Should we be looking at Korea's Amazon - Coupang (CPNG)?
Who is Coupang?
Coupang, Inc. is an e-commerce company based in Seoul, South Korea, and Seattle, WA, and incorporated in Delaware, United States. Founded in 2010 by Bom Kim, the company expanded to become the largest online marketplace in South Korea.
Why the interest in Coupang?
I was first intrigued when Bill Gates bought the shares. The following is a screenshot of a 2021 news article.
Here are a list of other top investors who bought CPNG:
Stanley Druckenmiller’s recent 13F (14 Feb 2024) saw him adding additional shares of CPNG, making this the 2nd biggest holding in his portfolio.
What is the hype about this company?
Let us look at Coupang in detail.
Summary of Coupang
The company stock has fallen from a height of $50+ to the recent price in the mid-teens. Based on 23 Feb 2024, the PE ratio (TTM) is 68.33 and an EPS (TTM) of 0.24.
The news has been branding CPNG as the Amazon of South Korea or Asian Amazon. Thus, let us do some comparison between the 2.
PE Ratio
Amazon’s recent PE was 57.62 and has a price-to-free cash flow of 54.41. CPNG appears more expensive for now comparing PE but Asia remains a key (and growing) market in the near future.
Now, let us look at the financial statements of CPNG:
Income Statement
We are seeing healthy growth of revenue from $11.9B (2020) to $23.1B (TTM).
Gross profit has been growing constantly over the last 4 years.
Most importantly, CPNG has started to make profits after losses since 2020.
Balance Sheet
We can see good growth in total assets and total liabilities. Fortunately (Net Debt or Total Debt) is improving (where we minus total liabilities from total assets).
There is also some share dilution (ownership dilution) as ordinary shares number increased over the years.
Cashflow
We are seeing an improving end cash position.
We have a positive free cash flow - the first time since 2020 (TTM).
It looks like things are going well.
Conclusion
It looks like CPNG is on the rise and there is some excitement for the business. However, it is also a market with international and domestic competition ranging from the likes of Alibaba and Amazon. However, this gives me enough data to create interest.
More due diligence needs to be done including establishing a business edge, a fair valuation, and then applying a margin of safety.
May we find our next winner soon.
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- Jjireh·02-29TOPGood analysis but what is range of reasonable entry price for mid term hold? any thoughts1Report