Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

A chartered management accountant with more than 10 years of rich experience in investment research and financial analysis. Worked as an equity analyst for one of the world's largest asset managers with USD2.5trn in AUM covering numerous sectors including chemicals, retail, tech, autos, telco, real-estate and banks, globally. Experienced in fundamental equity research, industry research, commodity studies, forensic accounting, and due diligence reviews.

Equity Analyst

36Kr IPO (Part I): Revenue Outlook and Cash-Burn Remain a Concern

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.

Equity Capital Markets

<p>In our previous insight on 36Kr IPO, <a href="https://www.smartkarma.com/insights/36kr-ipo-part-i-revenue-outlook-and-cash-burn-remain-a-concern" target="_blank" data-smartkarma-citation="insights:33117" rel="noopener">36Kr IPO (Part I): Revenue Outlook and Cash-Burn Remain a Concern</a> we discussed the company’s business model, industry and the company financials. This follow-up insight will mainly focus on the company’s valuation and the governance related concerns. The company had originally planned to raise US$100m through its US IPO, however, the company’s target IPO price range of US$14.5-17.5 per share indicates gross proceeds in the range of US$52.2-63m from the sale of 3.6m American Depositary Shares.</p><p>As we discussed in our previous insight, the company’s revenues have grown significantly over the last 2-3 years, but profitability remains a concern as the company has been generating operating losses during the current fiscal year. We believe, the company’s aggressive growth in revenue comes with increased expenses which have been eating into the company’s profits. Based on the company’s target price for its US IPO, the implied valuation multiple is at a giant premium to its peer group which we believe is not justified given our concerns regarding the sustainability of the company’s business model and deeply increasing operating losses. On the other hand, our concerns regarding the company’s governance further weighs down on the valuation. The Chinese firms have been struggling to raise capital in the US due to the ongoing trade tension between the US and China and we would not subscribe for the IPO.</p>

In our previous insight on 36Kr IPO, 36Kr IPO (Part I): Revenue Outlook and Cash-Burn Remain a Concern we discussed the company’s business model, industry and the company financials. This follow-up insight will mainly focus on the company’s valuation and the governance related concerns. The company had originally planned to raise US$100m through its US IPO, however, the company’s target IPO price range of US$14.5-17.5 per share indicates gross proceeds in the range of US$52.2-63m from the sale of 3.6m American Depositary Shares.As we discussed in our previous insight, the company’s revenues have grown significantly over the last 2-3 years, but profitability remains a concern as the company has been generating operating losses during the current fiscal year. We believe, the company’s aggressive growth in revenue comes with increased expenses which have been eating into the company’s profits. Based on the company’s target price for its US IPO, the implied valuation multiple is at a giant premium to its peer group which we believe is not justified given our concerns regarding the sustainability of the company’s business model and deeply increasing operating losses. On the other hand, our concerns regarding the company’s governance further weighs down on the valuation. The Chinese firms have been struggling to raise capital in the US due to the ongoing trade tension between the US and China and we would not subscribe for the IPO.

36Kr IPO (Part II): Cut in IPO Target, Expensive Valuation and Governance Concerns

36Kr Holdings

36Kr IPO (Part II): Cut in IPO Target, Expensive Valuation and Governance Concerns