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/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (TUYA US)</a> provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.</p></div><div><p>Tuya has priced its IPO at $21.00 per ADS to raise gross proceeds of $915 million, above the previous IPO price range of $17-20 per ADS, according to Bloomberg. At the final IPO price of $21 per share, Tuya will have a market cap of $11.8 billion. The IPO got off to a strong start due to indications of interest for $500 million worth of ADSs in the offering from existing investors (<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management).</p></div><div><p>In <a href="https://www.smartkarma.com/insights/tuya-ipo-initiation-connected-future" target="_blank" data-smartkarma-citation="insights:48695" rel="noopener">Tuya IPO Initiation: Connected Future</a>, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/tuya-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:49137" rel="noopener">Tuya IPO: Valuation Insights</a> we noted that the IPO price range is reasonable but full at the high-end. </p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of $20.65 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. </p></div></div></div>

Tuya Inc (TUYA US) provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.Tuya has priced its IPO at $21.00 per ADS to raise gross proceeds of $915 million, above the previous IPO price range of $17-20 per ADS, according to Bloomberg. At the final IPO price of $21 per share, Tuya will have a market cap of $11.8 billion. The IPO got off to a strong start due to indications of interest for $500 million worth of ADSs in the offering from existing investors (Tencent Holdings (700 HK) and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management).In Tuya IPO Initiation: Connected Future, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive. In Tuya IPO: Valuation Insights we noted that the IPO price range is reasonable but full at the high-end. Updating for the final IPO net raise, our base-case DCF derived price target of $20.65 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. 

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>Roblox, one of the leading global game platforms, announced on Friday (8 January) that it plans to go public through a Direct Public Listing (DPL), instead of the traditional IPO. Ahead of this direct public listing, <a href="https://www.cnbc.com/2021/01/08/roblox-expects-direct-listing-on-nyse-in-february.html" target="_blank" rel="noopener">Roblox</a> raised $520 million in private financing, valuing the company at $29.5 billion or $45 per share.</p><div class="content-highlight"><p><strong>Our valuation analysis suggests a base case implied market cap of $50 billion and a target price of $76.20 per share for Roblox. This would represent 69% higher level than its most recent private capital raise of $520 million, valuing the company at $29.5 billion or $45 per share. The direct listing valuation range is from $40.5 billion to $60.5 billion, according to our valuation sensitivity analysis. </strong></p></div>

Roblox, one of the leading global game platforms, announced on Friday (8 January) that it plans to go public through a Direct Public Listing (DPL), instead of the traditional IPO. Ahead of this direct public listing, Roblox raised $520 million in private financing, valuing the company at $29.5 billion or $45 per share.Our valuation analysis suggests a base case implied market cap of $50 billion and a target price of $76.20 per share for Roblox. This would represent 69% higher level than its most recent private capital raise of $520 million, valuing the company at $29.5 billion or $45 per share. The direct listing valuation range is from $40.5 billion to $60.5 billion, according to our valuation sensitivity analysis. 

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Thematic (Sector/Industry)

<p>Necessity is the mother of financial innovation. The non-traditional listings of <a href="https://www.smartkarma.com/entities/spotify-technology-sa" target="_blank" data-smartkarma-citation="entities:26772:1" rel="noopener">Spotify Technology SA (SPOT US)</a>, <a href="https://www.smartkarma.com/entities/slack-technologies-inc" target="_blank" data-smartkarma-citation="entities:27904:1" rel="noopener">Slack Technologies Inc (WORK US)</a> and <a href="https://www.smartkarma.com/entities/palantir-technologies-inc" target="_blank" data-smartkarma-citation="entities:27728:1" rel="noopener">Palantir Technologies Inc (PLTR US)</a> exhibit an increasing trend toward direct listings, in place of traditional IPOs incorporating lock-up agreements and dysfunctional pricing and allocation process.</p>
<p>This week Airbnb announced plans to go public next year joining the ranks of companies like Spotify and Slack that have used a direct listing to go public.</p>
<p>Is this IPO shortcut route appropriate for all companies? What are the pros and cons? And closer to home, which exchanges are open these virtual IPOs?</p>
<p>In this insight, I address the questions above, discuss various discussions with exchanges in the Asia-Pac regions, and also analyse alternative IPO routes such as special purpose acquisition company (SPACs).</p>
<div class="content-highlight">
<h2>What's Original?</h2>
<p style="text-align: start;">This insight explores the process, benefits, and track record to date of direct listings in equity markets, through to the current developments in Asia.</p>
</div>

Necessity is the mother of financial innovation. The non-traditional listings of Spotify Technology SA (SPOT US), Slack Technologies Inc (WORK US) and Palantir Technologies Inc (PLTR US) exhibit an increasing trend toward direct listings, in place of traditional IPOs incorporating lock-up agreements and dysfunctional pricing and allocation process.
This week Airbnb announced plans to go public next year joining the ranks of companies like Spotify and Slack that have used a direct listing to go public.
Is this IPO shortcut route appropriate for all companies? What are the pros and cons? And closer to home, which exchanges are open these virtual IPOs?
In this insight, I address the questions above, discuss various discussions with exchanges in the Asia-Pac regions, and also analyse alternative IPO routes such as special purpose acquisition company (SPACs).

