TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

Some updated thinking around our long portfolio: more bullish Google, Netflix, and Match, less bullish Snowflake, Facebook. And thinking about getting long some DIDI!<div class="content-highlight">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </div>

Some updated thinking around our long portfolio: more bullish Google, Netflix, and Match, less bullish Snowflake, Facebook. And thinking about getting long some DIDI!Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a> is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato will launch its IPO on 14 July at an IPO price range of Rs72-76 per share. The IPO will raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%. The selling shareholder is <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a>. In <a href="https://www.smartkarma.com/insights/zomato-ipo-initiation-emerging-appetites" target="_blank" data-smartkarma-citation="insights:54141" rel="noopener">Zomato IPO Initiation: Emerging Appetites</a>, we stated that that the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. <div class="content-highlight">In this note, we look at the updated prospectus which discloses the FY21 results and recent developments. Overall, the latest results support our view that Zomato has attractive fundamentals. </div>

Zomato (ZOM IN) is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato will launch its IPO on 14 July at an IPO price range of Rs72-76 per share. The IPO will raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%. The selling shareholder is Info Edge India (INFOE IN). In Zomato IPO Initiation: Emerging Appetites, we stated that that the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. In this note, we look at the updated prospectus which discloses the FY21 results and recent developments. Overall, the latest results support our view that Zomato has attractive fundamentals. 

Zomato IPO: Results Point to a Favourable Trajectory

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

US Treasury (10 Yr Generic) / Technical Analysis

We are beginning to see some mild deterioration in market dynamics, including a break below the key 1.45% support level on the 10-year Treasury yield which is coupled with underperformance from small-caps and value Sectors. Still, other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market.

We are beginning to see some mild deterioration in market dynamics, including a break below the key 1.45% support level on the 10-year Treasury yield which is coupled with underperformance from small-caps and value Sectors. Still, other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market.

U.S. Equity Strategy: Shifting To Growth As 10-Yr Yield Breaks Key Support

Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

In this insight, we discuss how and why the growth outlook for the online food delivery sector in India is not as robust as online consumer retail - a fact that Zomato's buoyant valuations seem to overlook. Food delivery players like <a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a> can tap into only a fraction of India's rising e-Comm user base in the next several years and hence are not the best plays on India's expanding online shopper base. India's low urbanization rate, restrictive social factors, and high level of income inequality limit the penetration rate for food delivery platforms like Zomato and thus impact their pace and potential for growth in the near-to-medium term vis-a-vis online retail tech platforms. Investors need to be cognizant of these restrictive macro factors while assessing this IPO's investment worth and valuation assumptions.Zomato's IPO has received the regulator's approval and is priced at Rs72 - 76 indicating a steep increase in valuation versus its last round of fundraising in February 2021. At the upper-end, Zomato will now be valued at USD8Bn+ versus USD5.2 Bn in Feb 2021. We suspect the street's excitement over this USD1.2 Bn+ IPO is likely driven by bullish growth expectations based on India's expanding online user base as well as the brand's high visibility and recall. We believe upcoming IPOs in the online retail sector like <a href="https://www.smartkarma.com/entities/flipkart-online-services-private-limited" target="_blank" data-smartkarma-citation="entities:31076:1" rel="noopener">Flipkart, </a><a href="https://www.smartkarma.com/entities/nykaa-e-retail-pvt-ltd" target="_blank" data-smartkarma-citation="entities:33469:1" rel="noopener">Nykaa E-Retail </a>could offer a more direct investment opportunity to ride the growth in India's rising online spending.Our earlier report <a href="https://www.smartkarma.com/insights/zomato-s-usd-1bn-ipo-india-foodtech-s-lead-play-striking-when-the-market-is-covid-hot" target="_blank" data-smartkarma-citation="insights:50874" rel="noopener">Zomato's USD 1Bn IPO: India Foodtech's Lead Play. Striking when the Market Is COVID-Hot.</a>discussed Zomato's business basics.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/217/484/original/Screenshot+2021-07-08+at+6.24.44+PM.png?1625741192" class="editor-image img-responsive" data-smartkarma-image-id="217484"></figure></section>

