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

The US Customs and Border Protection Agency (CBP) ordered its ports to begin seizing all disposable gloves produced in Malaysia by <a href="https://www.smartkarma.com/entities/top-glove-corp-bhd" target="_blank" data-smartkarma-citation="entities:20759:1" rel="noopener">Top Glove Corp (TOPG MK)</a>, citing that CBP has found sufficient evidence to determine that the imported goods were produced using forced labour practices. Top Glove shares sank 5.3% yesterday and another 5.4% today to close at MYR 4.52 per share.Even though the immediate financial impact from the above order is some what limited, we believe the order to have a significant impact on Top Glove’s financial performance in the post COVID era. Moreover, it could affect the company’s proposed Hong Kong Offering and also risk getting thrown out of ESG indices.

The US Customs and Border Protection Agency (CBP) ordered its ports to begin seizing all disposable gloves produced in Malaysia by Top Glove Corp (TOPG MK), citing that CBP has found sufficient evidence to determine that the imported goods were produced using forced labour practices. Top Glove shares sank 5.3% yesterday and another 5.4% today to close at MYR 4.52 per share.Even though the immediate financial impact from the above order is some what limited, we believe the order to have a significant impact on Top Glove’s financial performance in the post COVID era. Moreover, it could affect the company’s proposed Hong Kong Offering and also risk getting thrown out of ESG indices.

CBP to Seize Goods Over Forced Labour: The Impact Limited in The Short Run & Severe in The Long Run

Equity Capital Markets

The Bureau of Investigative Journalism, a non-profit news organisation based in London, published an article on 25th March 2021, accusing <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (1022770D LN)</a> of exploiting its riders through paying significantly less than the minimum wage requirement in the UK.<a href="https://www.thebureauinvestigates.com/stories/2021-03-25/deliveroo-riders-earning-as-little-as-2-pounds" target="_blank" rel="noopener">https://www.thebureauinvestigates.com/stories/2021-03-25/deliveroo-riders-earning-as-little-as-2-pounds</a>After the release of the news article, several high-profile assets managers have commented that they would not take part in the IPO, which was priced at £3.9-4.6 per share on 22nd March 2021. The decision to avoid the company’s IPO by big investment firms like <a target="_blank">Aviva, Aberdeen, Legal &amp; General, BMO Global, CCLA and M&amp;G Investments </a>could have severe consequences to an IPO as big as Delieveroo (£1.8bn), especially when the listing is expected to take place on 7th April 2021 (just 11 days from now).

The Bureau of Investigative Journalism, a non-profit news organisation based in London, published an article on 25th March 2021, accusing Deliveroo (1022770D LN) of exploiting its riders through paying significantly less than the minimum wage requirement in the UK.https://www.thebureauinvestigates.com/stories/2021-03-25/deliveroo-riders-earning-as-little-as-2-poundsAfter the release of the news article, several high-profile assets managers have commented that they would not take part in the IPO, which was priced at £3.9-4.6 per share on 22nd March 2021. The decision to avoid the company’s IPO by big investment firms like Aviva, Aberdeen, Legal &amp; General, BMO Global, CCLA and M&amp;G Investments could have severe consequences to an IPO as big as Delieveroo (£1.8bn), especially when the listing is expected to take place on 7th April 2021 (just 11 days from now).

Deliveroo IPO Hangs In The Balance: Multiple Asset Managers Opt To Snub The IPO Over Workers’ Rights

We previously examined the industry growth prospects, <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (1022770D LN)</a>’s competitive position and expressed our concerns regarding the company’s ability to be profitable in the next few years. Since then, Deliveroo has announced the price range to its IPO at £3.9-4.6 per share, which implies a market cap range of <a target="_blank">£</a>7.6-8.8bn. Here we the company’s valuation in comparison to peers.

We previously examined the industry growth prospects, Deliveroo (1022770D LN)’s competitive position and expressed our concerns regarding the company’s ability to be profitable in the next few years. Since then, Deliveroo has announced the price range to its IPO at £3.9-4.6 per share, which implies a market cap range of £7.6-8.8bn. Here we the company’s valuation in comparison to peers.

Independent Research, Food Delivery Space, Newmoon Capital

Newmoon Capital

Independent Research, Food Delivery Space

We look for owner-operators in what we believe are either highly defensible assets or soon to be highly defensible assets, trading at a fraction of their future potential.

