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.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a> is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. </p></div><div><p>Zomato will launch its IPO on 14 July at an IPO price range of Rs72-76 per share. The IPO will raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%. The selling shareholder is <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a>. </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/zomato-ipo-initiation-emerging-appetites" target="_blank" data-smartkarma-citation="insights:54141" rel="noopener">Zomato IPO Initiation: Emerging Appetites</a>, we stated that that the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. In <a href="https://www.smartkarma.com/insights/zomato-ipo-results-point-to-a-favourable-trajectory" target="_blank" data-smartkarma-citation="insights:54220" rel="noopener">Zomato IPO: Results Point to a Favourable Trajectory</a>, we noted that the FY21 results support our view that Zomato has attractive fundamentals. </p>
<div class="content-highlight"><p>Our relative valuation suggests that Zomato is overvalued at the IPO price range for its forecasted growth. Our base-case DCF valuation is Rs62.84 per share, which is 15% below the mid-point of the IPO price range. Consequently, while we like the fundamentals, we think that the IPO price range is unattractive and are inclined to remain on the sidelines. </p></div>
</div>

Zomato (ZOM IN) is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato will launch its IPO on 14 July at an IPO price range of Rs72-76 per share. The IPO will raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%. The selling shareholder is Info Edge India (INFOE IN). 
In Zomato IPO Initiation: Emerging Appetites, we stated that that the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. In Zomato IPO: Results Point to a Favourable Trajectory, we noted that the FY21 results support our view that Zomato has attractive fundamentals. 
Our relative valuation suggests that Zomato is overvalued at the IPO price range for its forecasted growth. Our base-case DCF valuation is Rs62.84 per share, which is 15% below the mid-point of the IPO price range. Consequently, while we like the fundamentals, we think that the IPO price range is unattractive and are inclined to remain on the sidelines. 


<p><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a> is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. </p><p>Zomato will launch its IPO on 14 July at an IPO price range of Rs72-76 per share. The IPO will raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%. The selling shareholder is <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a>. </p><p>In <a href="https://www.smartkarma.com/insights/zomato-ipo-initiation-emerging-appetites" target="_blank" data-smartkarma-citation="insights:54141" rel="noopener">Zomato IPO Initiation: Emerging Appetites</a>, we stated that that the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. </p><div class="content-highlight"><p>In this note, we look at the updated prospectus which discloses the FY21 results and recent developments. Overall, the latest results support our view that Zomato has attractive fundamentals. </p></div>

Zomato (ZOM IN) is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato will launch its IPO on 14 July at an IPO price range of Rs72-76 per share. The IPO will raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%. The selling shareholder is Info Edge India (INFOE IN). In Zomato IPO Initiation: Emerging Appetites, we stated that that the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. In this note, we look at the updated prospectus which discloses the FY21 results and recent developments. Overall, the latest results support our view that Zomato has attractive fundamentals. 

Zomato IPO: Results Point to a Favourable Trajectory

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

<p><strong>Coupang's share price is 14% above its IPO price of USD35 but it is down 21% from the peak closing price on 15 March. </strong> Since the IPO, the company has weathered through the deteriorating public support over the death of an overworked logistics center employee and the public ire over the death of a firefighter in the fire at Coupang's logistics center in June.  Added to this, The Korea Fair Trade Commission (KFTC) investigated  <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> for possible violation of the Korean Fair Trade Law last week. </p><p><strong>KFTC is accusing Coupang has manipulated its search algorithm to prioritize its private-label items at the top of the search results</strong>, while placing other products in the lower-tiered areas at the bottom.   Moreover, Coupang is also accused of leveraging its dominance to demand the lowest pricing from suppliers and penalizing those suppliers who resisted preferential pricing over those provided to other platforms.   </p><p><strong>I was cautious on the stock pre-IPO</strong> (see my pre-IPO thoughts in <a href="https://www.smartkarma.com/insights/coupang-cpng-us-going-mano-e-mano-with-jd-com" target="_blank" data-smartkarma-citation="insights:49065" rel="noopener">Coupang (CPNG US): Going Mano E Mano with JD.com</a> and my view on 1Q21 results in <a href="https://www.smartkarma.com/insights/coupang-cpng-us-crack-in-the-armor" target="_blank" data-smartkarma-citation="insights:51455" rel="noopener">Coupang (CPNG US): Crack in the Armor</a>) as its valuations appeared expensive. <strong> I remain a bear on the stock as I am concerned about the risk of operational disappointment, and the company's risky global ambition. </strong></p><p><strong>Eroding public sentiment on the company and the rising regulatory risks further increases risk premium on the stock, in my view.</strong> One of the benefits of owning Coupang for investors was risk diversification from the Chinese Internet platforms currently facing their own intense regulatory restrictions.  However, increasing regulatory risk neutralizes this benefit, in my view.       </p>

