Asia Long-Short PM/Analyst

Curtis Lehnert

Equity Bottom-Up

Allen Wang resigned as Google's Chief Marketing Officer of Asia to start Babytree in 2007. A year later in 2008, 54,000 babies were hospitalized in China for kidney damage due to milk formula tainted with melamine. 6 babies died and Sanlu, the primary culprit and market leader in China with 18% market share was bankrupt and acquired by SOE <a href="https://www.smartkarma.com/entities/16419" target="_blank" data-smartkarma-citation="entities:16419:1">Beijing Sanyuan Foods Co A (600429 CH)</a>. As a marketing guy he knew that people have short memories, but there is an exception when kids are being killed.
Allen Wang is quoted for saying, "People are actively seeking information. This is where smart and timely messaging and communication from the product makers can actually play a role to give people more confidence, or due to their lack of communication send people down the path of less trust."
This is where Babytree comes in. A platform designed for mothers to get and exchange advice on anything and everything related to pregnancy, birth, nursing and parenting. There are a million questions that come into a mothers mind as she is pregnant and raising young children. "How much protein should I be eating when nursing? What fish are safe to eat when pregnant? What if I haven't felt my baby kick in two hours? Can I eat spicy foods while pregnant? With all the questions and uncertainties in a mothers mind, Babytree is there to exchange info with other moms and experts in the field. 
Not a bad idea to offer an app catering to mothers with young children, but the obvious question is how do you retain users when children grow up and mothers are no longer second guessing their every action. This is a challenge that Babytree is struggling with and one that will be critical to address if they are to succeed.
In this insight I will take a look at:
<ul>
<li>the Babytree business model</li>
<li>historic financials</li>
<li>peer comparisons and valuation thoughts</li>
<li>MAU updates and the Alibaba investment</li>
</ul>

Allen Wang resigned as Google's Chief Marketing Officer of Asia to start Babytree in 2007. A year later in 2008, 54,000 babies were hospitalized in China for kidney damage due to milk formula tainted with melamine. 6 babies died and Sanlu, the primary culprit and market leader in China with 18% market share was bankrupt and acquired by SOE Beijing Sanyuan Foods Co A (600429 CH). As a marketing guy he knew that people have short memories, but there is an exception when kids are being killed.
Allen Wang is quoted for saying, "People are actively seeking information. This is where smart and timely messaging and communication from the product makers can actually play a role to give people more confidence, or due to their lack of communication send people down the path of less trust."
This is where Babytree comes in. A platform designed for mothers to get and exchange advice on anything and everything related to pregnancy, birth, nursing and parenting. There are a million questions that come into a mothers mind as she is pregnant and raising young children. "How much protein should I be eating when nursing? What fish are safe to eat when pregnant? What if I haven't felt my baby kick in two hours? Can I eat spicy foods while pregnant? With all the questions and uncertainties in a mothers mind, Babytree is there to exchange info with other moms and experts in the field. 
Not a bad idea to offer an app catering to mothers with young children, but the obvious question is how do you retain users when children grow up and mothers are no longer second guessing their every action. This is a challenge that Babytree is struggling with and one that will be critical to address if they are to succeed.
In this insight I will take a look at:

the Babytree business model
historic financials
peer comparisons and valuation thoughts
MAU updates and the Alibaba investment


BabyTree IPO: When the Bough Breaks, the Cradle Will Fall

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Japanese and Asian equity long/short strategies

Uzabase

Specialising in Japanese and Asian equity long/short strategies with a focus on rigorous, but targeted quantitative analysis to temper evaluations of company strategy, potential and vision. At Uzabase, our team of analysts provides coverage of industry dynamics with a local Asian flavour on Speeda, our financial information platform. Going forward we are aiming to channel our focus toward thematic research on emerging industries and company research.

As noted by <a href="https://www.smartkarma.com/profiles/710" target="_blank" data-smartkarma-citation="accounts:710">Pelham Smithers Associates</a>, <a href="https://www.smartkarma.com/entities/13316" target="_blank" data-smartkarma-citation="entities:13316:1">M3 Inc (2413 JP)</a> trades at roughly 32x EV/OP based on its recently released guidance for FY03/2018 or about 30x based on consensus. The company is undeniably well run, dominates a domestic market which is currently a niche but which has significant potential even excluding overseas prospects and has proven to be a great buy for investors, rising 10x in just over 5 years from early 2011 to mid-2016 before falling roughly 26%. However, warning signs have…

As noted by Pelham Smithers Associates, M3 Inc (2413 JP) trades at roughly 32x EV/OP based on its recently released guidance for FY03/2018 or about 30x based on consensus. The company is undeniably well run, dominates a domestic market which is currently a niche but which has significant potential even excluding overseas prospects and has proven to be a great buy for investors, rising 10x in just over 5 years from early 2011 to mid-2016 before falling roughly 26%. However, warning signs have…

Is M3 Now Forced to Use Its 30x EV/OP Multiple and M&A to Maintain Its 20+% OP Growth Rate?

United States

WebMD Health Corp. provides health information services to consumers, physicians, healthcare professionals, employers, and health plans. The Company provides its services through its public and private online portals and health-focused publications.

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Webmd Health (WBMD US)

BabyTree IPO: When the Bough Breaks, the Cradle Will Fall

Allen Wang resigned as Google's Chief Marketing Officer of Asia to start Babytree in 2007. A year later in 2008, 54,000 babies were hospitalized in...

Curtis Lehnert

Is M3 Now Forced to Use Its 30x EV/OP Multiple and M&A to Maintain Its 20+% OP Growth Rate?

As noted by Pelham Smithers Associates, M3 Inc (2413 JP) trades at roughly 32x EV/OP based on its recently released guidance for FY03/2018 or about...

Mio Kato

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