Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Cafe24 Vs. Shopify - An Excessive Divergence in Prices?

Cafe24 IPO Preview (Part 2): Korea's Shopify, But at What Price?

Equity Bottom-Up

<ul>
<li><strong>This report provides an update on <a href="https://www.smartkarma.com/entities/25912" target="_blank" data-smartkarma-citation="entities:25912:1">Cafe24 Corp (042000 KS)</a>, which is the Korean version of <a href="https://www.smartkarma.com/entities/25906" target="_blank" data-smartkarma-citation="entities:25906:1">Shopify Inc (SHOP US)</a>. </strong></li>
<li>The total e-commerce transaction market in Korea increased 29.3% CAGR in the past two years to 82.8 trillion won in 2018. Cafe24's GMV grew 24.3% CAGR in the past two years to reach 8.0 trillion won in 2018. Despite the stiff competition, the fact that Cafe24 has been able to maintain its market share of about 10% in the past two years suggests strong loyalty of its existing customers as well as the company's ability to attract new customers.  </li>
<li>At current prices, Cafe24 trades at 42x P/E (2019E) and 29x P/E (2020E), using the consensus earnings estimates. If we apply the current P/E multiple (42x) to next year's consensus earnings, it would suggest an implied market cap of 1.47 trillion won for Cafe24 (up 47% from current levels). </li>
<li>
<strong>Koreacenter.com is one the key competitors to Cafe24</strong>. Koreacenter.com is expected to complete its IPO in the next few weeks. Local media have mentioned that <a href="http://www.thebell.co.kr/free/content/ArticleView.asp?key=201904220100041750002593&amp;svccode=00&amp;page=1&amp;sort=thebell_check_time" target="_blank">Koreacenter.com's value</a> could be about 650 billion won to 700 billion won. The upcoming IPO of Koreacenter.com is likely to put some renewed spotlight on Cafe24 as well.</li>
</ul>


This report provides an update on Cafe24 Corp (042000 KS), which is the Korean version of Shopify Inc (SHOP US). 
The total e-commerce transaction market in Korea increased 29.3% CAGR in the past two years to 82.8 trillion won in 2018. Cafe24's GMV grew 24.3% CAGR in the past two years to reach 8.0 trillion won in 2018. Despite the stiff competition, the fact that Cafe24 has been able to maintain its market share of about 10% in the past two years suggests strong loyalty of its existing customers as well as the company's ability to attract new customers.  
At current prices, Cafe24 trades at 42x P/E (2019E) and 29x P/E (2020E), using the consensus earnings estimates. If we apply the current P/E multiple (42x) to next year's consensus earnings, it would suggest an implied market cap of 1.47 trillion won for Cafe24 (up 47% from current levels). 

Koreacenter.com is one the key competitors to Cafe24. Koreacenter.com is expected to complete its IPO in the next few weeks. Local media have mentioned that Koreacenter.com's value could be about 650 billion won to 700 billion won. The upcoming IPO of Koreacenter.com is likely to put some renewed spotlight on Cafe24 as well.


Cafe24: 魅力的な価格で魅力的なEコマースの成長ストーリー