Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>, the largest e-commerce company in South Korea filled an updates S-1 yesterday, which saw the offer price rage increasing from $27.0-30.0 per share to $30.0-32.0 per share.</p><p>Previously, we said that the IPO valuation of Coupang was extremely expensive and the revised offer price range makes it even more expensive with new market cap and post money EV of $54.9-58.3bn (previously $46.1-51.2bn) and $51.6-54.8bn (previously $43.3-48.1bn) respectively.</p><p>Nonetheless, the demand for the IPO of this South Korean e-commerce giant seems strong, despite the obvious signs of weakening investor enthusiasm on the overall e-commerce sector.</p><p>Like most of the high profile tech IPOs in the recent past, we could expect shares to open trading at a significant premium to the IPO price. However, the changing market sentiment on e-commerce pose huge risks and momentum trading needs to be carefully thought out. We suggest short term IPO investors should consider cashing out earlier than usual.</p><div style="text-align: left;" class="content-caption">Even though we expect the share price to pop immediately following the IPO, the insight is labelled bearish as we consider Coupang is overvalued on a long term basis.</div>

Coupang (CPNG US), the largest e-commerce company in South Korea filled an updates S-1 yesterday, which saw the offer price rage increasing from $27.0-30.0 per share to $30.0-32.0 per share.Previously, we said that the IPO valuation of Coupang was extremely expensive and the revised offer price range makes it even more expensive with new market cap and post money EV of $54.9-58.3bn (previously $46.1-51.2bn) and $51.6-54.8bn (previously $43.3-48.1bn) respectively.Nonetheless, the demand for the IPO of this South Korean e-commerce giant seems strong, despite the obvious signs of weakening investor enthusiasm on the overall e-commerce sector.Like most of the high profile tech IPOs in the recent past, we could expect shares to open trading at a significant premium to the IPO price. However, the changing market sentiment on e-commerce pose huge risks and momentum trading needs to be carefully thought out. We suggest short term IPO investors should consider cashing out earlier than usual.Even though we expect the share price to pop immediately following the IPO, the insight is labelled bearish as we consider Coupang is overvalued on a long term basis.

Coupang Ups Offer Price Range by 13-19%, As Investors Seem to Ignore The Company's 1P Exposure

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>Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$4.0bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the valuation at the revised price range.</p></div><div><p>Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.</p></div><div><p>I've covered various aspects of the deal in my earlier insights: </p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-positives-fast-growth-sticky-customers" target="_blank" rel="noopener">Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers</a>, </li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-negatives-horrendous-data-disclosures-including-no-mention-of-ott-launch" target="_blank" rel="noopener">Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-fair-bit-of-competition-but-it-s-doing-better-than-most-local-peers" target="_blank" rel="noopener">Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-earnings-forecast-and-valuation" target="_blank" rel="noopener">Coupang Pre-IPO - Earnings Forecast and Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-ipo-momentum-play-unequal-lock-up-index-inclusion" target="_blank" rel="noopener">Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion</a></li>
</ul></div>

Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$4.0bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the valuation at the revised price range.Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.I've covered various aspects of the deal in my earlier insights: 

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, 
Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch
Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers
Coupang Pre-IPO - Earnings Forecast and Valuation
Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion


Coupang IPO - Quick Note - Peers Move Down, Range Moves Up. Ripe for Trading.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> announced today that it plans to complete its IPO at $32 to $34 per share, from the previous IPO price range of $27 to $30 per share.</p><p>We continue to believe that there will be a "first day pop" for the Coupang IPO. We believe that the first day pop could be somewhere between the mid-to-high end of our valuation range which his from $35 to $47.3 per share.</p><p>If the IPO is priced at $33 per share, we believe the first day pop could be as high as $80.4 billion in market cap or $47.3 per share. Despite the first day pop, we find it difficult for Coupang to maintain such frothy valuations ($80 billion or $47.3 per share levels) for an extended period of time so our base case 6-12 months remains $35 per share ($60 billion in market cap).</p>

Coupang (CPNG US) announced today that it plans to complete its IPO at $32 to $34 per share, from the previous IPO price range of $27 to $30 per share.We continue to believe that there will be a "first day pop" for the Coupang IPO. We believe that the first day pop could be somewhere between the mid-to-high end of our valuation range which his from $35 to $47.3 per share.If the IPO is priced at $33 per share, we believe the first day pop could be as high as $80.4 billion in market cap or $47.3 per share. Despite the first day pop, we find it difficult for Coupang to maintain such frothy valuations ($80 billion or $47.3 per share levels) for an extended period of time so our base case 6-12 months remains $35 per share ($60 billion in market cap).

