China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

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Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

Equity Bottom-Up

<ul>
<li>CPNG will provide Farfetch with a bridge loan to save it from default. In exchange, CPNG acquires Farfetch business and its US$ 460mn+ net debt.</li>
<li>For Farfetch to achieve profitability, CPNG will need to conduct major layoffs and cancel brand deals, but both are difficult to achieve, in our view.</li>
<li>CPNG only found limited overseas success in Taiwan, and EU poses an even greater challenge. We cut TP to US$ 14.1 on increased debt and FCF burden.</li>
</ul>


CPNG will provide Farfetch with a bridge loan to save it from default. In exchange, CPNG acquires Farfetch business and its US$ 460mn+ net debt.
For Farfetch to achieve profitability, CPNG will need to conduct major layoffs and cancel brand deals, but both are difficult to achieve, in our view.
CPNG only found limited overseas success in Taiwan, and EU poses an even greater challenge. We cut TP to US$ 14.1 on increased debt and FCF burden.


[Coupang Inc. (CPNG US, SELL, TP US$14.1) TP Change]: Farfetch May Glitter, but It Isn’t Gold