TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>Roblox, an online gaming platform geared towards children, is poised to continue the accelerating usage and monetization triggered by the pandemic. Its business model produces a flywheel where its audience grows as new games are introduced, further incentivizing its user/developers to create more user generated content that strengthens the platform. A large, hyper engaged youth audience offers Roblox open-ended optionality around advertising, sponsorships, and other new monetization avenues. Already highly cash generative, Roblox is poised to invest in localization efforts to expand its global reach, while potentially introducing new metaverse-based gaming platforms for older demographics. </p>
<p><strong>Base Case Valuation: $30B<br></strong><strong>Bull Case: $60B<br>Bear Case: $10B</strong></p>
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<p style="text-align: left;">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p>
</div>

Roblox, an online gaming platform geared towards children, is poised to continue the accelerating usage and monetization triggered by the pandemic. Its business model produces a flywheel where its audience grows as new games are introduced, further incentivizing its user/developers to create more user generated content that strengthens the platform. A large, hyper engaged youth audience offers Roblox open-ended optionality around advertising, sponsorships, and other new monetization avenues. Already highly cash generative, Roblox is poised to invest in localization efforts to expand its global reach, while potentially introducing new metaverse-based gaming platforms for older demographics. 
Base Case Valuation: $30B Bull Case: $60B Bear Case: $10B

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  


Roblox: If Its in the Game, Its in the Game

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p>Indonesia e-commerce player Bukalapak, which counts <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> as its largest local backer but also has <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft Corp (MSFT US)</a>, <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>, GIC, and Naver Corp is investors in reportedly in talks to list through a SPAC with a valuation of US$4bn-US$5bn, with a local listing of part of the business in Jakarta first. The timing suggests a target transaction date in 3Q2021.</p>
<p>Bukalapak is the No.4 e-commerce player in Indonesia with 13.5m online sellers and 100m monthly active users, competing with players such as <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>, Shopee (<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US))</a>, and <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a> but with an edge providing fulfillment and logistics for around 5.4m warungs (mom&amp;pop stores) in Indonesia.</p>
<p>The company recently saw <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a> come in as part of a US$200m funding round, with a view of helping to build financial services through the platform and offer to its sellers and customers financial services.</p>
<p><a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> is the most direct beneficiary of a listing for Bukalapak, even through a SPAC, given that it will crystallize a market value for the company. <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>approved a stock split in December and the company has become more liquid and it may look at a further restructuring at a later stage to bring all its digital and media assets under one roof.</p>
<p>The IDX (Indonesia Stock Exchange) is already talking about both allowing SPACs to list in Indonesia but also more importantly to allow main-board listings for high-growth companies that may not be profitable, as well as allowing dual-class shares. </p>

Indonesia e-commerce player Bukalapak, which counts Emtek (EMTK IJ) as its largest local backer but also has Microsoft Corp (MSFT US), Standard Chartered (STAN LN), GIC, and Naver Corp is investors in reportedly in talks to list through a SPAC with a valuation of US$4bn-US$5bn, with a local listing of part of the business in Jakarta first. The timing suggests a target transaction date in 3Q2021.
Bukalapak is the No.4 e-commerce player in Indonesia with 13.5m online sellers and 100m monthly active users, competing with players such as Tokopedia PT (1087142D IJ), Shopee (Sea Ltd (SE US)), and Lazada Group (LAZADA SP) but with an edge providing fulfillment and logistics for around 5.4m warungs (mom&amp;pop stores) in Indonesia.
The company recently saw Standard Chartered (STAN LN) come in as part of a US$200m funding round, with a view of helping to build financial services through the platform and offer to its sellers and customers financial services.
Emtek (EMTK IJ) is the most direct beneficiary of a listing for Bukalapak, even through a SPAC, given that it will crystallize a market value for the company. Emtek (EMTK IJ)approved a stock split in December and the company has become more liquid and it may look at a further restructuring at a later stage to bring all its digital and media assets under one roof.
The IDX (Indonesia Stock Exchange) is already talking about both allowing SPACs to list in Indonesia but also more importantly to allow main-board listings for high-growth companies that may not be profitable, as well as allowing dual-class shares. 

Emtek (EMTK IJ) - Bukalapak Eyeing a SPAC Listing But Jakarta May Be First?

