Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Tuya: A Pure-Play IoT PaaS/SaaS Player Announces IPO Pricing Range

Tuya IPO - Valuation Sensitivity Analysis

Equity Bottom-Up

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<p>Unlike 2H 2020 when many global tech stocks were roaring higher, it has been more selective so far in 2021, especially among the Chinese tech stocks. In this insight, we discuss the outlook for <a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (TUYA US)</a>, which appears to have one of the best momentum among Chinese tech stocks post first quarter results. <a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (TUYA US)</a>'s current share price is $26, up 24% from the IPO price of $21. The stock has especially been very strong in May as it is up 34% this month. </p>
<p>Among the 16 major Chinese tech stocks mentioned in this report, Tuya had the highest sales growth rate of 200% YoY in 1Q 2021. The average YoY sales growth of these 16 stocks were 58.6% in 1Q 2021. There were only three stocks that had more than 100% YoY sales growth rate in 1Q 2021, which included Tuya, <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>, and <a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a>. </p>
<p>Our conclusion is that we continue to like Tuya as it has one of the best growth prospects among major Chinese tech stocks. It is also experiencing significant improvement in its operating margins. Although its valuation multiple is the highest among the 16 companies mentioned in this insight, we believe investors are willing to pay higher multiples for companies such as Tuya which is experiencing a combination of very strong sales growth as well as improving operating losses as a percentage of revenues. </p>
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Unlike 2H 2020 when many global tech stocks were roaring higher, it has been more selective so far in 2021, especially among the Chinese tech stocks. In this insight, we discuss the outlook for Tuya Inc (TUYA US), which appears to have one of the best momentum among Chinese tech stocks post first quarter results. Tuya Inc (TUYA US)'s current share price is $26, up 24% from the IPO price of $21. The stock has especially been very strong in May as it is up 34% this month. 
Among the 16 major Chinese tech stocks mentioned in this report, Tuya had the highest sales growth rate of 200% YoY in 1Q 2021. The average YoY sales growth of these 16 stocks were 58.6% in 1Q 2021. There were only three stocks that had more than 100% YoY sales growth rate in 1Q 2021, which included Tuya, Pinduoduo (PDD US), and Zhihu Technology (ZH US). 
Our conclusion is that we continue to like Tuya as it has one of the best growth prospects among major Chinese tech stocks. It is also experiencing significant improvement in its operating margins. Although its valuation multiple is the highest among the 16 companies mentioned in this insight, we believe investors are willing to pay higher multiples for companies such as Tuya which is experiencing a combination of very strong sales growth as well as improving operating losses as a percentage of revenues. 


Tuya's Strong Momentum & A Review of China's Tech Stocks Results in 1Q 2021