Brief USA: Container Shipping and Coronavirus – Update and more

In this briefing:

  1. Container Shipping and Coronavirus – Update
  2. Genworth Financial – One Step Closer
  3. Procore Technologies IPO Preview

1. Container Shipping and Coronavirus – Update

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The short term impact of the coronavirus health crisis is a sharp hit to global container volumes and carrier earnings, but we re-iterate that the medium-term impact will be manageable provided the virus spread is contained.

2. Genworth Financial – One Step Closer

  • Agreement With New York State: Genworth Financial (GNW.US) [Genworth] disclosed that it had reached an agreement in principle with the New York State Department of Financial Services (NYSDFS) to contribute USD 100 mn to the Genworth Life Insurance Company of New York (GLICNY) subsidiary. 
  • Still Worth a Flyer:Both sides have demonstrated patience with the sale process, as demonstrated by each side’s commitment to this transaction through 13 waivers of their options to walk away from the deal. Potential closing of Genworth’s deal to be acquired by a Chinese financial holding group for $5.43 per share in cash.  Shares are trading almost 30% below the deal price. 

3. Procore Technologies IPO Preview

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Procore Technologies (PCT US) is getting ready to complete its IPO in the U.S. stock market in the coming weeks. The company is a global market leader in cloud-based construction management and collaboration software. The company has put the IPO placeholder at $100 million but could raise up to $400 million.

Established in 2002, Procore Technologies generated sales of $289 million and a net loss of $83 million in 2019. The company has achieved strong revenue growth in the past three years. Nearly all of the company’s revenue is derived from subscriptions to its products. Its sales increased at 60.5% CAGR from 2017 to 2019, which is very impressive. Procore Technologies had 4,310 customers at the end of 2017, increasing to 6,095 at the end of 2018 and 8,506 at the end of 2019.

One of the global competitors to Procore is Aconex which was listed in the Australian stock market before it was acquired by Oracle Corp (ORCL US) in December 2017 and Aconex was valued at about $1.2 billion, net of its cash.

Key Risk Factors:

  • Global contagion fears about COVID-19 coronavirus
  • Lack of profitability
  • Dependent on the construction industry

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