Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Equity Bottom-Up

I have to admit that I was wrong about Coupang. I used to believe that SoBank-backed Coupang was playing a very dangerous money game. But it is now becoming more evident that Coupang is rather transforming Korea's retail use scene. The point is Coupang isn't buying customers by simply throwing money. It is true that it is spending tons of money on customers, but it now seems that its money is being spent on occupying the purchase habits of Korean customers rather than cash-rewarding them. To back this argument, here is very interesting and convincing data that I'd like to share.

I have to admit that I was wrong about Coupang. I used to believe that SoBank-backed Coupang was playing a very dangerous money game. But it is now becoming more evident that Coupang is rather transforming Korea's retail use scene. The point is Coupang isn't buying customers by simply throwing money. It is true that it is spending tons of money on customers, but it now seems that its money is being spent on occupying the purchase habits of Korean customers rather than cash-rewarding them. To back this argument, here is very interesting and convincing data that I'd like to share.

Recent Data of Coupang, SoBank VF AI Initiative & Emart Crisis

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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

WeWork plans to raise US$1bn+ in its IPO, as per media reports. 
I covered some of the basic aspects of the deal in my earlier insight, <a href="https://www.smartkarma.com/insights/wework-pre-ipo-in-the-business-of-providing-flexibility-by-being-on-the-hook-for-us-47-2bn" target="_blank" rel="noopener">WeWork Pre-IPO - In the Business of Providing Flexibility by Being on the Hook for US$47.2bn.</a>
In this insight, I'll talk about the contribution margin, and costs that have been kept out of it, and whether its current spend on capex leaves a lot of room for profits.

WeWork plans to raise US$1bn+ in its IPO, as per media reports. 
I covered some of the basic aspects of the deal in my earlier insight, WeWork Pre-IPO - In the Business of Providing Flexibility by Being on the Hook for US$47.2bn.
In this insight, I'll talk about the contribution margin, and costs that have been kept out of it, and whether its current spend on capex leaves a lot of room for profits.

WeWork Pre-IPO - Problems with the Company's Profitability Metrics and Evasive Profits

WeWork plans to raise US$1bn+ in its IPO, as per media reports. 
As per its lease disclosures, the company is on the hook to pay an average of US$498 per member per month over the next 15 years just to cover its rental expenses. As of now, it earns less than that per member.
In addition, while the company has high occupancy, it also seems to have a high churn rate which might explain the enthusiasm for enterprise clients.

WeWork plans to raise US$1bn+ in its IPO, as per media reports. 
As per its lease disclosures, the company is on the hook to pay an average of US$498 per member per month over the next 15 years just to cover its rental expenses. As of now, it earns less than that per member.
In addition, while the company has high occupancy, it also seems to have a high churn rate which might explain the enthusiasm for enterprise clients.

WeWork Pre-IPO - In the Business of Providing Flexibility by Being on the Hook for US$47.2bn

Telco/Internet specialist

Kirk Boodry

Redex Research

'We have read through The We Company prospectus and expect to update our forecasts and valuation in the near future but we felt there were some important takeaways that were worth sharing now. On the aggregate, there was not anything in the filing that leads us to meaningfully change our opinion. We would note that a closer look at the funding rounds indicates a significant majority of funds were raised at $17-25bn and whilst the valuation discussion has sometimes gone as high as $47bn, it seems clear the actual range has not strayed far from $20bn, which we think is high but not as unreasonable as the former implies.

'We have read through The We Company prospectus and expect to update our forecasts and valuation in the near future but we felt there were some important takeaways that were worth sharing now. On the aggregate, there was not anything in the filing that leads us to meaningfully change our opinion. We would note that a closer look at the funding rounds indicates a significant majority of funds were raised at $17-25bn and whilst the valuation discussion has sometimes gone as high as $47bn, it seems clear the actual range has not strayed far from $20bn, which we think is high but not as unreasonable as the former implies.

Initial Thoughts on WeWork's IPO Filing Aren't Supportive of a Higher Valuation

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar. 

Lucror Analytics - Morning Views Asia - 08 Aug 2019

Japan

SoftBank Group Corp. provides telecommunication services. The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

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Softbank Group (9984 JP)

Recent Data of Coupang, SoBank VF AI Initiative & Emart Crisis

I have to admit that I was wrong about Coupang. I used to believe that SoBank-backed Coupang was playing a very dangerous money game. But it is now...

Sanghyun Park

WeWork Pre-IPO - Problems with the Company's Profitability Metrics and Evasive Profits

WeWork plans to raise US$1bn+ in its IPO, as per media reports. I covered some of the basic aspects of the deal in my earlier insight, WeWork...

Sumeet Singh

WeWork Pre-IPO - In the Business of Providing Flexibility by Being on the Hook for US$47.2bn

WeWork plans to raise US$1bn+ in its IPO, as per media reports. As per its lease disclosures, the company is on the hook to pay an average of...

Sumeet Singh

Initial Thoughts on WeWork's IPO Filing Aren't Supportive of a Higher Valuation

'We have read through The We Company prospectus and expect to update our forecasts and valuation in the near future but we felt there were some...

Kirk Boodry

Lucror Analytics - Morning Views Asia - 08 Aug 2019

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

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