheme shareholders represent 13,239.3 million shares or 76.69% of shares outstanding, which implies the 10% blocking stake is 1,323.9 million shares or 7.67% of shares outstanding.The privatisation offer is fair in both the distribution in-specie (distribution ratio in line with the control ratio) and the cash consideration (in line with the value of the payments business). The discrepancy between the privatisation bid and the current share price can be explained by Youzan Technology's potential standalone value as a listed entity. If Youzan Technology is valued at Shopify Inc (SHOP US)’s current trailing EV/Sales multiple of 53.5x (arguably the closest peer), it would imply a fair value of China Youzan of HK$3.54 per share. Overall, we believe that the privatisation bid will succeed due to the reasonable terms.  

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<p>Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$3.6bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the lock-up, index inclusion and run the deal through our framework.</p><div><p>Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.</p></div><div><p>I've covered various aspects of the deal in my earlier insights: </p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-positives-fast-growth-sticky-customers" target="_blank" rel="noopener">Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers</a>, </li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-negatives-horrendous-data-disclosures-including-no-mention-of-ott-launch" target="_blank" rel="noopener">Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-fair-bit-of-competition-but-it-s-doing-better-than-most-local-peers" target="_blank" rel="noopener">Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-earnings-forecast-and-valuation" target="_blank" rel="noopener">Coupang Pre-IPO - Earnings Forecast and Valuation</a></li>
</ul></div>

Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$3.6bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the lock-up, index inclusion and run the deal through our framework.Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.I've covered various aspects of the deal in my earlier insights: 

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, 
Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch
Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers
Coupang Pre-IPO - Earnings Forecast and Valuation


Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Affirm Holdings  / Equity Capital Markets

<p style="text-align: justify;">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. </p><p style="text-align: justify;">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.</p>

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

<p><strong>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.</strong> 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. </p><p>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. </p>

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

<p>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.</p><p><strong>Wish is an e-commerce platform founded by an ex-Google engineer Piotr Szulczewski (CEO) and Danny Zhang (former CTO).</strong> 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.</p><p>Wish's is focused on serving customers whose number one priority is price.</p>

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.

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)

China Youzan’s Privatisation Proposal

China Youzan disclosed a privatisation offer through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. The...

Arun George

Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion

Coupang aims to raise up to US$3.6bn in its US listing via selling primary and secondary shares. In this note, we’ll talk about the lock-up, index...

Sumeet Singh

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

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