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 Bottom-Up

<ul>
<li>With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.</li>
<li>
<a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.</li>
<li>With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.</li>
</ul>


With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.

Coupang (CPNG US)’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.
With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.


Coupang: No Substance to The Steady State EBITDA Guidance

<ul>
<li>We are outright negative on regional e-commerce names leading into earnings as a small miss could spark a significant sell-off in the current market conditions.</li>
<li>Even though most regional EC names including <a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> are down by around 65%, we fear that there’s further downside risk in a rising interest rate environment.</li>
<li>In the meantime, we expect Coupang to miss 4Q21 revenue when they report on Thursday. In addition, Coupang has the biggest downside potential as it is expensive compared to peers.</li>
</ul>


We are outright negative on regional e-commerce names leading into earnings as a small miss could spark a significant sell-off in the current market conditions.
Even though most regional EC names including Coupang (CPNG US) are down by around 65%, we fear that there’s further downside risk in a rising interest rate environment.
In the meantime, we expect Coupang to miss 4Q21 revenue when they report on Thursday. In addition, Coupang has the biggest downside potential as it is expensive compared to peers.


Coupang Earnings Preview: More Room to Fall

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>CPNG will provide Farfetch with a bridge loan to save it from default. In exchange, CPNG acquires Farfetch business and its US$ 460mn+ net debt.</li>
<li>For Farfetch to achieve profitability, CPNG will need to conduct major layoffs and cancel brand deals, but both are difficult to achieve, in our view.</li>
<li>CPNG only found limited overseas success in Taiwan, and EU poses an even greater challenge. We cut TP to US$ 14.1 on increased debt and FCF burden.</li>
</ul>


CPNG will provide Farfetch with a bridge loan to save it from default. In exchange, CPNG acquires Farfetch business and its US$ 460mn+ net debt.
For Farfetch to achieve profitability, CPNG will need to conduct major layoffs and cancel brand deals, but both are difficult to achieve, in our view.
CPNG only found limited overseas success in Taiwan, and EU poses an even greater challenge. We cut TP to US$ 14.1 on increased debt and FCF burden.


[Coupang Inc. (CPNG US, SELL, TP US$14.1) TP Change]: Farfetch May Glitter, but It Isn’t Gold

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.

<ul><li>This is our first report on South Korean e-commerce giant, Coupang Inc.</li><li>The company delivered an all-around beat in the most recent quarterly result.</li><li>The company observed an acceleration in revenue and active customer growth, particularly noteworthy for the rapid acceleration in active customer numbers.</li></ul>

This is our first report on South Korean e-commerce giant, Coupang Inc.The company delivered an all-around beat in the most recent quarterly result.The company observed an acceleration in revenue and active customer growth, particularly noteworthy for the rapid acceleration in active customer numbers.

Coupang Inc.: Initiation of Coverage – Business Strategy

China/Asia TMT

Shawn Yang

<ul>
<li>CPNG reported C2Q23 top-line, adjusted EBITDA, and GAAP net profit in-line, 45%, and 102% vs. our estimate, and 2%, 27%, and 49% vs. consensus, respectively.</li>
<li>Product commerce EBITDA margin rose 2ppts QoQ, which offset the 126% QoQ increase to developing offerings losses, which rose due to increased investment in its Taiwan business.</li>
<li>Given improved product commerce profitability, we raise our TP to US$ 14.4, but maintain SELL to reflect the impact of China e-commerce on CPNG.</li>
</ul>


CPNG reported C2Q23 top-line, adjusted EBITDA, and GAAP net profit in-line, 45%, and 102% vs. our estimate, and 2%, 27%, and 49% vs. consensus, respectively.
Product commerce EBITDA margin rose 2ppts QoQ, which offset the 126% QoQ increase to developing offerings losses, which rose due to increased investment in its Taiwan business.
Given improved product commerce profitability, we raise our TP to US$ 14.4, but maintain SELL to reflect the impact of China e-commerce on CPNG.


[Coupang (CPNG US, SELL, TP US$14.4) TP Change]: Margin Beat Due to Higher 3P Spend on Ads and FLC

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: No Substance to The Steady State EBITDA Guidance

Coupang's steady state margin guidance lacked substance and was only slightly better than consensus medium term expectations on the margin side....

Oshadhi Kumarasiri

Coupang Earnings Preview: More Room to Fall

With Coupang possibly having the biggest downside potential among leading EC players in the region, we would choose it over others names to have a...

Oshadhi Kumarasiri

[Coupang Inc. (CPNG US, SELL, TP US$14.1) TP Change]: Farfetch May Glitter, but It Isn’t Gold

CPNG saves Farfetch from default with a bridge loan, acquiring the business and its debt. Achieving profitability will require layoffs and...

Blue Lotus Research Institute

Coupang Inc.: Initiation of Coverage – Business Strategy

This is our first report on South Korean e-commerce giant, Coupang Inc. The company delivered an all-around beat in the most recent quarterly...

Baptista Research

[Coupang (CPNG US, SELL, TP US$14.4) TP Change]: Margin Beat Due to Higher 3P Spend on Ads and FLC

Given improved product commerce profitability, we raise our TP to US$ 14.4, but maintain SELL to reflect the impact of China e-commerce on CPNG.

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Coupang: No Substance to The Steady State EBITDA Guidance

Coupang's steady state margin guidance lacked substance and was only slightly better than consensus medium term expectations on the margin side....

Oshadhi Kumarasiri

Coupang Earnings Preview: More Room to Fall

With Coupang possibly having the biggest downside potential among leading EC players in the region, we would choose it over others names to have a...

Oshadhi Kumarasiri

[Coupang Inc. (CPNG US, SELL, TP US$14.1) TP Change]: Farfetch May Glitter, but It Isn’t Gold

​CPNG saves Farfetch from default with a bridge loan, acquiring the business and its debt. Achieving profitability will require layoffs and...

Blue Lotus Research Institute

Coupang Inc.: Initiation of Coverage – Business Strategy

This is our first report on South Korean e-commerce giant, Coupang Inc. The company delivered an all-around beat in the most recent quarterly...

Baptista Research

[Coupang (CPNG US, SELL, TP US$14.4) TP Change]: Margin Beat Due to Higher 3P Spend on Ads and FLC

Given improved product commerce profitability, we raise our TP to US$ 14.4, but maintain SELL to reflect the impact of China e-commerce on CPNG.

Blue Lotus Research Institute

CPNG saves Farfetch from default with a bridge loan, acquiring the business and its debt. Achieving profitability will require layoffs and...