APAC IPOs & Placements

Zhen Zhou, Toh

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.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (1869782D US)</a> is looking to raise US$1bn in its upcoming U.S. IPO. </p></div><div><p>Tuya is a Platform as a Service (PaaS) and Software as a Service (SaaS) provider to businesses and developers with a focus on IoT. The company’s IoT PaaS enables businesses and developers to easily develop, launch, manage, and monetize software-enabled devices and services while its Industry SaaS helps businesses deploy, connect, and manage a large number and different types of smart devices.</p></div><div>
<p>In this note, we will take a look at comparable peers, share our thoughts on forecast and valuation. </p>
<p>We have previously covered the company in:</p>
<ul>
<li>
<a href="https://www.smartkarma.com/insights/tuya-pre-ipo-ride-the-iot-wave-via-tuya-s-platform" target="_blank" data-smartkarma-citation="insights:48740" rel="noopener">Tuya (涂鸦智能) Pre-IPO - Ride the IoT Wave Via Tuya’s Platform</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/tuya-pre-ipo-tuya-s-platform-usage-review" target="_blank" data-smartkarma-citation="insights:48822" rel="noopener">Tuya (涂鸦智能) Pre-IPO - Tuya's Platform Usage Review</a> </li>
</ul>
</div>

Tuya Inc (1869782D US) is looking to raise US$1bn in its upcoming U.S. IPO. Tuya is a Platform as a Service (PaaS) and Software as a Service (SaaS) provider to businesses and developers with a focus on IoT. The company’s IoT PaaS enables businesses and developers to easily develop, launch, manage, and monetize software-enabled devices and services while its Industry SaaS helps businesses deploy, connect, and manage a large number and different types of smart devices.
In this note, we will take a look at comparable peers, share our thoughts on forecast and valuation. 
We have previously covered the company in:


Tuya (涂鸦智能) Pre-IPO - Ride the IoT Wave Via Tuya’s Platform 

Tuya (涂鸦智能) Pre-IPO - Tuya's Platform Usage Review 



Tuya (涂鸦智能) Pre-IPO - Peer Comparison, Forecast, and Valuation

<p>When we first looked at Snowflake at the time of the IPO, we saw an incredible business with great management and unbelievable business model. But the stock quickly went well beyond our valuation comfort levels, and last quarter we said we couldn’t justify owning it. We reserve the right to change our minds. The number that stood out this quarter was 168% - Snowflake’s net revenue retention in the quarter. We still think Snowflake is expensive – and you can arguably get a similar growth rate and excellent business model at half the valuation with Crowdstrike…but like many compounders (Adobe, ServiceNow), sometimes you never get the entry point you want. We think the drawdown in growth presents that opportunity.</p>
<div class="content-highlight">
<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
</div>

When we first looked at Snowflake at the time of the IPO, we saw an incredible business with great management and unbelievable business model. But the stock quickly went well beyond our valuation comfort levels, and last quarter we said we couldn’t justify owning it. We reserve the right to change our minds. The number that stood out this quarter was 168% - Snowflake’s net revenue retention in the quarter. We still think Snowflake is expensive – and you can arguably get a similar growth rate and excellent business model at half the valuation with Crowdstrike…but like many compounders (Adobe, ServiceNow), sometimes you never get the entry point you want. We think the drawdown in growth presents that opportunity.

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.


Snowflake 4Q21 Earnings: Their Revenues ARE Worth More Than Yours

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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>We have theorised previously that the upgraded Switch that everyone expects from Nintendo could utilise graphics partner, Nvidia’s DLSS technology. This could help the company close the gap with Sony and Microsoft and could have a variety of other implications which we discuss below.</p>

We have theorised previously that the upgraded Switch that everyone expects from Nintendo could utilise graphics partner, Nvidia’s DLSS technology. This could help the company close the gap with Sony and Microsoft and could have a variety of other implications which we discuss below.

Nintendo – DLSS Developments Have Implications for Switch “Pro”

United States

Microsoft Corporation operates as a software company. The Company offers applications, extra cloud storage, and advanced security solutions. Microsoft serves customers worldwide.

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Microsoft Corp (MSFT US)

Roblox: If Its in the Game, Its in the Game

Roblox is set to IPO tomorrow. We think its a unique asset and are inclined to own this depending on how outlandish valuation turns out to be as...

Aaron Gabin

Emtek (EMTK IJ) - Bukalapak Eyeing a SPAC Listing But Jakarta May Be First?

Emtek is an interesting way to play the burgeoning digital economy in Indonesia and would be a key beneficiary should subsidiary Bukalapak choose...

Angus Mackintosh

Tuya (涂鸦智能) Pre-IPO - Peer Comparison, Forecast, and Valuation

Tuya Inc (1869782D US) is looking to raise US$1bn in its upcoming U.S. IPO. In this note, we will take a look at comparable peers, share our...

Zhen Zhou, Toh

Snowflake 4Q21 Earnings: Their Revenues ARE Worth More Than Yours

Snowflake had an incredible quarter and we think its a reasonable entry point for the highest valuation software stock in the market.

Aaron Gabin

Nintendo – DLSS Developments Have Implications for Switch “Pro”

We examine recent developments for Nvidia's DLSS technology and consider the implications for the expected Switch "Pro", including for third party...

Mio Kato

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