Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Palantir Technologies  / Equity Capital Markets

<p>Palantir is ready to complete its Direct Public Listing on September 23rd. </p>
<p>Our valuation analysis suggests an implied market cap of $29.7 billion and a target price of $13.7 per share for Palantir (49% higher than the base price of $9.2 per share). The IPO price range is from $11.1 (low) to $16.6 per share (high). Assuming Direct Public Listing (DPL) market cap of $20 billion and diluted shares of 2.17 billion, this suggests $9.2 per share. Given the solid upside, we have a positive view of this DPL.</p>
<p>There are three key positives with Palantir which we believe are likely to outweigh its negatives, leading many investors to value this company at nearly $30 billion.</p>
<ul>
<li>First, we believe the <strong>company's accelerating sales growth</strong> since the launch of its Foundry product in 2017 is likely to be valued highly. The company's sales growth is clearly much higher than its peers in 2020. </li>
<li>
<div class="content-highlight">Second, Palantir has picked a <strong>great time</strong> to complete its public offering with great investors demand high-quality software-related stocks this year.</div>
</li>
</ul>
<ul>
<li>Third, Palantir has been enjoying a noticeable improvement in its operating margins and the company possesses a strong balance sheet. </li>
</ul>

Palantir is ready to complete its Direct Public Listing on September 23rd. 
Our valuation analysis suggests an implied market cap of $29.7 billion and a target price of $13.7 per share for Palantir (49% higher than the base price of $9.2 per share). The IPO price range is from $11.1 (low) to $16.6 per share (high). Assuming Direct Public Listing (DPL) market cap of $20 billion and diluted shares of 2.17 billion, this suggests $9.2 per share. Given the solid upside, we have a positive view of this DPL.
There are three key positives with Palantir which we believe are likely to outweigh its negatives, leading many investors to value this company at nearly $30 billion.

First, we believe the company's accelerating sales growth since the launch of its Foundry product in 2017 is likely to be valued highly. The company's sales growth is clearly much higher than its peers in 2020. 

Second, Palantir has picked a great time to complete its public offering with great investors demand high-quality software-related stocks this year.



Third, Palantir has been enjoying a noticeable improvement in its operating margins and the company possesses a strong balance sheet. 


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

<p>Our view remains bullish as long as the S&amp;P 500 is above the 2940-2980 support zone and we suggest buying any dips. Additionally, 3076 is a short-term support level to watch on the S&amp;P 500; if 3076 holds it would be further confirmation that the bulls are still in charge. In today’s report we highlight attractive Groups and stocks within Technology: Semiconductors, Mid-Cap, Semiconductor Equip., Large/Mid-Cap, Software, Data Analysis &amp; Solutions, Software, E-Commerce.</p>

Our view remains bullish as long as the S&amp;P 500 is above the 2940-2980 support zone and we suggest buying any dips. Additionally, 3076 is a short-term support level to watch on the S&amp;P 500; if 3076 holds it would be further confirmation that the bulls are still in charge. In today’s report we highlight attractive Groups and stocks within Technology: Semiconductors, Mid-Cap, Semiconductor Equip., Large/Mid-Cap, Software, Data Analysis &amp; Solutions, Software, E-Commerce.

U.S. Equity Strategy: S&P 500 A Coiled Spring

<p>In this insight, we provide a valuation analysis of <a href="https://www.smartkarma.com/entities/saltlux" target="_blank" data-smartkarma-citation="entities:29011:1" rel="noopener">Saltlux (SLTX KS)</a>. In addition, we provide additional fundamental details of the company, competitors, as well as the market outlook for AI &amp; Big Data services.</p><p>In our view, Saltlux has one of the best technologies in the AI/Big Data sector in Korea. In terms of business model, it is closer to Mindslab and Daumsoft which are privately held. The fact that Saltlux has larger sales than these two competitors is impressive. We think there is likely to be a big acquisition premium on Saltlux going forward.</p><div class="content-highlight"><p>In terms of valuation multiples, we think that a 10x P/S, using 2019 sales (which is 10% premium to Laon People) is reasonable for Saltlux, which would suggest an implied market cap of 184 billion won or 36,000 won, which is 20% above the high end of the IPO price of 30,000 won. As such, we have a positive view of the Saltlux IPO. We are also adding Saltlux to our model portfolio. </p></div>

