Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/24184" target="_blank" data-smartkarma-citation="entities:24184:1">Baozun Inc. (BZUN US)</a> was our top long idea for the past 8 months with a price target of $45.  At its current $55 per share, the stock price in optimism in the company’s transition from an E-commerce service provider (SP) to Software as a Service (SaaS) business model.  Once it fully transitions to a SaaS business, investors will see an upside in profit margins driven by the scalability of the product, compared to its current client by client, customized projects.  However, according to our checks, the optimism is largely unwarranted. Our new price target is $29, representing 47% downside to current stock price.

Baozun Inc. (BZUN US) was our top long idea for the past 8 months with a price target of $45.  At its current $55 per share, the stock price in optimism in the company’s transition from an E-commerce service provider (SP) to Software as a Service (SaaS) business model.  Once it fully transitions to a SaaS business, investors will see an upside in profit margins driven by the scalability of the product, compared to its current client by client, customized projects.  However, according to our checks, the optimism is largely unwarranted. Our new price target is $29, representing 47% downside to current stock price. 

Turning Negative on Baozun: Software Upgrade Delayed; E-Commerce Premiumization Slows

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

The U.S. has continued to separate itself from broad emerging market and developed international indexes. One positive is that MSCI EM and MSCI EAFE have been able to stabilize from a price perspective in recent weeks despite relative strength weakness vs. MSCI ACWI.  In today’s report we scour the globe for attractive investments, ex-U.S., in an environment where selectivity is key.

The U.S. has continued to separate itself from broad emerging market and developed international indexes. One positive is that MSCI EM and MSCI EAFE have been able to stabilize from a price perspective in recent weeks despite relative strength weakness vs. MSCI ACWI.  In today’s report we scour the globe for attractive investments, ex-U.S., in an environment where selectivity is key.  

Global Equity Strategy: Where to Hide Outside the U.S.

We continue to view the market as healthy in terms of breadth, although rotations are occurring at the margin which warrant minor tweaks to our overall theme of continued consolidation and heightened volatility. Also within our May Equity Strategy, we highlight opportunities within the Technology (Overweight), Financial (Overweight), and Energy (Market weight) Sectors.

We continue to view the market as healthy in terms of breadth, although rotations are occurring at the margin which warrant minor tweaks to our overall theme of continued consolidation and heightened volatility. Also within our May Equity Strategy, we highlight opportunities within the Technology (Overweight), Financial (Overweight), and Energy (Market weight) Sectors.

U.S. Equity Strategy: Upgrading Utilities, Downgrading Manufacturing

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Cafe 24 IPO will start trading tomorrow (February 8th). Cafe24 is the most anticipated IPO so far in Korea in 2018. A combination of the put-option clause with the company's big moat business similar to <a href="https://www.smartkarma.com/entities/25906" target="_blank" data-smartkarma-citation="entities:25906:1">Shopify Inc (SHOP US)</a> has resulted in an extraordinary demand for the company's IPO shares. The hiccup is the market. The global equity markets have shown a steep increase in volatility in the past week and this is likely to result in some of the "weaker-hand" traders that participated in the…

Cafe 24 IPO will start trading tomorrow (February 8th). Cafe24 is the most anticipated IPO so far in Korea in 2018. A combination of the put-option clause with the company's big moat business similar to Shopify Inc (SHOP US) has resulted in an extraordinary demand for the company's IPO shares. The hiccup is the market. The global equity markets have shown a steep increase in volatility in the past week and this is likely to result in some of the "weaker-hand" traders that participated in the…

<ul><li>Our valuation analysis of <a href="https://www.smartkarma.com/entities/25912" target="_blank" data-smartkarma-citation="entities:25912:1">Cafe24 (042000 KF)</a> suggests that we would take this IPO deal. Our base one-year target price suggests a price target of 82,798 won, which is 45% higher than the high end of the IPO price range. </li><li>In this report, we provide a valuation analysis of <a href="https://www.smartkarma.com/entities/25912" target="_blank" data-smartkarma-citation="entities:25912:1">Cafe24 (042000 KF)</a> making adjustments to the company's internal forecasts and applying appropriate valuation multiples. We also compare Cafe24 to Shopify's valuations. </li><li>Many investors are betting that a key competitive advantage of Shopify is the stickiness of its services with its customers and relatively low customer turnover. This trait also exists with Cafe24, albeit it is competing mostly in a smaller e-commerce market in Korea. </li></ul>

Our valuation analysis of Cafe24 (042000 KF) suggests that we would take this IPO deal. Our base one-year target price suggests a price target of 82,798 won, which is 45% higher than the high end of the IPO price range. In this report, we provide a valuation analysis of Cafe24 (042000 KF) making adjustments to the company's internal forecasts and applying appropriate valuation multiples. We also compare Cafe24 to Shopify's valuations. Many investors are betting that a key competitive advantage of Shopify is the stickiness of its services with its customers and relatively low customer turnover. This trait also exists with Cafe24, albeit it is competing mostly in a smaller e-commerce market in Korea. 

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 CN)

Turning Negative on Baozun: Software Upgrade Delayed; E-Commerce Premiumization Slows

Baozun Inc. (BZUN US) was our top long idea for the past 8 months with a price target of $45. At its current $55 per share, the stock price in...

JL Warren Capital

Global Equity Strategy: Where to Hide Outside the U.S.

The U.S. has continued to separate itself from broad emerging market and developed international indexes. One positive is that MSCI EM and MSCI...

Vermilion Research

U.S. Equity Strategy: Upgrading Utilities, Downgrading Manufacturing

We continue to view the market as healthy in terms of breadth, although rotations are occurring at the margin which warrant minor tweaks to our...

Vermilion Research

Cafe24 IPO: D-1 Trading Strategy

Cafe 24 IPO will start trading tomorrow (February 8th). Cafe24 is the most anticipated IPO so far in Korea in 2018. A combination of the put-option...

Douglas Kim

Cafe24: Valuation Analysis

Our valuation analysis of Cafe24 (042000 KF) suggests that we would take this IPO deal. Our base one-year target price suggests a price target of...

Douglas Kim

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