Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

In a new filing on Monday, US online food delivery giant DoorDash disclosed additional details of its planned IPO. The company hopes to sell 33 mn new shares at between US$75 and US$85 per share, raising over US$2.4 bn and valuing the company at US$25 bn or more. In this note we compare it to other listed online food delivery firms, and discuss which factors could justify either higher valuation multiples (strong revenue growth) or lower valuation multiples (US restaurant closures) versus global peers.

In a new filing on Monday, US online food delivery giant DoorDash disclosed additional details of its planned IPO. The company hopes to sell 33 mn new shares at between US$75 and US$85 per share, raising over US$2.4 bn and valuing the company at US$25 bn or more. In this note we compare it to other listed online food delivery firms, and discuss which factors could justify either higher valuation multiples (strong revenue growth) or lower valuation multiples (US restaurant closures) versus global peers. 

DoorDash IPO: First Take on Proposed IPO Price Range of US$75-85 Per Share

US-based online food delivery company <a href="https://www.smartkarma.com/entities/doordash-inc" target="_blank" data-smartkarma-citation="entities:28881:1" rel="noopener">DoorDash Inc (0881510D US)</a> has filed to go public. In this note we describe the company's operations and compare its scale and efficiency to other online food delivery companies in the US and around the globe. 
Intensely focused and increasingly dominant in its home market, DoorDash has made admirable progress toward profitability by focusing on smaller cities and suburban areas in the US. This approach is the opposite of conventional wisdom, which suggests that only a handful of large US cities can generate the order density necessary to make online food delivery economically viable. 
DoorDash is seeking growth from new market segments adjacent to its core operation even as it faces the threat of a large, disruptive new entrant in US online food delivery. Last valued at US$16 bn in June 2020, we believe DoorDash's unorthodox approach deserves to be thoroughly understood by investors. We will write more about DoorDash as the IPO process moves forward.

US-based online food delivery company DoorDash Inc (0881510D US) has filed to go public. In this note we describe the company's operations and compare its scale and efficiency to other online food delivery companies in the US and around the globe. 
Intensely focused and increasingly dominant in its home market, DoorDash has made admirable progress toward profitability by focusing on smaller cities and suburban areas in the US. This approach is the opposite of conventional wisdom, which suggests that only a handful of large US cities can generate the order density necessary to make online food delivery economically viable. 
DoorDash is seeking growth from new market segments adjacent to its core operation even as it faces the threat of a large, disruptive new entrant in US online food delivery. Last valued at US$16 bn in June 2020, we believe DoorDash's unorthodox approach deserves to be thoroughly understood by investors. We will write more about DoorDash as the IPO process moves forward.

DoorDash IPO Context: What It Is & How It Compares to Online Food Delivery Universe

We hope <a href="https://www.smartkarma.com/entities/dida-inc" target="_blank" data-smartkarma-citation="entities:29701:1" rel="noopener">Dida (DIDA HK)</a> will publish another set of updated financial statements (from Q3 2020) before it lists in Hong Kong later this year. If and when those results are published, investors should study them carefully to detect signs of a resurgent <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (1284375D CH)</a> , the ride-hailing giant that exited the car pool market in late 2018 but quietly re-entered about a year ago.
The two most telling signs of a DiDi ChuXing resurgence in the car pool segment would be: 
<ol>
<li>Dida Inc's car pool revenue growing slower than its car pool ride volume or GTV</li>
<li>A sharp rise in Sales &amp; Marketing expenses relative to DiDa Inc's overall revenue</li>
</ol>
Both of the above metrics would be reflected in DiDa Inc's car pool 'take rate': the net revenue it earns on booking car pool rides after deducting any incentives paid to drivers, payments that have likely diminished dramatically in the two years since Didi ChuXing exited the market. 
We suspect that in the absence of a large, savvy competitor (like DiDi ChuXing), DiDa Inc's 'take rate' is higher and its spending on Sales &amp; Marketing is lower than it would be otherwise. Signs that DiDi ChuXing is aggressively pushing its way back into this market -- which it used to dominate, and not so long ago -- would be negative for DiDa Inc, in our view.
In fact, the 'free ride' DiDa Inc has enjoyed as the dominant (and quite profitable) player in the growing car pool segment could come to an end.

We hope Dida (DIDA HK) will publish another set of updated financial statements (from Q3 2020) before it lists in Hong Kong later this year. If and when those results are published, investors should study them carefully to detect signs of a resurgent DiDi Chuxing (1284375D CH) , the ride-hailing giant that exited the car pool market in late 2018 but quietly re-entered about a year ago.
The two most telling signs of a DiDi ChuXing resurgence in the car pool segment would be: 

Dida Inc's car pool revenue growing slower than its car pool ride volume or GTV
A sharp rise in Sales &amp; Marketing expenses relative to DiDa Inc's overall revenue

Both of the above metrics would be reflected in DiDa Inc's car pool 'take rate': the net revenue it earns on booking car pool rides after deducting any incentives paid to drivers, payments that have likely diminished dramatically in the two years since Didi ChuXing exited the market. 
We suspect that in the absence of a large, savvy competitor (like DiDi ChuXing), DiDa Inc's 'take rate' is higher and its spending on Sales &amp; Marketing is lower than it would be otherwise. Signs that DiDi ChuXing is aggressively pushing its way back into this market -- which it used to dominate, and not so long ago -- would be negative for DiDa Inc, in our view.
In fact, the 'free ride' DiDa Inc has enjoyed as the dominant (and quite profitable) player in the growing car pool segment could come to an end. 