Coupang's share price is 14% above its IPO price of USD35 but it is down 21% from the peak closing price on 15 March.  Since the IPO, the company has weathered through the deteriorating public support over the death of an overworked logistics center employee and the public ire over the death of a firefighter in the fire at Coupang's logistics center in June.  Added to this, The Korea Fair Trade Commission (KFTC) investigated  Coupang (CPNG US) for possible violation of the Korean Fair Trade Law last week. KFTC is accusing Coupang has manipulated its search algorithm to prioritize its private-label items at the top of the search results, while placing other products in the lower-tiered areas at the bottom.   Moreover, Coupang is also accused of leveraging its dominance to demand the lowest pricing from suppliers and penalizing those suppliers who resisted preferential pricing over those provided to other platforms.   I was cautious on the stock pre-IPO (see my pre-IPO thoughts in Coupang (CPNG US): Going Mano E Mano with JD.com and my view on 1Q21 results in Coupang (CPNG US): Crack in the Armor) as its valuations appeared expensive.  I remain a bear on the stock as I am concerned about the risk of operational disappointment, and the company's risky global ambition. Eroding public sentiment on the company and the rising regulatory risks further increases risk premium on the stock, in my view. One of the benefits of owning Coupang for investors was risk diversification from the Chinese Internet platforms currently facing their own intense regulatory restrictions.  However, increasing regulatory risk neutralizes this benefit, in my view.       

Coupang (CPNG US): Under the Regulator's Microscope

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.

<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 with US$ 12.0bn in annual revenue, has come under a lot of scrutiny ever since its extremely successful IPO.</p><p>The latest in a series of negative publicity for Coupang is the news that South Korea’s antitrust watchdog has launched an investigation over an accusation that the company has meddled with algorithms to prioritize its own products.</p><p>Although the shares were down over 40% from the first-day peak, Softbank Group-backed company is trading at $40.46 per share, 15% above the IPO price.</p><p>Mega cap Chinese e-commerce companies 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> have underperformed the S&amp;P index by almost 50% during the last one-year period due to concerns over strict oversight by the government. Given how things have fared so far, it seems like Coupang is heading in a direction that invites strict oversight from the government.</p>

Coupang (CPNG US), the largest e-commerce company in South Korea with US$ 12.0bn in annual revenue, has come under a lot of scrutiny ever since its extremely successful IPO.The latest in a series of negative publicity for Coupang is the news that South Korea’s antitrust watchdog has launched an investigation over an accusation that the company has meddled with algorithms to prioritize its own products.Although the shares were down over 40% from the first-day peak, Softbank Group-backed company is trading at $40.46 per share, 15% above the IPO price.Mega cap Chinese e-commerce companies like Alibaba Group (BABA US) have underperformed the S&amp;P index by almost 50% during the last one-year period due to concerns over strict oversight by the government. Given how things have fared so far, it seems like Coupang is heading in a direction that invites strict oversight from the government.

Coupang: Inviting Strict Oversight from Government Regulators

Telco/Internet specialist

Kirk Boodry

Redex Research

<p><a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>  shares are down 5% on news that the Cyberspace Admin of China has ordered app stores to pull <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a> 's mobile app. The intra-day ~¥365/share decline seems overdone as Didi’s total value to SBG shareholders is c. ¥470 yen but this is Vision Fund's largest single investment and any hopes that it would build on the upside from <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> , <a href="https://www.smartkarma.com/entities/doordash-inc" target="_blank" data-smartkarma-citation="entities:28881:1" rel="noopener">DoorDash Inc (DASH US)</a> and <a href="https://www.smartkarma.com/entities/ke-holdings-inc" target="_blank" data-smartkarma-citation="entities:29213:1" rel="noopener">KE Holdings Inc (BEKE US)</a> have been sidelined. Plus, the company's target to list 20+ companies this year seems less impressive if this is the kind of performance that will result. </p>

Softbank Group (9984 JP)  shares are down 5% on news that the Cyberspace Admin of China has ordered app stores to pull DiDi Chuxing (DIDI US) 's mobile app. The intra-day ~¥365/share decline seems overdone as Didi’s total value to SBG shareholders is c. ¥470 yen but this is Vision Fund's largest single investment and any hopes that it would build on the upside from Coupang (CPNG US) , DoorDash Inc (DASH US) and KE Holdings Inc (BEKE US) have been sidelined. Plus, the company's target to list 20+ companies this year seems less impressive if this is the kind of performance that will result. 

Softbank Group and Didi Chuxing - Regulatory Pressure on the Rise

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Coupang (CPNG US)

Zomato IPO: Valuation Insights

Our DCF valuation is Rs62.84 per share, 15% below the mid-point of the IPO price range. While we like the fundamentals, the IPO price range is...

Arun George

Zomato IPO: Results Point to a Favourable Trajectory

Zomato will launch its IPO on 14 July to raise up to $1.3 billion. Overall, the FY21 results disclosed in the updated prospectus, support our view...

Arun George

Coupang (CPNG US): Under the Regulator's Microscope

Not unlike its Chinese counterparts, Coupang too has come under anti-trust regulatory scrutiny for flexing its dominant player's power. Risk...

Mitchell Kim

Coupang: Inviting Strict Oversight from Government Regulators

If bulls start to doubt because of regulatory risks then the downtrend could be long and hard for Coupang shares as there's a lot to lose before...

Oshadhi Kumarasiri

Softbank Group and Didi Chuxing - Regulatory Pressure on the Rise

Softbank is down 5% and the holdco discount is over 45% on Didi weakness. We think our forecasts cover regulatory pressure but the VF IPO flywheel...

Kirk Boodry

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)