Coupang - Slightly Raises IPO Price Range & The "First Day Pop"

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/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.</p></div><div><p>Coupang has increased its IPO price range from $27-30 per share to $32-34 per share. The number of the offer shares remains unchanged at 120 million shares and the primary/secondary split remains unchanged. At the upsized IPO price range of $32-34 per share, Coupang will have a market cap of $55-58 billion vs the previous market cap of $46-51 billion. At the mid-point of the IPO price range, the net proceeds from the primary raise are $3.2 billion ($2.8 billion previously). </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/coupang-ipo-initiation-delivering-the-goods" target="_blank" data-smartkarma-citation="insights:48125" rel="noopener">Coupang IPO Initiation: Delivering the Goods</a>, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In <a href="https://www.smartkarma.com/insights/coupang-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:48708" rel="noopener">Coupang IPO: Valuation Insights</a> we noted was attractively priced for its growth potential vs global e-commerce peers at the original IPO price range.</p>
<div class="content-highlight"><p>Our valuation analysis suggests that Coupang remains attractive at the upsized IPO price range of $32-34 per share. Our base-case DCF valuation is $39.35 per share and we would participate in the IPO.</p></div>
</div>

Coupang (CPNG US) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.Coupang has increased its IPO price range from $27-30 per share to $32-34 per share. The number of the offer shares remains unchanged at 120 million shares and the primary/secondary split remains unchanged. At the upsized IPO price range of $32-34 per share, Coupang will have a market cap of $55-58 billion vs the previous market cap of $46-51 billion. At the mid-point of the IPO price range, the net proceeds from the primary raise are $3.2 billion ($2.8 billion previously). 
In Coupang IPO Initiation: Delivering the Goods, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. In Coupang IPO: Valuation Insights we noted was attractively priced for its growth potential vs global e-commerce peers at the original IPO price range.
Our valuation analysis suggests that Coupang remains attractive at the upsized IPO price range of $32-34 per share. Our base-case DCF valuation is $39.35 per share and we would participate in the IPO.


Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

<p>Coupang's IPO pricing is scheduled for March 10.</p><p>March 11 is a likely IPO day.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"IPO overview"}'><div><div>IPO overview</div></div></td></tr>
<tr>
<td style="width: 329.091px;" data-sheets-value='{"1":2,"2":"Proposed Symbol"}'>Proposed Symbol</td>
<td style="text-align: left; width: 373.636px;" data-sheets-value='{"1":2,"2":"CPNG"}' data-sheets-hyperlink="https://www.nasdaq.com/market-activity/stocks/cpng"><p>CPNG</p></td>
</tr>
<tr>
<td style="width: 329.091px;" data-sheets-value='{"1":2,"2":"Exchange"}'>Exchange</td>
<td style="text-align: left; width: 373.636px;" data-sheets-value='{"1":2,"2":"NYSE"}'>NYSE</td>
</tr>
<tr>
<td style="width: 329.091px;" data-sheets-value='{"1":2,"2":"Share Price"}'>Share Price</td>
<td style="text-align: left; width: 373.636px;" data-sheets-value='{"1":2,"2":"$27.00-30.00"}'><div><div>$27.00-30.00</div></div></td>
</tr>
<tr>
<td style="width: 329.091px;" data-sheets-value='{"1":2,"2":"Shares Offered"}'>Shares Offered</td>
<td style="text-align: left; width: 373.636px;" data-sheets-value='{"1":3,"3":120000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>120,000,000</td>
</tr>
<tr>
<td style="width: 329.091px;" data-sheets-value='{"1":2,"2":"Offer amount"}'>Offer amount</td>
<td style="text-align: left; width: 373.636px;" data-sheets-value='{"1":2,"2":"$3,600,000,000"}'><div><div>$3,600,000,000</div></div></td>
</tr>
<tr>
<td style="width: 329.091px;" data-sheets-value='{"1":2,"2":"Shareholder Shares Offered"}'>Shareholder Shares Offered</td>
<td style="text-align: left; width: 373.636px;" data-sheets-value='{"1":3,"3":20000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>20,000,000</td>
</tr>
<tr>
<td style="width: 329.091px;" data-sheets-value='{"1":2,"2":"Shares Outstanding"}'>Shares Outstanding</td>
<td style="text-align: left; width: 373.636px;" data-sheets-value='{"1":3,"3":1531911152}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,531,911,152</td>
</tr>
<tr><td colspan="2" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: NYSE"}'>Source: NYSE</td></tr>
</tbody>
</table><hr><p><strong>The biggest concern in the pricing would <em>still</em> be a high level of A/Ps and inventories.</strong></p><p>Coupang achieved nearly 100% yearly growth in sales last year.</p><p>But what Coupang really wants investors to see is a dramatic turnaround in operating cash flow. Since its foundation, it had never reported plus in this area until last year.</p><p>Finally, a $301.6B positive number got in.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"(US$B)"}'>(US$B)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2019}'>2019</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2020}'>2020</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"YoY"}'>YoY</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Sales"}'>Sales</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6273.26}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula="=R[0]C[-5]">6,273.3</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11967.34}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula="=R[0]C[-5]">11,967.3</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.9076747974737217}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[0]C[-1]-R[0]C[-2])/R[0]C[-2]">90.77%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Operating cash flow"}'><strong>Operating cash flow</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-311.84}' data-sheets-numberformat='[null,2,"#,##0.0"]'><strong>-311.8</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":301.55}' data-sheets-numberformat='[null,2,"#,##0.0"]'><strong>301.6</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='[null,3,"0.00%",1]'>-</td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: SEC &amp; Coupang"}'>Source: SEC &amp; Coupang</td></tr>
</tbody>
</table><p>Given the extraordinary situation (pandemic), doubling sales would be easily understandable.</p><p>Then, profitability improvement?</p><p>Is it really true that Coupang's volume-driven strategy has reached a level to enjoy a consistent stream of positive cash flow?</p>

Coupang's IPO pricing is scheduled for March 10.March 11 is a likely IPO day.





IPO overview

Proposed Symbol
CPNG


Exchange
NYSE


Share Price
$27.00-30.00


Shares Offered
120,000,000


Offer amount
$3,600,000,000


Shareholder Shares Offered
20,000,000


Shares Outstanding
1,531,911,152

Source: NYSE

The biggest concern in the pricing would still be a high level of A/Ps and inventories.Coupang achieved nearly 100% yearly growth in sales last year.But what Coupang really wants investors to see is a dramatic turnaround in operating cash flow. Since its foundation, it had never reported plus in this area until last year.Finally, a $301.6B positive number got in.








(US$B)
2019
2020
YoY


Sales
6,273.3
11,967.3
90.77%


Operating cash flow
-311.8
301.6
-

Source: SEC &amp; Coupang

Given the extraordinary situation (pandemic), doubling sales would be easily understandable.Then, profitability improvement?Is it really true that Coupang's volume-driven strategy has reached a level to enjoy a consistent stream of positive cash flow?

South Korea

Coupang, Inc. operates as an e-commerce company. The Company offers dynamic end-to-end e-commerce and logistic solutions. Coupang serves customers worldwide.

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Coupang (CPNG US)

Coupang Ups Offer Price Range by 13-19%, As Investors Seem to Ignore The Company's 1P Exposure

The demand for the Coupang IPO is strong, but the changing market sentiment on e-commerce pose huge risks and momentum trading needs to be...

Oshadhi Kumarasiri

Coupang IPO - Quick Note - Peers Move Down, Range Moves Up. Ripe for Trading.

Coupang,aims to raise up to US$4.0bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the...

Sumeet Singh

Coupang - Slightly Raises IPO Price Range & The "First Day Pop"

Coupang (CPNG US) announced today that it plans to complete its IPO at $32 to $34 per share, from the previous IPO price range of $27 to $30 per...

Douglas Kim

Coupang IPO: Upsized Deal Size

Coupang has increased its IPO price range from $27-30 per share to $32-34 per share. Our base-case DCF valuation is $39.35 per share and we would...

Arun George

Coupang IPO: A/P & Inventories Issue

This insight details how Coupang may have inflated operating cash flow through its infamous A/P practice ahead of the IPO.

Sanghyun Park

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