In this insight, we provide a valuation analysis of Saltlux (SLTX KS). In addition, we provide additional fundamental details of the company, competitors, as well as the market outlook for AI &amp; Big Data services.In our view, Saltlux has one of the best technologies in the AI/Big Data sector in Korea. In terms of business model, it is closer to Mindslab and Daumsoft which are privately held. The fact that Saltlux has larger sales than these two competitors is impressive. We think there is likely to be a big acquisition premium on Saltlux going forward.In terms of valuation multiples, we think that a 10x P/S, using 2019 sales (which is 10% premium to Laon People) is reasonable for Saltlux, which would suggest an implied market cap of 184 billion won or 36,000 won, which is 20% above the high end of the IPO price of 30,000 won. As such, we have a positive view of the Saltlux IPO. We are also adding Saltlux to our model portfolio. 

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

<p>This note is a followup to our deep dive on Nutanix from December. The quarter’s results were consistent with our long thesis, and the near 30% selloff in shares is egregious given the reasons behind the guidance cut (faster subscription transition and corona-virus driven uncertainty. We would point towards the upcoming Investor Day on March 26 as the next catalyst in the event path when management will likely provide updated guidance.</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>

This note is a followup to our deep dive on Nutanix from December. The quarter’s results were consistent with our long thesis, and the near 30% selloff in shares is egregious given the reasons behind the guidance cut (faster subscription transition and corona-virus driven uncertainty. We would point towards the upcoming Investor Day on March 26 as the next catalyst in the event path when management will likely provide updated guidance.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.

Nutanix: Subscription Transition Meets Corona Virus? Huh?

Slack Technologies Inc / Equity Bottom-Up

<p>In light of the recent leg down in growth software, we thought it timely to do a followup to our <a href="https://www.smartkarma.com/entities/slack-technologies-inc" target="_blank" rel="noopener">Slack Technologies Inc (WORK US)</a> case study from the time of  its IPO. </p><p>At the time, we leaned bullish on Slack's competitive positioning and open-ended growth opportunity, and despite recent history showing us that investors have been rewarded for buying richly valued SaaS companies, we were inclined to wait for a better entry point. Today's 7% pullback after a rough first two quarters got us to ask ourselves....is now that entry point?</p><p>This analysis tests our Working Thesis and evaluates how Slack's Key Questions and Thesis Threats have evolved over its last two quarters. As a reminder, the one page up front summary is meant to be used by investors as a road map to evaluate Slack's progress over its first few quarters.</p>

In light of the recent leg down in growth software, we thought it timely to do a followup to our Slack Technologies Inc (WORK US) case study from the time of  its IPO. At the time, we leaned bullish on Slack's competitive positioning and open-ended growth opportunity, and despite recent history showing us that investors have been rewarded for buying richly valued SaaS companies, we were inclined to wait for a better entry point. Today's 7% pullback after a rough first two quarters got us to ask ourselves....is now that entry point?This analysis tests our Working Thesis and evaluates how Slack's Key Questions and Thesis Threats have evolved over its last two quarters. As a reminder, the one page up front summary is meant to be used by investors as a road map to evaluate Slack's progress over its first few quarters.

United States

Splunk Inc. develops web based application software. The Company provides software that collects and analyzes machine data generated by websites, applications, servers, networks, and mobile devices. Splunk serves customers worldwide.

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Splunk Inc (SPLK US)

Palantir DPL Valuation Analysis

Our valuation analysis suggests an implied market cap of $29.7 billion and a target price of $13.7 per share for Palantir (49% higher than the base...

Douglas Kim

U.S. Equity Strategy: S&P 500 A Coiled Spring

Our view remains bullish as long as the S&P 500 is above the 2940-2980 support zone and we suggest buying any dips. Additionally, 3076 is a...

Vermilion Research

Saltlux IPO Valuation Analysis

In this insight, we provide a valuation analysis of Saltlux (SLTX KS). In addition, we provide additional fundamental details of the company,...

Douglas Kim

Nutanix: Subscription Transition Meets Corona Virus? Huh?

This note is a followup to our deep dive on Nutanix from December. The quarter’s results were consistent with our long thesis, and the near 30%...

Aaron Gabin

Slack: A Case Study Followup

In light of the recent leg down in growth software, we thought it timely to do a followup to our Slack Technologies Inc (WORK US) case study from...

Aaron Gabin

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