Simba Posted November 11, 2020 Share Posted November 11, 2020 valueinvestor: Shopee - multiple at 5x looks low for the growth it has. Unless growth slows down materially in 2021... always a possibility. Also I have $631.3M revenue for 1H2020 for e-Commerce, if they grow at 100% for 2H20 they'll be at about $1.6B for FY2020. Digital Finance services - Revenue of $16M, $13M and $11M of revenue in 2017, 2018, 2019 respectively. 1H2020 was $22.6M revenue ($45M annualized).. As for quick dirty valuation- $SQ is 10x trailing sales.... $STNE is 77x TTM sales. Pick your poison on the multiple. (Using 77x of $STNE nets you $3.4B for digital payments for $45M annualized 1H2020 revenue). I know I know Back of the envelope math here. Garena - How did you compare Fortnite to Freefire? On the P/S Multiple? Also if you look at other gaming companies ($ATVI 7.6x ttm sales, $TTWO 5x ttm sales, $EA 6x ttm sales, $ZNGA 5x ttm sales) they are not trading like relatively crazy "tech" multiples. So I'm not sure why Mr. Market is applying a premium to Garena (T12M revenue was $1.5B so at your $22B valuation your assuming 14.6x ttm sales) Link to comment Share on other sites More sharing options...
valueinvestor Posted November 11, 2020 Author Share Posted November 11, 2020 Free Fire is a different beast and comparables should be towards Fortnite and Epic Games. Economics of the business is different from Call of Duty and other console/PC games, hence $220 per user. As for Shoppe revenue, I just rounded. It’s “only” a 2B dollar difference. Either way we slice it, we have a tens of billions in excess in overvaluation. Link to comment Share on other sites More sharing options...
Gregmal Posted November 11, 2020 Share Posted November 11, 2020 Yea, agree on the above. Grossly expensive but in the sweet spot in an area I love the outlook of and rather than be another dork with a calculator griping about the euphoria, I'll take a small flyer here, ~$170, and if were get a 50% drawdown I'll play ball. Wouldn't be the first time. If it keeps ripping, I like that too. These are the types of companies you either have to buy at horrible valuations or come to terms with never owning. Link to comment Share on other sites More sharing options...
Xerxes Posted November 11, 2020 Share Posted November 11, 2020 Gregmal How about light speed LSPD at $5 billion market cap than Sea at $83 billion. If I am going to go with a high market cap on an absolute basis it would be Mercaodolibre, given its entrenchment. Link to comment Share on other sites More sharing options...
Gregmal Posted November 11, 2020 Share Posted November 11, 2020 I dont know much at all about LSPD. MELI I was a dork with a calculator for too long and missed it. Its a gem though. Link to comment Share on other sites More sharing options...
Xerxes Posted November 11, 2020 Share Posted November 11, 2020 I was a dork with a calculator on Amazon till early 2017. Been happy since. Pay up ! And average up. Link to comment Share on other sites More sharing options...
Simba Posted November 12, 2020 Share Posted November 12, 2020 I was a dork with a calculator on Amazon till early 2017. Been happy since. Pay up ! And average up. But what are you paying up for? Paying up because price is up? Multiple expansion has obviously trounced fundamentals. Also I'm not sure if you know but here is how Amazon traded in 2017. It looks cheap with just running a Bloomberg Screen Jan-1-2017 Amazon: Price / Sales Ratio 2.2x EV / EBITDA 19x (NTM) Revenue grew 27% and 30% in 2016 and 2017 respectively Link to comment Share on other sites More sharing options...
valueinvestor Posted November 12, 2020 Author Share Posted November 12, 2020 Gregmal How about light speed LSPD at $5 billion market cap than Sea at $83 billion. If I am going to go with a high market cap on an absolute basis it would be Mercaodolibre, given its entrenchment. I still don’t understand LightSpeed - granted I didn’t do a deep dive. Funny enough I think I have the CEO phone number in my contacts. Any chance Xerxes you can pm or post your thesis here? I can take a look and get back to you, if you find that valuable. As for Meli - it’s definitely more entrenched but I like Sea is in more “stable” low corruption economies with high GDP growth that’s sustainable imho. Also Sea for me is almost like a mini-tencent with tencent backing. Hence they can leverage tencent’s operational expertise to NOT make the same mistakes as tencent to grow, as opposed to Meli who are doesn’t really have strategic shareholders. What kind of nailed it for me this year is that they are cash flow positive. All they need to do is dial down the growth and take out the cash. Although if that’s the case, then stock is wildly expensive but it’s a huge plus as opposed to building infrastructure from outside capital or dilution. When my napkin math said that I had a more than fair value at 50-60, I went “all-in” as they say. I just hope they can keep on getting capital at reasonable rates and try to dominate South East Asia. Link to comment Share on other sites More sharing options...
