TMT: Alibaba Group, BigCommerce Holdings Inc, Samsung Electronics, SK Telecom and more

In today’s briefing:

  • Alibaba: Where Is FCF Spent? – FY03/20 Update
  • BigCommerce IPO Valuation Analysis
  • Samsung Electronics – Bulls on Parade
  • MSCI Korea Index August IR: SKT Weight Doubling Status Check

Alibaba: Where Is FCF Spent? – FY03/20 Update

By Supun Walpola

Strong FCF generation is one of the key positives for Alibaba Group (BABA US). However, as we have noticed in the past, Alibaba has invested around 30% of its FCF in private companies, that most of the time, are undisclosed to Alibaba’s shareholders (refer our note, Alibaba: Where Is FCF Spent?).

However, in FY03/20, Alibaba’s investments in private companies was only 10% of its FCF, its lowest for the past five years. Instead, investments were directed towards listed equities, short term investments, and equity investees. We believe this provides better transparency of the money flow to Alibaba’s shareholders. We consider this to be a step in the right direction by Alibaba towards better corporate governance in the post-Jack Ma era.

BigCommerce IPO Valuation Analysis

By Douglas Kim

BigCommerce Holdings Inc (BIGC US) plans to complete its IPO next week. The IPO price range has been determined at $18 to $20. The company plans to offer 6.9 million shares. At the high end of the IPO price (excluding greenshoe option), the company would raise nearly $138 million.

Our valuation analysis of BigCommerce suggests an implied market cap of $2.3 billion and a target price per share of $30.9, which suggests a 62% upside to the mid-point of the IPO price range of $19. We are also including BigCommerce in our model stock portfolio. 

Our valuation is based on P/S, using our estimated sales of $189.4 million in 2021 and P/S multiple of 12x. We used fully diluted shares of 74 million shares to derive our target price valuation. Our P/S valuation multiple of 12x represents a 20% discount to the average P/S valuation of the comps in 2021. It also represents a 67% discount to the P/S multiple of 36.7x for Shopify.

Samsung Electronics – Bulls on Parade

By Ken S. Kim

Key reasons why Samsung Electronics (005930 KS) is gearing for a bull run.  Key fundamental and non- fundamental reasons why Samsung Electronics (005930 KS) is gearing for a catch run versus Taiwan Semiconductor Sp Adr (TSM US) 

MSCI Korea Index August IR: SKT Weight Doubling Status Check

By Sanghyun Park

At the last close, SKT’s FOL burnout sits at an even better place. It is at 70.90%, with a FO of 34.74%.

It is nearly 4 percent point lower than LG U+ on February 11. 

So, SKT’s weight doubling in the MSCI Korea Index seems almost a done deal. 

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