Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

2019 Korea M&A Market Outlook - What’s For Sale?

Event-Driven

It has been reported in numerous media sources that the <a href="https://www.bloomberg.com/quote/9984:JP" target="_blank">SoftBank Group Corp.</a>’s Vision Fund will invest $2 billion in Coupang (Korea), putting the value of the company at $9 billion after this additional injection of capital. This would represent nearly 3.3x P/S (using 2017 sales) and 5.1x P/gross profit (using 2017 gross profit). After the $1 billion investment in Coupang by Softbank in 2015, this huge $2 billion investment in Coupang is an enormous boost for Coupang and it really shows the deep commitment Softbank has for the company. According to Coupang, it estimates that its 2018 sales are likely to come in at about 5 trillion won in 2018, which would represent nearly 86% higher sales growth YoY. This would be much faster sales growth than the company's sales growth in 2016 and 2017. It remains to be seen how close Coupang will be able to achieve its revenue target of 5 trillion won in 2018. The financial details of Coupang's 2018 results are not yet available but we estimate that the company is burning about 50 billion won per month (about US$45 million) this year. The additional $2 billion investment will likely carry Coupang further for at least the next four years.As a result of this investment by Softbank, the smaller competitors are now in dire straits, especially TicketMonster and Wemakeprice, which are private companies that compete in the social commerce sector. Other companies that will also be negatively impacted by the greater competition from Coupang include all other major e-commerce/retail companies in Korea including Emart, SSG.com, and <a href="https://www.smartkarma.com/entities/2338" target="_blank" data-smartkarma-citation="entities:2338:1">Lotte Shopping Co</a>.

It has been reported in numerous media sources that the SoftBank Group Corp.’s Vision Fund will invest $2 billion in Coupang (Korea), putting the value of the company at $9 billion after this additional injection of capital. This would represent nearly 3.3x P/S (using 2017 sales) and 5.1x P/gross profit (using 2017 gross profit). After the $1 billion investment in Coupang by Softbank in 2015, this huge $2 billion investment in Coupang is an enormous boost for Coupang and it really shows the deep commitment Softbank has for the company. According to Coupang, it estimates that its 2018 sales are likely to come in at about 5 trillion won in 2018, which would represent nearly 86% higher sales growth YoY. This would be much faster sales growth than the company's sales growth in 2016 and 2017. It remains to be seen how close Coupang will be able to achieve its revenue target of 5 trillion won in 2018. The financial details of Coupang's 2018 results are not yet available but we estimate that the company is burning about 50 billion won per month (about US$45 million) this year. The additional $2 billion investment will likely carry Coupang further for at least the next four years.As a result of this investment by Softbank, the smaller competitors are now in dire straits, especially TicketMonster and Wemakeprice, which are private companies that compete in the social commerce sector. Other companies that will also be negatively impacted by the greater competition from Coupang include all other major e-commerce/retail companies in Korea including Emart, SSG.com, and Lotte Shopping Co.

Hyundai Home Shopping Network (057050 KS)

Softbank Plans to Invest $2 Billion in Coupang: Impact on the Korean E-Commerce Market

Softbank Group

Softbank Plans to Invest $2 Billion in Coupang: Impact on the Korean E-Commerce Market