Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul>
<li>Auto dealer, CarMax Inc. has benefitted heavily from the positive trends in the used car industry.</li>
<li>The high level of pricing and supply shortage of new cars coupled with the stimulus package are the reasons behind increased consumer spending on used vehicles.</li>
<li>CarMax is milking this used car demand and also launched an e-commerce portal for online car shopping.</li>
</ul>


Auto dealer, CarMax Inc. has benefitted heavily from the positive trends in the used car industry.
The high level of pricing and supply shortage of new cars coupled with the stimulus package are the reasons behind increased consumer spending on used vehicles.
CarMax is milking this used car demand and also launched an e-commerce portal for online car shopping.


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<div><p><a href="https://www.smartkarma.com/entities/k-car" target="_blank" data-smartkarma-citation="entities:34118:1" rel="noopener">K Car (KCAR KS)</a>  is looking to raise up to US$629m in its upcoming South Korea IPO.</p></div><div>
<p>K Car is a used car marketplace and dealership operating in South Korea. The company operates 41 offline dealership branches across South Korea, as of July, 2021. The company also operates online platforms like <a href="https://www.smartkarma.com/compose/insight/57212/www.kcar.com" target="_blank" rel="noopener">www.kcar.com</a> and K Car App that allows customers purchase used cars.</p>
<p>In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.</p>
<p>Our previous coverage of the IPO:</p>
<ul><li>
<a href="https://www.smartkarma.com/insights/k-car-pre-ipo-dominant-leadership-in-the-online-space" target="_blank" data-smartkarma-citation="insights:57212" rel="noopener">K Car Pre-IPO - Dominant Leadership in the Online Space</a> </li></ul>
</div>

K Car (KCAR KS)  is looking to raise up to US$629m in its upcoming South Korea IPO.
K Car is a used car marketplace and dealership operating in South Korea. The company operates 41 offline dealership branches across South Korea, as of July, 2021. The company also operates online platforms like www.kcar.com and K Car App that allows customers purchase used cars.
In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.
Our previous coverage of the IPO:

K Car Pre-IPO - Dominant Leadership in the Online Space 


K Car IPO - Peer Comparison and Valuation

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>Our base case valuation of K Car is implied market cap of 2.8 trillion won or 55,441 won per share, which is 28% higher than the high end of the IPO price range of 43,200 won per share. Given the attractive upside, we have a POSITIVE view of the K Car IPO and we would subscribe to the IPO deal. </p><p><em>Given K Car's solid financials combined with its dominant market share in the online used car segment in Korea, we believe that many investors would be willing to attach higher valuation multiples on the company than its peers. In the first few days of trading, we believe that investors could push K Car's shares higher towards the high end of our valuation range 67,084 won per share, which would be 55% higher than the high end of the IPO valuation range. </em></p>

Our base case valuation of K Car is implied market cap of 2.8 trillion won or 55,441 won per share, which is 28% higher than the high end of the IPO price range of 43,200 won per share. Given the attractive upside, we have a POSITIVE view of the K Car IPO and we would subscribe to the IPO deal. Given K Car's solid financials combined with its dominant market share in the online used car segment in Korea, we believe that many investors would be willing to attach higher valuation multiples on the company than its peers. In the first few days of trading, we believe that investors could push K Car's shares higher towards the high end of our valuation range 67,084 won per share, which would be 55% higher than the high end of the IPO valuation range. 

<p>K Car is another interesting upcoming IPO in Korea. K Car, the largest used car e-commerce player in Korea, is getting ready to complete its IPO in early October. The IPO price range is from 34,300 won to 43,200 won per share. The IPO base deal size is from US$498 million to US$627 million. Of the 16.8m shares offered in the IPO, 15.6m shares are old shares and 1.2m are new shares).</p><p>According to the bankers' valuation, the expected market cap of the company is from 1.8 trillion won to 2.2 trillion won. The lead underwriters include NH Investment &amp; Securities and Goldman Sachs. The book building for the institutional investors starts on 27 September 2021. </p><p>K Car is mainly in the used car and rental car businesses. Hahn &amp; Co, a private equity firm in Korea, acquired the controlling stake in K Car in April 2018. Hahn &amp; Co Auto Service Holdings currently has a 100% stake in K Car. Post the IPO, it will have a 61% stake in K Car. </p><table class="table table-striped">
<colgroup>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td><div><strong>Deal Specifics of K Car IPO</strong></div></td>
<td style="width: 258pt;"> </td>
</tr>
<tr>
<td>Lead underwriters of the IPO: </td>
<td style="width: 258pt;">NH Investment &amp; Securities, Goldman Sachs</td>
</tr>
<tr>
<td>Expected IPO price per share: </td>
<td style="width: 258pt;">34,300 won (low)/43,200 won (high)</td>
</tr>
<tr>
<td>Number of Shares for IPO:</td>
<td style="width: 258pt;">16.83m shares (15.6mn old shares; 1.2mn new shares)</td>
</tr>
<tr>
<td>IPO base deal size: </td>
<td style="width: 258pt;">US$498mn (low);  US$627mn (high)</td>
</tr>
<tr>
<td>Expected common shares outstanding, fully diluted (post-IPO):  </td>
<td style="width: 258pt;">50.89m shares</td>
</tr>
<tr>
<td>Expected market cap after IPO:</td>
<td style="width: 258pt;">1,745 billion won (low)/2,198 billion won (high)</td>
</tr>
<tr>
<td>Book open: </td>
<td style="text-align: left; width: 258pt;">27-Sep-21</td>
</tr>
<tr>
<td>Book closed:</td>
<td style="text-align: left; width: 258pt;">28-Sep-21</td>
</tr>
<tr>
<td>Listing date: </td>
<td style="text-align: left; width: 258pt;">TBC</td>
</tr>
<tr>
<td>Source: Company data</td>
<td style="width: 258pt;"></td>
</tr>
</tbody>
</table>