valueinvestor Posted November 12, 2020 Author Share Posted November 12, 2020 Also Lightspeed seems to be a beneficiary of Canadian Tech ETF/mutual fund flows, just like Shopify - where there are very little tech companies in Canada and yet tonnes of etf money. Here's ishares holdings: CSU CONSTELLATION SOFTWARE INC Information Technology CAD 109,512,360.32 25.19 SHOP SHOPIFY SUBORDINATE VOTING INC CLA Information Technology CAD 104,453,176.86 24.03 GIB.A CGI INC Information Technology CAD 78,773,391.00 18.12 OTEX OPEN TEXT CORP Information Technology CAD 55,296,757.08 12.72 DSG DESCARTES SYSTEMS GROUP INC Information Technology CAD 22,256,587.74 5.12 KXS KINAXIS INC Information Technology CAD 17,406,300.00 4.00 BB BLACKBERRY LTD Information Technology CAD 12,791,003.75 2.94 LSPD LIGHTSPEED POS SUBORDINATE VOTING Information Technology CAD 12,356,506.80 2.84 ENGH ENGHOUSE SYSTEMS LTD Information Technology CAD 9,916,306.56 2.28 9 CLS CELESTICA INC Information Technology CAD 3,712,560.43 0.85 Imagine having 10 tech etf with the same allocation. They are desperate for more tech companies if they included Celestica. Link to comment Share on other sites More sharing options...
Xerxes Posted November 12, 2020 Share Posted November 12, 2020 Valueinvestor, Within my TFSA, i am holding half a dozen names. I call it the portfolio of long shots. Within that I hold Spotify, Uber, IAC, Mercado-Liber and Lightspeed. I also have BB there but will remove it as soon it gets close to $10 CAD. That basket of names all have nose-bleed valuation (with the exception of perhaps IAC) and make up less than ~30% of the entire financial assets and is meant to hedge against 'my other side' which is more about looking in depth in some of the names. So, what I have in there is not based on deep conviction (they are not Berkshire size bet for me on absolute and relative terms), but rather bets on general themes. I am not even looking at earnings. Only market opportunity and the fact that all of them with the exception of Uber are ran by founder-owners. Specifically on LSPD, it is a home city name, Canadian and the market cap is low enough to have enough runway. That is good enough for the intent of that portfolio to cover a fintech type names, without dishing out top dollar for Square. On the other hand, I hold Amazon, Tencent, Alibaba and Alphabet, each with much larger position size in my retirement account along with the old economy stalwart names that I have (Walt Disney, Berkshire, BAM, Couche Tard, RTX, FFH, General Motors etc). I spent my time mostly on these names, rather the portfolio of long shots. It works for me. Link to comment Share on other sites More sharing options...
Xerxes Posted November 12, 2020 Share Posted November 12, 2020 I was a dork with a calculator on Amazon till early 2017. Been happy since. Pay up ! And average up. But what are you paying up for? Paying up because price is up? Multiple expansion has obviously trounced fundamentals. Also I'm not sure if you know but here is how Amazon traded in 2017. It looks cheap with just running a Bloomberg Screen Jan-1-2017 Amazon: Price / Sales Ratio 2.2x EV / EBITDA 19x (NTM) Revenue grew 27% and 30% in 2016 and 2017 respectively Actually i didn't. But good to know it has a very low p/s ratio. Back in the day i was looking only multiple on earnings and not on sales. Very high multiples on earnings on Amazon for me was a company that chose to have depressed earnings (indication that it was re-investing). of course, the re-investment thesis above is not mine, everyone was saying that about Amazon at the time. My value add was simply to take action and lock-in some shares instead of looking at it. Bought in between $800-$1100. My mistake since 2017 was not adding to it. The highest I bought was at $1100 USD. Link to comment Share on other sites More sharing options...
valueinvestor Posted November 13, 2020 Author Share Posted November 13, 2020 Valueinvestor, Within my TFSA, i am holding half a dozen names. I call it the portfolio of long shots. Within that I hold Spotify, Uber, IAC, Mercado-Liber and Lightspeed. I also have BB there but will remove it as soon it gets close to $10 CAD. That basket of names all have nose-bleed valuation (with the exception of perhaps IAC) and make up less than ~30% of the entire financial assets and is meant to hedge against 'my other side' which is more about looking in depth in some of the names. So, what I have in there is not based on deep conviction (they are not Berkshire size bet for me on absolute and relative terms), but rather bets on general themes. I am not even looking at earnings. Only market opportunity and the fact that all of them with the exception of Uber are ran by founder-owners. Specifically on LSPD, it is a home city name, Canadian and the market cap is low enough to have enough runway. That is good enough for the intent of that portfolio to cover a fintech type names, without dishing out top dollar for Square. On the other hand, I hold Amazon, Tencent, Alibaba and Alphabet, each with much larger position size in my retirement account along with the old economy stalwart names that I have (Walt Disney, Berkshire, BAM, Couche Tard, RTX, FFH, General Motors etc). I spent my time mostly on these names, rather the portfolio of long shots. It works for me. Awesome! I think that's a good balance. I feel that there will be a time where Sea will be unpopular but the business is firing on all cylinders. Microsoft, Apple went through the same thing. I'll wait for the pendulum swing towards value - which I see cracks off now but still not enough to think we're at a tipping point. Link to comment Share on other sites More sharing options...