Private Capital Markets

£8bn at the mid-point… that’s pretty high. That prices the company on a much higher valuation than $DASH on a comparable accounting perspective. Also, existing investors which include Will Shu will be selling OVER £600mn shares.

£8bn at the mid-point… that’s pretty high. That prices the company on a much higher valuation than $DASH on a comparable accounting perspective. Also, existing investors which include Will Shu will be selling OVER £600mn shares.

Roofoods Ltd, the company behind the on-demand food delivery service <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (1022770D LN)</a>, plans to raise around £1.0bn ($1.4bn) via an IPO on the London Stock Exchange over the next few weeks. The company had a private market valuation of $7.0bn in July last year, and various media reports suggests that the valuation could increase by about $3.0bn to $10.0bn following the IPO.The food delivery industry’s medium to long term growth potential may not concern investors for now, but the competition and the lack of profitability might become a big concern, especially if the current tech bubble bursts anytime soon.Deliveroo made a net loss of £226.4m in 2020, which is about 19.0% of revenue compared to <a href="https://www.smartkarma.com/entities/just-eat-takeaway-908587b0-d4c9-488a-801b-2910cf29e24b" target="_blank" data-smartkarma-citation="entities:28360:1" rel="noopener">Just Eat Takeaway (TKWY NA)</a>’s 2020 net loss of €151.0m (£129.9m) and net margin of -7.4%.We see Deliveroo’s path to profitability being blocked by excessive competition. Therefore, we are not 100% confident on Deliveroo’s business model to consider it as a as a long-term investment. That said, all these recent high profile tech IPOs had excellent stock market debuts. If priced decently, it is difficult to think that a famous IPO like Deliveroo will not provide similar upside on trading debut.

Roofoods Ltd, the company behind the on-demand food delivery service Deliveroo (1022770D LN), plans to raise around £1.0bn ($1.4bn) via an IPO on the London Stock Exchange over the next few weeks. The company had a private market valuation of $7.0bn in July last year, and various media reports suggests that the valuation could increase by about $3.0bn to $10.0bn following the IPO.The food delivery industry’s medium to long term growth potential may not concern investors for now, but the competition and the lack of profitability might become a big concern, especially if the current tech bubble bursts anytime soon.Deliveroo made a net loss of £226.4m in 2020, which is about 19.0% of revenue compared to Just Eat Takeaway (TKWY NA)’s 2020 net loss of €151.0m (£129.9m) and net margin of -7.4%.We see Deliveroo’s path to profitability being blocked by excessive competition. Therefore, we are not 100% confident on Deliveroo’s business model to consider it as a as a long-term investment. That said, all these recent high profile tech IPOs had excellent stock market debuts. If priced decently, it is difficult to think that a famous IPO like Deliveroo will not provide similar upside on trading debut.

Deliveroo IPO: Plagued With Intense Competition

United Kingdom

Deliveroo PLC provides software solutions. The Company offers an online food delivery platform which allows users to order meals from partner restaurants, grocery stores, and other food suppliers. Deliveroo serves customers worldwide.

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Deliveroo (ROO LN)

CBP to Seize Goods Over Forced Labour: The Impact Limited in The Short Run & Severe in The Long Run

The immediate financial impact from the CBP order is limited. Yet we believe it to have a significant impact on Top Glove’s financial performance...

Oshadhi Kumarasiri

Deliveroo IPO Hangs In The Balance: Multiple Asset Managers Opt To Snub The IPO Over Workers’ Rights

The decision to avoid the Deliveroo IPO by big investment firms could have severe consequences to an IPO as big as Delieveroo (£1.8bn), especially...

Oshadhi Kumarasiri

Deliveroo IPO Valuation:

Competition is intense in this high growth industry and Deliveroo’s business model does not seem attractive enough get excited about the long-term...

Oshadhi Kumarasiri

Deliveroo part 7 - Valuation

£8bn at the mid-point… that’s pretty high. That prices the company on a much higher valuation than $DASH on a comparable accounting perspective

Newmoon Capital

Deliveroo IPO: Plagued With Intense Competition

Deliveroo’s track record regarding its financial discipline is not that great. The company has raised around £0.9bn over seven funding rounds...

Oshadhi Kumarasiri

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