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

<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 with $12.0bn in annual revenue and 14.9m in quarterly active customers, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of $1.0bn.In our two previous insights on the IPO; <a href="https://www.smartkarma.com/insights/coupang-ipo-not-worth-subscribing-at-rumoured-50-0bn-valuation" target="_blank" rel="noopener">Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation</a>, <a href="https://www.smartkarma.com/insights/coupang-ipo-lacks-margin-upside" target="_blank" rel="noopener">Coupang IPO: Lacks Margin Upside</a>, we looked at the company’s business model, future prospects, and revenue and earnings estimates. In this insight, we assess the fairness of the company's rumoured $50.0bn valuation.

Coupang (CPNG US), the largest e-commerce company in South Korea with $12.0bn in annual revenue and 14.9m in quarterly active customers, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of $1.0bn.In our two previous insights on the IPO; Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation, Coupang IPO: Lacks Margin Upside, we looked at the company’s business model, future prospects, and revenue and earnings estimates. In this insight, we assess the fairness of the company's rumoured $50.0bn valuation.

Coupang IPO: Initial Thoughts on Rumoured $50.0bn Valuation

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><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.</div><div>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.</div>In my earlier insight,  <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>, I spoke about the positive aspects of the deal. In this insight, I'll talk about the not so pleasing aspects of the deal.

Coupang (CPNG US) , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.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.In my earlier insight,  Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, I spoke about the positive aspects of the deal. In this insight, I'll talk about the not so pleasing aspects of the deal.

Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch

<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 with $12.0bn in annual revenue, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of $1.0bn.Coupang is fundamentally different from other e-commerce companies as it generates around 92.2% of the total revenue from the owned inventory segment. The company’s COGS is over 83% of revenue compared to marketplace players like <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>’s 57% and <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>’s 22%. Inherently, Coupang is incapable of generating gross margins comparable with e-commerce marketspace players due to its dependence on own inventory sales.Around 29% of South Korea’s total population is active Coupang customers, yet the company made an operating loss of $528m in 2020. Moreover, the company’s revenue increased 91% YoY in 2020 to $12.0bn driven by 25.9% YoY and 59% YoY active customer growth and revenue per active customer growth respectively. However, 2020 operating loss declined just $116m. It is an indication that Coupang’s margin expansion potential is greatly exhausted.There is significant revenue growth potential in Coupang. However, we don’t expect revenue growth to translate into profits. Thus, the $50.0bn valuation suggested by various media reports seems extremely optimistic.

Coupang (CPNG US), the largest e-commerce company in South Korea with $12.0bn in annual revenue, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of $1.0bn.Coupang is fundamentally different from other e-commerce companies as it generates around 92.2% of the total revenue from the owned inventory segment. The company’s COGS is over 83% of revenue compared to marketplace players like Alibaba Group (BABA US)’s 57% and Pinduoduo (PDD US)’s 22%. Inherently, Coupang is incapable of generating gross margins comparable with e-commerce marketspace players due to its dependence on own inventory sales.Around 29% of South Korea’s total population is active Coupang customers, yet the company made an operating loss of $528m in 2020. Moreover, the company’s revenue increased 91% YoY in 2020 to $12.0bn driven by 25.9% YoY and 59% YoY active customer growth and revenue per active customer growth respectively. However, 2020 operating loss declined just $116m. It is an indication that Coupang’s margin expansion potential is greatly exhausted.There is significant revenue growth potential in Coupang. However, we don’t expect revenue growth to translate into profits. Thus, the $50.0bn valuation suggested by various media reports seems extremely optimistic.

<a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.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.In this insight, we'll talk about the positive aspects of the deal.

Coupang (CPNG US) , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.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.In this insight, we'll talk about the positive aspects of the deal.

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

In this insight, we discuss about what the locals are saying about this IPO in Korea to better understand how the locals are thinking about the Coupang IPO. The following are the major issues highlighted by the local media on the Coupang IPO:<ol>
<li>RSUs grant worth 100 billion won to its frontline workers </li>
<li>Stock options exercise price of $1.95 per share</li>
<li>Softbank &amp; Softbank's Vision Fund's huge gains on Coupang</li>
<li>Extra 500 billion won spent for COVID-19 prevention in 2020</li>
<li>Differential voting rights </li>
<li>Aggressive expansion into OTT and cloud services likely after the IPO</li>
<li>Timing of Coupang IPO</li>
<li>Naver's E-commerce partnership with CJ Group</li>
<li>Will Delivery Hero be willing to sell Yogiyo to Coupang? </li>
<li>Big increase in accounts payable</li>
<li>Coupang's GMV is estimated to be about 20 trillion won in 2020</li>
<li>Plans to secure another 1.4 trillion won in unsecured loans post IPO</li>
<li>Coupang is a U.S. company listing in the U.S.</li>
</ol>

In this insight, we discuss about what the locals are saying about this IPO in Korea to better understand how the locals are thinking about the Coupang IPO. The following are the major issues highlighted by the local media on the Coupang IPO:
RSUs grant worth 100 billion won to its frontline workers 
Stock options exercise price of $1.95 per share
Softbank &amp; Softbank's Vision Fund's huge gains on Coupang
Extra 500 billion won spent for COVID-19 prevention in 2020
Differential voting rights 
Aggressive expansion into OTT and cloud services likely after the IPO
Timing of Coupang IPO
Naver's E-commerce partnership with CJ Group
Will Delivery Hero be willing to sell Yogiyo to Coupang? 
Big increase in accounts payable
Coupang's GMV is estimated to be about 20 trillion won in 2020
Plans to secure another 1.4 trillion won in unsecured loans post IPO
Coupang is a U.S. company listing in the U.S.


Coupang - What Are the Locals Saying About This IPO?

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 IPO: Initial Thoughts on Rumoured $50.0bn Valuation

Coupang is fundamentally different from other e-commerce platforms as it generates over 92% of revenue from own inventory retail. Therefore a EV...

Oshadhi Kumarasiri

Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch

Coupang (CPNG US) , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and...

Sumeet Singh

Coupang IPO: Lacks Margin Upside

Coupang is not the typical e-commerce company that enjoys margin expansion with volume and revenue growth. The company’s revenue increased 91% YoY...

Oshadhi Kumarasiri

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers

Coupang (CPNG US) , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and...

Sumeet Singh

Coupang - What Are the Locals Saying About This IPO?

In this insight, we discuss about what the locals are saying about this IPO in Korea to better understand how the locals are thinking about the...

Douglas Kim

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