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

We continue to be encouraged by market dynamics that are supportive of an ongoing equity bull market. Additionally, there continues to be an absence of breakdowns on the major global indexes (MSCI ACWI, ACWI ex-US, EM, &amp; EAFE). As a result, our outlook remains bullish.  In this report we show some love to various Sectors that have not been big attention-grabbers for us in recent months, but still have plenty of attractive stocks. The stocks highlighted hail from a variety of countries. Sectors covered include Services, Communications, Staples, Financials, and Utilities.

We continue to be encouraged by market dynamics that are supportive of an ongoing equity bull market. Additionally, there continues to be an absence of breakdowns on the major global indexes (MSCI ACWI, ACWI ex-US, EM, &amp; EAFE). As a result, our outlook remains bullish.  In this report we show some love to various Sectors that have not been big attention-grabbers for us in recent months, but still have plenty of attractive stocks. The stocks highlighted hail from a variety of countries. Sectors covered include Services, Communications, Staples, Financials, and Utilities.

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

Equity Bottom-Up

Maintaining strong revenue growth at the online food delivery companies largely depends on some combination of rising orders, increasing value per order, and higher monetization ('take') rates. 
And improvement in gross profitability at these companies depends on getting unit delivery revenues to grow faster than unit delivery costs. 
In our view, many of the drivers of recent strong revenue growth and improving gross profitability are beginning to fade for some online food delivery companies, including China's Meituan. 
This decline can be obscured by a number of temporary factors. At <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> in 2020 these include a change in segment reporting, a sharp rise in 'other' operating income, and growth of  the company's food delivery advertising revenue. 
In this note we take a closer look at H1 2020 food delivery results from Meituan, <a href="https://www.smartkarma.com/entities/delivery-hero-se" target="_blank" data-smartkarma-citation="entities:24416:1" rel="noopener">Delivery Hero SE (DHER GY)</a> and newly merged <a href="https://www.smartkarma.com/entities/takeaway-com-nv" target="_blank" data-smartkarma-citation="entities:28360:1" rel="noopener">Takeaway.com NV (TKWY NA)</a> to see how each company is faring in terms of top-line growth and gross profitability. The numbers are mixed, but in Meituan's case show a waning of momentum and stagnant margins in core food delivery activity.

Maintaining strong revenue growth at the online food delivery companies largely depends on some combination of rising orders, increasing value per order, and higher monetization ('take') rates. 
And improvement in gross profitability at these companies depends on getting unit delivery revenues to grow faster than unit delivery costs. 
In our view, many of the drivers of recent strong revenue growth and improving gross profitability are beginning to fade for some online food delivery companies, including China's Meituan. 
This decline can be obscured by a number of temporary factors. At Meituan (3690 HK) in 2020 these include a change in segment reporting, a sharp rise in 'other' operating income, and growth of  the company's food delivery advertising revenue. 
In this note we take a closer look at H1 2020 food delivery results from Meituan, Delivery Hero SE (DHER GY) and newly merged Takeaway.com NV (TKWY NA) to see how each company is faring in terms of top-line growth and gross profitability. The numbers are mixed, but in Meituan's case show a waning of momentum and stagnant margins in core food delivery activity.

Meituan: Key Drivers of Top-Line Growth &  Margin Lift Receding, Obscured By Growth of 'Other' Items

United Kingdom

Just Eat Takeaway.com N.V. is an online food ordering company. The Company offers mobile application for ordering and delivering of food and beverages. Just Eat Takeaway.com serves customers worldwide.

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Just Eat Takeaway.com NV (TKWY NA)

DoorDash IPO Context: What It Is & How It Compares to Online Food Delivery Universe

US-based on-demand food delivery company DoorDash plans to list soon. In this note we show investors how DoorDash differs from some of its peers in...

Tracking Traffic

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

DiDa Inc has carved out a niche for itself in China's growing car pool segment. But should ride-hailing giant DiDi ChuXing re-emerge as a player,...

Tracking Traffic

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

We show some love to various Sectors that have not been big attention-grabbers for us in recent months, including Services, Communications,...

Vermilion Research

Meituan: Key Drivers of Top-Line Growth & Margin Lift Receding, Obscured By Growth of 'Other' Items

New name Rider costs - $3690 Advertising Summary

Tracking Traffic

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DoorDash IPO: First Take on Proposed IPO Price Range of US$75-85 Per Share

On some metrics, US-based online food delivery company looks reasonably priced at the mid-point of its IPO range. We highlight some factors that...

Tracking Traffic

DoorDash IPO Context: What It Is & How It Compares to Online Food Delivery Universe

US-based on-demand food delivery company DoorDash plans to list soon. In this note we show investors how DoorDash differs from some of its peers in...

Tracking Traffic

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

DiDa Inc has carved out a niche for itself in China's growing car pool segment. But should ride-hailing giant DiDi ChuXing re-emerge as a player,...

Tracking Traffic

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

We show some love to various Sectors that have not been big attention-grabbers for us in recent months, including Services, Communications,...

Vermilion Research

Meituan: Key Drivers of Top-Line Growth & Margin Lift Receding, Obscured By Growth of 'Other' Items

New name Rider costs - $3690 Advertising Summary

Tracking Traffic