arcube Posted November 14, 2020 Share Posted November 14, 2020 +1. Yea, agree on the above. Grossly expensive but in the sweet spot in an area I love the outlook of and rather than be another dork with a calculator griping about the euphoria, I'll take a small flyer here, ~$170, and if were get a 50% drawdown I'll play ball. Wouldn't be the first time. If it keeps ripping, I like that too. These are the types of companies you either have to buy at horrible valuations or come to terms with never owning. Link to comment Share on other sites More sharing options...
valueinvestor Posted November 17, 2020 Author Share Posted November 17, 2020 Group o Total GAAP revenue was US$1.2 billion, up 98.7% year-on-year. o Total gross profit was US$407.6 million, up 100.6% year-on-year. o Total adjusted EBITDA1 was US$120.4 million compared to US$-30.8 million for the third quarter of 2019. Raised guidance by 59%. Link to comment Share on other sites More sharing options...
Gregmal Posted December 4, 2020 Share Posted December 4, 2020 Approved for digital banking license in Singapore. Stock back to tiger by the tail mode. Link to comment Share on other sites More sharing options...
rohitc99 Posted December 4, 2020 Share Posted December 4, 2020 Approved for digital banking license in Singapore. Stock back to tiger by the tail mode. can you expand more on what you mean by 'stock back to tiger by the tail mode' ? Link to comment Share on other sites More sharing options...
rkbabang Posted December 4, 2020 Share Posted December 4, 2020 Approved for digital banking license in Singapore. Stock back to tiger by the tail mode. can you expand more on what you mean by 'stock back to tiger by the tail mode' ? I assume he means that it is up almost 10% just today and is hard to catch a good price. Link to comment Share on other sites More sharing options...
Gregmal Posted December 4, 2020 Share Posted December 4, 2020 Yea. Very volatile and not as liquid as you'd expect a $100B company to be. Link to comment Share on other sites More sharing options...
rohitc99 Posted December 4, 2020 Share Posted December 4, 2020 Yea. Very volatile and not as liquid as you'd expect a $100B company to be. thanks Link to comment Share on other sites More sharing options...
formthirteen Posted December 4, 2020 Share Posted December 4, 2020 P/S 23.98. This is one of those stocks that I've forced myself to buy multiple times :-[ I call this a bubble. When will the music stop? Link to comment Share on other sites More sharing options...
Gregmal Posted December 4, 2020 Share Posted December 4, 2020 Not advice, but simply what I try to do; trade your way into a bit of a cushion. Everyone is always worried about the bubble bursting. The earlier you get in, the better, then just manage it and derisk as you go. Bubble could burst today and in something like CRSP for instance, I could lose everything Ive got currently in the name and still have nearly 7x my initial investment. Take the initial stake(ideally a smallish sized position), trim aggressively until you recoup your capital, and buy the dips with discipline. Worst thing that happens is you lose your allocation if it goes to 0. SE aint going to 0. Link to comment Share on other sites More sharing options...
valueinvestor Posted December 6, 2020 Author Share Posted December 6, 2020 P/S 23.98. This is one of those stocks that I've forced myself to buy multiple times :-[ I call this a bubble. When will the music stop? Just to cherry-pick your post. Other than regulation - Singapore and South East Asia countries are much more swift with policy changes for the people. I find P/S almost as useless as SSS - as it's an oversimplification. Ironically, let me explain via oversimplification - Consider a 20B company generating 1B in revenues - 20x sales. If it's highly innovative and has great economics that becomes greater over time, then I think we can say it's net margin could be 60%. Especially considering large tech sporting 20-30% net margins. Only a 33x P/E. At 40% net margins - 50x earnings. At 20% net margins - 100x earnings. For a business that's growing 100% y-o-y, you can decide what's fair. Of course, they're buying their sales but they are paid back in full within months. Here's an interesting take from a local. https://seekingalpha.com/article/4391750-shopee-perspective-from-indonesia Link to comment Share on other sites More sharing options...
arcube Posted December 7, 2020 Share Posted December 7, 2020 Excellent piece. P/S 23.98. This is one of those stocks that I've forced myself to buy multiple times :-[ I call this a bubble. When will the music stop? Just to cherry-pick your post. Other than regulation - Singapore and South East Asia countries are much more swift with policy changes for the people. I find P/S almost as useless as SSS - as it's an oversimplification. Ironically, let me explain via oversimplification - Consider a 20B company generating 1B in revenues - 20x sales. If it's highly innovative and has great economics that becomes greater over time, then I think we can say it's net margin could be 60%. Especially considering large tech sporting 20-30% net margins. Only a 33x P/E. At 40% net margins - 50x earnings. At 20% net margins - 100x earnings. For a business that's growing 100% y-o-y, you can decide what's fair. Of course, they're buying their sales but they are paid back in full within months. Here's an interesting take from a local. https://seekingalpha.com/article/4391750-shopee-perspective-from-indonesia Link to comment Share on other sites More sharing options...
Gregmal Posted December 9, 2020 Share Posted December 9, 2020 52 Week high and they tap the equity markets. Link to comment Share on other sites More sharing options...
valueinvestor Posted December 10, 2020 Author Share Posted December 10, 2020 and the flywheel continues Link to comment Share on other sites More sharing options...
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