Coupang, Inc.

CPNG Details

Coupang, Inc. (NYSE: CPNG) is a Korea-based e-commerce company that sells various goods, including apparel, electronics, footwear, food products, furniture, nutritional supplements, and other products through its mobile application and internet websites. CPNG also operates an e-commerce and logistics system and provides delivery services. In addition, it also offers online advertising space on its websites and mobile applications. CPNG's shares were listed on NYSE on March 11, 2021, at an issue price of USD 35.00 per share.

Appointment of Head of Public Affairs: On August 26, 2021, CPNG announced the appointment of Alex Wong as its Head of Public Affairs. In this newly created role, Mr Wong has been tasked to oversee public policy matters, relations with the US government, and engagement with stakeholders. Before this appointment, he served the US Department of State as Deputy Assistant Secretary of State for East Asian & Pacific Affairs.

Q2FY21 Results: The company reported YoY growth of 71.31% in total revenues to USD 4.48 billion in Q2FY21 (ended June 30, 2021) compared to USD 2.61 billion in Q2FY20. Net retail sales, which accounted for 89.20% of the total revenue in Q2FY21, improved 64.96% YoY. Net loss attributable to shareholders for Q2FY21 increased to USD 518.60 million from USD 159.91 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents of USD 4.28 billion and total debt of USD 646.90 million.

Key Risks: CPNG relies on payment processing provided by Coupang Pay across its business, which must comply with complex and ever-changing laws, rules, and regulations, especially in the areas of online and mobile payment services. Therefore, any decline in its quality, usability, convenience, or attractiveness could impair the company's operations.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CPNG Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CPNG's stock price decreased 26.04% in the past three months and has breached its previous 52-week range of USD 30.19 to USD 65.00. The stock is currently trading below its 50 DMA level, and its RSI Index is at 30.60. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 35.95. Considering the significant correction in the stock price in the past three months, decent balance sheet, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 30.15, down 2.52% as of August 27, 2021, 2:58 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached. 

Xerox Holdings Corporation

XRX Details

Xerox Holdings Corporation (NYSE: XRX) is a leading global digital print technology provider and related services, software, and solutions. Its operating segments include 1) Workplace Solutions (Entry and Mid-Range), focused on sharing common technology, manufacturing, and product platforms; 2) Graphic Communications & Production Solutions, providing graphic communications and high-volume in-plant and production printing services; and 3) Xerox Services, offering Intelligent Workplace Services (IWS), Workflow Automation, Personalization and Communication Software, Content Management Solutions, and Digitization Services.

Growing Presence in US SMB Market: On June 02, 2021, XRX closed the acquisition of Southern California-based Document Systems for an undisclosed consideration. The transaction aims to strengthen XRX's position in the Small & Midsize Business (SMB) market by improving customer experience and productivity. The transaction follows the acquisition of Groupe CT in May 2021 and Digitex in March 2020.

Launching Eloque: On May 10, 2021, the company and the Government of Victoria (Australia) launched Eloque, a joint venture focused on commercializing an Industrial Internet of Things (IIoT) technology to monitor the structural health of bridges remotely. Eloque's tiny fiber optic sensors will be attached to the bridge to measure their structural strain, thermal response, loads, and corrosion, the analysis of which will be delivered to the bridge owners in real-time.

Q2FY21 Results: The company reported a sharp uptick of 22.39% in revenue to USD 1.79 billion in Q2FY21 (ended June 30, 2021) compared to USD 1.47 billion in Q2FY20, primarily due to the negative impact of the COVID-19 pandemic on its revenue during Q2FY20 (including the closing of businesses, restrictions imposed on office building capacity, reduction in customers' purchasing decisions, etc.). Net income for Q2FY21 was USD 91 million, significantly higher than USD 27 million in Q2FY20. XRX exited the quarter with a cash balance of USD 2.12 billion and a total debt of USD 4.24 billion.

Quarterly Revenue Trend (Source: Q2FY21 Earnings Presentation, July 27, 2021)

Key Risks: XRX generates significant revenue from contracts with US and international governments and agencies. Hence, changes in government spending, adverse political developments, funding constraints, etc., could adversely impact the company's results of operations.

In addition, XRX outsources a considerable portion of its manufacturing operations to third parties (such as Fuji Xerox Co., Ltd.). Any failure on the part of these third parties in developing appropriate manufacturing methods, responding efficiently to changes in customer demand, or obtaining materials necessary for the manufacturing process could harm the company's financials.

Outlook:

FY21 Outlook (Source: Q2FY21 Earnings Presentation, July 27, 2021)

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

XRX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: XRX's stock price fell 10.32% in the past six months and is currently close to the higher-band of the 52-week range of USD 17.05 to USD 26.96. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 44.83. We have valued the stock using the EV/EBITDA multiple-based relative valuation methodology and arrived at a target price of USD 26.70. Considering the correction in the stock price, a significant recovery from COVID-19, growth initiatives, encouraging outlook, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 22.85, up 2.28% as of August 27, 2021, 1:30 PM ET.