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The market is evaluating that Coupang will stabilize not only in large-scale investments but also in terms of financing and performance relative to the public offering. Efficiency can be increased by saving fixed costs while increasing the amount of goods handled and at the same time having the ability to automate the logistics facility. This is expected to lead to a reduction in sales and sales and administration costs, leading to a chronic deficit. Since the turnaround is the driving force to facilitate future loan financing, Coupang has immediately upgraded its constitution with an initial public offering.
A national network of rocket delivery appears … It seems to be equipped with a logistics network of another dimension.
Coupang offered 130 million shares in the process of listing on the New York Stock Exchange. The price per share is $ 35 (40,000 won) and the total amount Coupang acquires is $ 445 million (5,170.6 trillion won). Among them, shareholders, including Chairman Kim Bum-seok, have 30 million shares in sales and 100 million shares (3,974.6 billion won) to enter Coupang. This is 7.2 times the amount of Coupang’s capital expenditure (CAPEX) of $ 48463 million (5506 billion won) last year.
Coupang plans to spend most of the money transfused on logistics investments. It is expanding rocket delivery nationwide and fresh rocket delivery (same day and early morning delivery), which are currently limited to the metropolitan area and local metropolitan areas.
Coupang is known to plan to secure a distribution site of approximately 3 million square meters (1 million pyeong) to build around 10 large-scale distribution centers across the country. It is also expected that a considerable amount of money will be invested in automating part of the entire registry that focuses on the existing workforce. In addition, investment in delivery (Coupang Logistics), online video service (OTT) and business abroad is also foreseen.
Industry interest is focused on whether Coupang can accelerate the payback period through large-scale investments. In the context of Coupang’s chronic shortfall, the large-scale depreciation of new full applications and the operating costs of full applications are also playing a role. For Coupang to generate operating profit, its sales must significantly exceed the rate of increase in SG&A expenses, but the key is how much Coupang’s transaction amount will increase with the expansion of the rocket distribution network.
◆ Financial structure improves immediately … detects money losses
Coupang’s listing on the New York Stock Exchange also removed financial concerns. Right now, $ 500 million (56.71 billion won) worth of convertible notes (open convertible bonds) issued to one of the top investors in 2018, such as Greenox Capital, are converted to shares when publicly traded, which significantly reduces debt.
Interest expense is also expected to decline. Since Coupang has run into a deficit every year, he has struggled with financing after exhausting the money he received from the Vision Fund (SVF) from Softbank president Son Jeong-eui. Although the scale of assets to be insured as collateral, such as distribution centers, is large, it is running a deficit of hundreds of billions of dollars each year, so borrowing conditions were inevitably tight.
Until last year, Coupang spent $ 17.76 million (11.976 billion won) on interest alone on loans of $ 1.1 billion (1.249.6 billion won). He was responsible for posting a net loss of $ 474.90 million (527.7 billion won) last year.
A market official said: “Because Coupang has huge funds on hand, there is a greater margin for efficiency when expanding the business. If it succeeds in becoming a surplus, there will be no difficulty in raising additional funds (loans, etc. .) “It was very helpful to Coupang in many ways,” he said.
◆ Is the M&A Market ‘Big Hand’ Emerging … “Less Likely”
Some of the market is also looking at whether Coupang will use the money it received as a source of money for mergers and acquisitions. The delivery app ‘Yogiyo’ is a representative example.
Currently, Yogiyo’s largest shareholder, Delivery Hero (DH), is in the process of selling it underwater. This is in accordance with the condition of the Fair Trade Commission that DH must sell Yogiyo to take care of his elegant brothers (Baedal People).
When it acquires Yogiyo, the second largest in the Coupangi market, it is expected that it will be able to put heavy pressure on the delivery country, the No. 1 in the market, along with its Coupang Itz. As a competitor has disappeared, it is possible to have a lot of fun in the delivery market because it can be partially erased from the marketing competition, which has become a chronic problem in the industry.
However, in the related industry, it is questionable whether DH will choose to cede the yokiyo to rival Coupang, and Coupang, who had concerns about a financial crisis just before listing, responds that Coupang will have no trouble making a decision. risk.
An industry official said, “Coupang received 4 trillion won of money through the IPO, but the moment it acquired Yogiyo, it could fall into a financial crisis.” “We will focus on the direction of growth,” he predicted.
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