Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a> , a leading provider of cloud-based customer engagement software, filed for a $100 million placeholder IPO. Form S-1 starts with a founder letter, where Mr. Girish Mathrubootham describes the vision of a company: “What if we can create an iPhone moment in <strong>business software</strong> by blending existing technology with unified, intuitive, and delightful experiences? Just as the iPhone freed users from the hassles of carrying separate devices, we envision a new product experience that breaks down data silos and creates unified experiences”. Freshworks has applied to list shares of Class A common stock on the Nasdaq Global Select Market under the symbol “FRSH”. Morgan Stanley, J.P. Morgan and Bank of America are lead underwriters on the IPO.</p>

Freshworks (FRSH US) , a leading provider of cloud-based customer engagement software, filed for a $100 million placeholder IPO. Form S-1 starts with a founder letter, where Mr. Girish Mathrubootham describes the vision of a company: “What if we can create an iPhone moment in business software by blending existing technology with unified, intuitive, and delightful experiences? Just as the iPhone freed users from the hassles of carrying separate devices, we envision a new product experience that breaks down data silos and creates unified experiences”. Freshworks has applied to list shares of Class A common stock on the Nasdaq Global Select Market under the symbol “FRSH”. Morgan Stanley, J.P. Morgan and Bank of America are lead underwriters on the IPO.

Freshworks IPO Preview. India’s First SaaS Unicorn

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<p>Headline Developments China has likened online computer games to opium, causing shares in Tencent (700.HK) and NetEase (9999.HK) to drop 10% and 15% respectively.  The article, which appeared in state-run Economic Information Daily (before being removed), said more than half of China’s children were nearsighted and online games affects their education; adding that gaming addiction is widespread and could negatively impact their growth.</p>

Headline Developments China has likened online computer games to opium, causing shares in Tencent (700.HK) and NetEase (9999.HK) to drop 10% and 15% respectively.  The article, which appeared in state-run Economic Information Daily (before being removed), said more than half of China’s children were nearsighted and online games affects their education; adding that gaming addiction is widespread and could negatively impact their growth.

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

Palantir Technologies  / Equity Bottom-Up

<p>Palantir’s earnings call was a master class in obfuscation.</p><p><strong>Since 4Q20 earnings on February 16, 2021, five C-Suite executives from Palantir have sold $250MM (!!) in stock, with CEO Alex Karp selling $137MM in just the past 3 months. Luckily for them, Cathie Wood and ARK has bought 20M shares for $480MM! </strong></p><div class="content-highlight"><p>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.</p></div>

Palantir’s earnings call was a master class in obfuscation.Since 4Q20 earnings on February 16, 2021, five C-Suite executives from Palantir have sold $250MM (!!) in stock, with CEO Alex Karp selling $137MM in just the past 3 months. Luckily for them, Cathie Wood and ARK has bought 20M shares for $480MM! 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.

Palantir 1Q21 Earnings: ARK’s Buying What They’re Selling

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>
<strong>Our base case valuation of UiPath is $60.7 per share, which represents a 21% upside from the high end of the IPO price range of $50 per share.</strong> Given the moderate upside in the share price using our base case valuation, we have a Positive view of the UiPath IPO. </li>
<li>We forecast the company to generate sales of $982.5 million (up 61.7% YoY), gross profit of $877.8 million (up 62.0% YoY), and an operating loss of $71.2 million in FY ending Jan 2022. From FY ending Jan 2021 to FY ending Jan 2026, we estimate the company's sales to increase by 37.9% CAGR.</li>
<li><p>UiPath is one of the global leaders in the RPA (robotic process automation) market. Robotic process automation is a form of business process automation technology based on software robots or on artificial intelligence. <span>The company provides a comprehensive range of automation solutions via numerous interrelated software offerings. </span></p></li>
</ul>



Our base case valuation of UiPath is $60.7 per share, which represents a 21% upside from the high end of the IPO price range of $50 per share. Given the moderate upside in the share price using our base case valuation, we have a Positive view of the UiPath IPO. 
We forecast the company to generate sales of $982.5 million (up 61.7% YoY), gross profit of $877.8 million (up 62.0% YoY), and an operating loss of $71.2 million in FY ending Jan 2022. From FY ending Jan 2021 to FY ending Jan 2026, we estimate the company's sales to increase by 37.9% CAGR.
UiPath is one of the global leaders in the RPA (robotic process automation) market. Robotic process automation is a form of business process automation technology based on software robots or on artificial intelligence. The company provides a comprehensive range of automation solutions via numerous interrelated software offerings. 


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.

<div><p><a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (TUYA US)</a> provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.</p></div><div><p>Tuya has priced its IPO at $21.00 per ADS to raise gross proceeds of $915 million, above the previous IPO price range of $17-20 per ADS, according to Bloomberg. At the final IPO price of $21 per share, Tuya will have a market cap of $11.8 billion. The IPO got off to a strong start due to indications of interest for $500 million worth of ADSs in the offering from existing investors (<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management).</p></div><div><p>In <a href="https://www.smartkarma.com/insights/tuya-ipo-initiation-connected-future" target="_blank" data-smartkarma-citation="insights:48695" rel="noopener">Tuya IPO Initiation: Connected Future</a>, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/tuya-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:49137" rel="noopener">Tuya IPO: Valuation Insights</a> we noted that the IPO price range is reasonable but full at the high-end. </p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of $20.65 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. </p></div></div></div>

Tuya Inc (TUYA US) provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.Tuya has priced its IPO at $21.00 per ADS to raise gross proceeds of $915 million, above the previous IPO price range of $17-20 per ADS, according to Bloomberg. At the final IPO price of $21 per share, Tuya will have a market cap of $11.8 billion. The IPO got off to a strong start due to indications of interest for $500 million worth of ADSs in the offering from existing investors (Tencent Holdings (700 HK) and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management).In Tuya IPO Initiation: Connected Future, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive. In Tuya IPO: Valuation Insights we noted that the IPO price range is reasonable but full at the high-end. Updating for the final IPO net raise, our base-case DCF derived price target of $20.65 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. 

United States

Atlassian Corporation provides technology solutions. The Company designs and develops enterprise software platform for project management, collaboration, issue tracking, integration, deployment, and support services. Atlassian serves customers worldwide.

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Atlassian (TEAM US)

Freshworks IPO Preview. India’s First SaaS Unicorn

We expect the high investor demand for Freshworks IPO as SaaS unicorn may disrupt CRM market by breaking down the silos of marketing, sales, and...

Andrei Zakharov

Weekly Innovation Review (WIRE) #43

Headline Developments: China has likened online computer games to opium, causing shares in Tencent (700.HK) and NetEase (9999.HK) to drop 10% and...

Granite Bay Capital

Palantir 1Q21 Earnings: ARK’s Buying What They’re Selling

Since 4Q20 C-Suite executives from Palantir have sold $250MM (!!) in stock, with CEO Alex Karp selling $137MM in just the past 3 months. Luckily...

Aaron Gabin

UiPath IPO Valuation Analysis

Our base case valuation of UiPath is $60.7 per share, which represents a 21% upside from the high end of the IPO price range of $50 per share.

Douglas Kim

Tuya IPO: Trading Debut

Tuya has priced its IPO at $21 per ADS above the marketed range of $17-20 per ADS. Our sensitivity analysis points to a meaningful upside based on...

Arun George

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