Daily BriefsIPOs and Placements

Equity Capital Markets: DoorDash Inc, Dalrymple Bay Infrastructure and more

In today’s briefing:

  • DoorDash Inc IPO Preview – A Big Winner in the U.S. Prepared Food Delivery Services Market
  • Dalrymple Bay Infrastructure – Highly Curious Timing

DoorDash Inc IPO Preview – A Big Winner in the U.S. Prepared Food Delivery Services Market

By Douglas Kim

DoorDash IPO is a big winner and it is likely to generate enormous institutional investors’ interest. Founded in 2012, DoorDash Inc provides on-demand, prepared food delivery service mainly from restaurants. DoorDash has a nearly 50% market share in the U.S. on-demand, prepared food delivery services. DoorDash founders include Stanford students including Tony Xu, Stanley Tang, Andy Fang, and Evan Moore. 

DoorDash has shown tremendous improvement in sales and operating leverage in the past three years. DoorDash has clearly been one of the major beneficiaries of the extended COVID-19 pandemic and various lockdown measures in the US, forcing people to eat at home which resulted in a massive increase in delivery of prepared foods to home.

DoorDash’s sales increased by 204% YoY to $885 million in 2019. Its sales continued to increase very fast by 226% YoY to $1,916 million in 1Q-3Q2020. The company’s operating margins were relatively steady at -72.2% in 2018 and -69.8% in 2019. A most impressive figure was the company’s HUGE improvement in operating margin to -6.8% in 1Q-3Q 2020, down from -81.6% in 1Q-3Q 2019.

As of June 2020, DoorDash was last valued at $16 billion. Since its establishment, DoorDash has raised more than $700 million. Major investors in DoorDash include Sequoia Capital, Khosla Ventures, and Softbank.

We are including DoorDash in our model portfolio.


Dalrymple Bay Infrastructure – Highly Curious Timing

By Sumeet Singh

Dalrymple Bay Infrastructure (DBI from hereon) aims to raise around US$500m in its Australian listing. It is owned by Brookfield Asset Management (BAM US)

It holds a 99-lease for Dalrymple Bay Terminal (DBT), a coal export terminal. DBT was commissioned in 1983 and is located close to Bowen Basin, the world’s largest met coal export region, in Queensland.  

The terminal is a common-user facility providing services to a large number of mining customers. Approximately 80% of the coal shipped through DBT in 2019 was metallurgical (met) coal. It is the largest met coal terminal, handling 15% of global met coal in 2019 and 30% of Queensland coal exports. 

While the current revenue for DBI is regulated and hence, fairly stable, it has been trying to change that so that it can set its own tariffs directly with clients. However, even if it manages to do that the upside might be limited.

As per my calculations, if it doesn’t manage to succeed in doing so, its revenue could drop by an amount far exceeding the projected upside. This doesn’t make DBI appear particularly attractive.


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