K Car is another interesting upcoming IPO in Korea. K Car, the largest used car e-commerce player in Korea, is getting ready to complete its IPO in early October. The IPO price range is from 34,300 won to 43,200 won per share. The IPO base deal size is from US$498 million to US$627 million. Of the 16.8m shares offered in the IPO, 15.6m shares are old shares and 1.2m are new shares).According to the bankers' valuation, the expected market cap of the company is from 1.8 trillion won to 2.2 trillion won. The lead underwriters include NH Investment &amp; Securities and Goldman Sachs. The book building for the institutional investors starts on 27 September 2021. K Car is mainly in the used car and rental car businesses. Hahn &amp; Co, a private equity firm in Korea, acquired the controlling stake in K Car in April 2018. Hahn &amp; Co Auto Service Holdings currently has a 100% stake in K Car. Post the IPO, it will have a 61% stake in K Car. 






Deal Specifics of K Car IPO
 


Lead underwriters of the IPO: 
NH Investment &amp; Securities, Goldman Sachs


Expected IPO price per share: 
34,300 won (low)/43,200 won (high)


Number of Shares for IPO:
16.83m shares (15.6mn old shares; 1.2mn new shares)


IPO base deal size: 
US$498mn (low);  US$627mn (high)


Expected common shares outstanding, fully diluted (post-IPO):  
50.89m shares


Expected market cap after IPO:
1,745 billion won (low)/2,198 billion won (high)


Book open: 
27-Sep-21


Book closed:
28-Sep-21


Listing date: 
TBC


Source: Company data





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

Advanced Micro Devices / Technical Analysis

<p>The market continues to send mixed signals and we remain cautious and selective, preferring large-caps over small-caps, growth over value, and defensives (Utilities, Staples, REITs, Health Care) over cyclical value (Energy, Materials, Manufacturing, Transportation, Financials). While market dynamics suggest a 5-15% pullback is in the cards, there continues to be an absence of breakdowns at the index and Sector level; even the weaker Sectors such as Energy and Transportation are not yet breaking down. Until we start to see breakdowns at the Sector and index level, we remain constructive overall.</p>

The market continues to send mixed signals and we remain cautious and selective, preferring large-caps over small-caps, growth over value, and defensives (Utilities, Staples, REITs, Health Care) over cyclical value (Energy, Materials, Manufacturing, Transportation, Financials). While market dynamics suggest a 5-15% pullback is in the cards, there continues to be an absence of breakdowns at the index and Sector level; even the weaker Sectors such as Energy and Transportation are not yet breaking down. Until we start to see breakdowns at the Sector and index level, we remain constructive overall.

U.S. Equity Strategy: Buying Semiconductors, Auto Dealers, and Asset Mgmt/Custody Banks

United States

CarMax, Inc. sells at retail used cars and light trucks. The Company purchases, reconditions, and sells used vehicles in its superstores and franchises throughout the United States.

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Carmax Inc (KMX US)

CarMax Inc. - Investment Thesis

Auto dealer, CarMax Inc. has benefitted heavily from the positive trends in the used car industry. The high level of pricing and supply shortage...

Baptista Research

K Car IPO - Peer Comparison and Valuation

K Car (KCAR KS) is looking to raise up to US$629m in its upcoming South Korea IPO. K Car is a used car marketplace and dealership operating in...

Sumeet Singh

K Car IPO Valuation Analysis

Our base case valuation of K Car is implied market cap of 2.8 trillion won or 55,441 won per share, which is 28% higher than the high end of the...

Douglas Kim

K Car IPO Preview

K Car, the largest used car e-commerce player in Korea, is getting ready to complete its IPO in early October. The IPO base deal size is from...

Douglas Kim

U.S. Equity Strategy: Buying Semiconductors, Auto Dealers, and Asset Mgmt/Custody Banks

Despite our overall cautious outlook, several areas are attractive and buyable, including: Semiconductors, Auto Dealers, and Asset Management...

Vermilion Research

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