What's Original?
This insight explores the process, benefits, and track record to date of direct listings in equity markets, through to the current developments in Asia.


Virtual IPOs/Direct Listings: Uninhibited Price Discovery

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>When we first began writing about Slack last summer, an acquisition was always on the radar, even as we were initially positive....for the same reason we flipped negative. Slack is a product, not a company, and is best housed inside a larger enterprise IT company...Salesforce.com is certainly it. Price matters though...and Slack is now trading ~22x forward EV/Sales after the 20% rip....CRM 10x. Are we sure Marc Benioff is willing to dilute his stock THAT much? slack = 10% of CRM EV.</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 began writing about Slack last summer, an acquisition was always on the radar, even as we were initially positive....for the same reason we flipped negative. Slack is a product, not a company, and is best housed inside a larger enterprise IT company...Salesforce.com is certainly it. Price matters though...and Slack is now trading ~22x forward EV/Sales after the 20% rip....CRM 10x. Are we sure Marc Benioff is willing to dilute his stock THAT much? slack = 10% of CRM EV.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.

Japan Specialist

Mark Chadwick

<ul style="list-style-type: disc;" role="list">
<li role="listitem" data-leveltext="" data-font="Symbol" data-listid="1" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1"><p><span xml:lang="EN-US" data-contrast="auto"><a href="https://www.smartkarma.com/entities/chatwork-co-ltd" target="_blank" data-smartkarma-citation="entities:28295:1" rel="noopener">Chatwork Co Ltd (4448 JP)</a>  is Japan’s </span><span xml:lang="EN-US" data-contrast="auto">leading business chat app provider with</span><span xml:lang="EN-US" data-contrast="auto"> a ¥</span><span xml:lang="EN-US" data-contrast="auto">50bn market capitalization. </span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259,"335559795":0}'> </span></p></li>
<li role="listitem" data-leveltext="" data-font="Symbol" data-listid="1" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1"><p><span xml:lang="EN-US" data-contrast="auto">With 35% topline growth, the company's future lies in conquering the SME market and then using that as a platform to launch </span><span xml:lang="EN-US" data-contrast="auto">additional</span><span xml:lang="EN-US" data-contrast="auto"> value-added services. </span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259,"335559795":0}'> </span></p></li>
<li role="listitem" data-leveltext="" data-font="Symbol" data-listid="1" aria-setsize="-1" data-aria-posinset="3" data-aria-level="1"><p><span xml:lang="EN-US" data-contrast="auto">Chatwork</span><span xml:lang="EN-US" data-contrast="auto"> dominates within the SME chat market and competes head to head with <a href="https://www.smartkarma.com/entities/slack-technologies-inc" target="_blank" data-smartkarma-citation="entities:27904:1" rel="noopener">Slack Technologies Inc (WORK US)</a>  in Japan. </span><span data-ccp-props='{"201341983":0,"335551550":1,"335551620":1,"335559685":420,"335559739":160,"335559740":259,"335559796":0,"335559991":420}'> </span></p></li>
</ul>


Chatwork Co Ltd (4448 JP)  is Japan’s leading business chat app provider with a ¥50bn market capitalization.  
With 35% topline growth, the company's future lies in conquering the SME market and then using that as a platform to launch additional value-added services.  
Chatwork dominates within the SME chat market and competes head to head with Slack Technologies Inc (WORK US)  in Japan.  


Small Cap Growth: Chatwork (4448) – It’s Good to Chat.

United States

Slack Technologies, Inc. operates as a software company. The Company designs and develops communication platform that provide real-time messaging, archiving, and searching services for teams. Slack Technologies serves clients worldwide.

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Slack Technologies Inc (WORK US)

Tuya IPO: Trading Debut

Tuya has priced its IPO at $21 per ADS above the marketed range of $17-20 per ADS. Our sensitivity analysis points to a meaningful upside based on...

Arun George

Roblox Valuation Analysis

Our base case valuation for Roblox is $50 billion and a target price of $76.20 per share. This would represent 69% higher than its most recent...

Douglas Kim

Virtual IPOs/Direct Listings: Uninhibited Price Discovery

There’s no cookie-cutter approach that should be employed for every company seeking to go public. But late-stage, venture-backed technology...

David Blennerhassett

Slack + Salesforce.com: Initial Thoughts

We take a look at the potential pluses and minuses of Salesforce.com's proposed acquisition of Slack. The proposed deal is expensive and makes more...

Aaron Gabin

Small Cap Growth: Chatwork (4448) – It’s Good to Chat.

$4448 is Japan’s leading business chat app provider with a ¥50bn market capitalization. With 35% topline growth, the company's future lies in...

Mark Chadwick

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