In this insight, we discuss how and why the growth outlook for the online food delivery sector in India is not as robust as online consumer retail - a fact that Zomato's buoyant valuations seem to overlook. Food delivery players like Zomato (ZOM IN) can tap into only a fraction of India's rising e-Comm user base in the next several years and hence are not the best plays on India's expanding online shopper base. India's low urbanization rate, restrictive social factors, and high level of income inequality limit the penetration rate for food delivery platforms like Zomato and thus impact their pace and potential for growth in the near-to-medium term vis-a-vis online retail tech platforms. Investors need to be cognizant of these restrictive macro factors while assessing this IPO's investment worth and valuation assumptions.Zomato's IPO has received the regulator's approval and is priced at Rs72 - 76 indicating a steep increase in valuation versus its last round of fundraising in February 2021. At the upper-end, Zomato will now be valued at USD8Bn+ versus USD5.2 Bn in Feb 2021. We suspect the street's excitement over this USD1.2 Bn+ IPO is likely driven by bullish growth expectations based on India's expanding online user base as well as the brand's high visibility and recall. We believe upcoming IPOs in the online retail sector like Flipkart, Nykaa E-Retail could offer a more direct investment opportunity to ride the growth in India's rising online spending.Our earlier report Zomato's USD 1Bn IPO: India Foodtech's Lead Play. Striking when the Market Is COVID-Hot.discussed Zomato's business basics.

Zomato IPO: Floating High Above Sector Reality. Not a Linear Play on India's Rising EComm User Base

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

Japan’s retail and distribution sector has long been seen as fragmented, even to the point of being accused of inefficiency. On the surface, concentration levels do remain low, but scratch that surface and a very different picture emerges.
By format and by category sector, larger companies are taking increasing share and, over the past five years, this trend has accelerated.
Now, given the pressures of Covid, there is ample opportunity for stronger players to gain ground by buying out weaker ones, while some mid-level companies are joining together, hoping to become a fish too big to swallow.
Business tie-ups are also increasing in number, particularly as physical retailers seek to bring in and learn skills necessary to succeed in e-commerce and to build omnichannel models.
The following is a detailed review of how concentration has increased along with a map of who own who in retailing today.
There is a strong possibility that we could see some really big deals, even ones that span format and geographical borders, as many mid-sized retailers recognise that independent survival is getting hard. Acquirers will use the current environment to diversify into new areas, expand volumes and market share, or simply acquire more retail property for long-term development.

Japan’s retail and distribution sector has long been seen as fragmented, even to the point of being accused of inefficiency. On the surface, concentration levels do remain low, but scratch that surface and a very different picture emerges.
By format and by category sector, larger companies are taking increasing share and, over the past five years, this trend has accelerated.
Now, given the pressures of Covid, there is ample opportunity for stronger players to gain ground by buying out weaker ones, while some mid-level companies are joining together, hoping to become a fish too big to swallow.
Business tie-ups are also increasing in number, particularly as physical retailers seek to bring in and learn skills necessary to succeed in e-commerce and to build omnichannel models.
The following is a detailed review of how concentration has increased along with a map of who own who in retailing today.
There is a strong possibility that we could see some really big deals, even ones that span format and geographical borders, as many mid-sized retailers recognise that independent survival is getting hard. Acquirers will use the current environment to diversify into new areas, expand volumes and market share, or simply acquire more retail property for long-term development.

Who Owns Who: Concentration Levels Accelerate in Japan Retail, with More M&A to Come

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon.com Inc (AMZN US)

2H21 Obex Research Long Portfolio

Some updated thinking around our long portfolio: more bullish Google, Netflix, and Match, less bullish Snowflake, Facebook. And thinking about...

Aaron Gabin

Zomato IPO: Results Point to a Favourable Trajectory

Zomato will launch its IPO on 14 July to raise up to $1.3 billion. Overall, the FY21 results disclosed in the updated prospectus, support our view...

Arun George

U.S. Equity Strategy: Shifting To Growth As 10-Yr Yield Breaks Key Support

Upgrading Technology, Downgrading Financials, Materials, and Industrials. We discuss implications of the break below the key 1.45% support level on...

Vermilion Research

Zomato IPO: Floating High Above Sector Reality. Not a Linear Play on India's Rising EComm User Base

IPO valuations ignore that the growth outlook for the online food delivery sector in India is not as robust as online consumer retail. Projections...

Devi Subhakesan

Who Owns Who: Concentration Levels Accelerate in Japan Retail, with More M&A to Come

Japanese retail is in the process of extensive concentration and market consolidation through M&A, organic expansion and tie-ups. Numerous...

Michael Causton

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