Author: admin

China’s Long-term Apartment Rentals Startups

After WeWork’s unsuccessful IPO, several long-term apartment rentals startups in China are preparing to list on Nasdaq. Q&K (青客公寓) will likely be the first, planning to raise $100 million, according to the SEC filing.

Firms like Q&K will lease apartments from individual landlords, renovate the space with uniform styles, and then sublease fully-furnished rooms to tenants, who are mainly young urbanites looking for affordable housing. Q&K reported a net revenue of USD 129.6 million in the fiscal year 2018, up 70.3% year-on-year. Net losses however doubled to USD 72.8 million in the same period. [kr-asia]

I do believe they are similar to WeWork in many aspects.

Q&K is more like a test for investors’ current appetite (especially needed after WeWork), with two other bigger players waiting in line. Not surprisingly, those are backed by Alibaba and Tencent respectively.

Ant Financial-backed Danke (蛋壳公寓) and Tencent-backed Ziroom (自如) both are also looking for an IPO to raise $500 million – $1 billion.

Danke raised $500 million in February 2019.

Ziroom raised $500 million in June 2019.

 

Corporate Acquisitions in Cybersecurity Space

Cyber-security has been a hot space for investments and acquisitions. With Thoma Bravo buying Sophos Group for $3.8 billion this week, here is a roundup of selected corporate M&As happened since 2018.

Corporate acquisitions

cloud services infrastructure protection – Palo Alto Networks to acquire Evident for $300 million (2018.3)

Endpoint Detection and Response (EDR) – Palo Alto Networks to Acquire Secdo for $100 million (2018.4)

unified access security and multi-factor authentication – Cisco to acquire Duo System for $2.35 billion (2018.8)

Cloud Security – Check Point to Acquire Dome9 for $175 million (2018.10)

Operational Technology (OT) network security – Forescout to acquire SecurityMatters for $113 million (2018.11)

AI based endpoint cybersecurity – Blackberry to acquire Cylance for $1.4 billion (2018.11)

network and endpoints protections – Carbonite to acquire Webroot for $618.5 million (2019.2)

security orchestration, automation and response (SOAR) – Palo Alto Networks to acquire Demisto for $560 million (2019.2)

enterprise security –  Broadcom to acquire Symantec’s enterprise business for $10.7 billion (2019.8)

「What’s News In China」

Paypal (NASDAQ: PYPL) is becoming the first foreign payment platform to provide online payment services in China. The license is obtained by acquiring 70% of GoPay (国付宝). The transaction is approved by the People’s Bank of China (PBOC) on September 30. // Crunchbase ｜ GoPay PR

Baidu (NASDAQ: BIDU) launched self-driving service Apollo Robotaxi for the general public in Changsha China on September 27. The initial fleet has 45 autonomous cars. // cnet | SCMP

Source: SCMP

Shake Shack (NYSE: SHAK) opened its 2nd store at Kerry Center (嘉里中心) in Shanghai on September 26. Its first store in mainland China launched in January 2019 in Shanghai Xintiandi (新天地). // PR Newswire Asia | Jiemian

Source: prnasia

Xiaomi (HKSE: 1810) is entering the smart fridge segment (pricing starts at RMB 999) and completing its major appliance offerings comprised of TV, A/C, washing machines and fridges. Users can modify the temperature and mode of the cabin via voice control. Xiaomi has been trying to diversify from its smart phone business with smart home/IoT products. // gizmochina | 36kr

 

The Companies To Watch After WeWork

Following WeWork’s unsuccessful IPO (so far), people became more concerned with valuations similar companies – as Morgan Stanley says WeWork’s failed IPO marks the end of an era for unprofitable unicorns and its struggles share eerie similarities to three other market tops throughout history.

Source: Nasdaq

In public, the chairman of Softbank, Masayoshi Son commented that WeWork and Uber may be losing money now, but they will be substantially profitable in 10 years’ time.

Meanwhile, there are a bunch of other similar companies of watch and we can see what other investors are thinking.

City Storage Systems (CSS)

formerly called CloudKitchens, or “WeWork for Food”, led by Uber ex-CEO Travis Kalanick, with $150 million funding announced in March 2018.

Travis announced that he would be starting a new fund with his windfall from Uber shares sold in its most recent major secondary round. At the time, Kalanick said the new fund — called 10100, or “ten one hundred” — would be geared toward “large-scale job creation,” with investments in real estate, ecommerce, and “emerging innovation in India and China.” CSS has two businesses, CloudKitchens and CloudRetail (controlled with one entity I assume), which focus on redevelopment of distressed assets in those two areas. [Crunchbase]

And in Feb 2019, Travis Kalanick said to plot China comeback with ‘shared kitchen’ business – CloudKitchens in China, partnering with Zhang Yanqi, former COO of ofo.

OYO

also backed by SoftBank, started from assembling hotel rooms under its brand and management system in India.

Source: oyorooms

OYO CEO purchased $2 billion shares of its company this summer at a valuation of $10 billion. After the deal, Mr. Agarwal’s stake in Oyo will rise to 30% from around 10%. Of the $2bn, Mr Agarwal spent $1.3bn on a secondary purchase that saw US backers Lightspeed Venture Partners and Sequoia Capital partly cash out.

And this week, OYO raised another $1.5 billion. The remaining $700m from the previous $2 billion is included in this round.

It also recently announced a $300m investment in the US, where it has 50 hotels.

Besides it core business, OYO expanded into businesses like cloud kitchen (through acquisition of  FreshMenu for about $60 million) and co-working as well (through acquisition of  Innov8 for $30 million)

The Office Group (“TOG”)

acquired by Blackstone, the traditional and one of the largest real estate players in the work, back in June 2017 for approximately £500m.

Source: The Office Group

But with a different type of investor, TOG might be on the path of growing profits.

Its financial results for 2015 reported its EBITDA up 33% to £15.4m (2014: £11.6m), and revenues up 62% to £54.3m (2014: £33.6m). TOG is London’s largest privately-owned occupier of office space (at least by that time). [leadersleague]

Airbnb

In September, Airbnb announces it will go public in 2020, after WeWork’ delayed IPO.

It reported “substantially” more than $1 billion in revenue in Q3 2018.

Earlier this year, Airbnb sold common shares at a price that values the home-rental startup at roughly $35 billion. The company priced its equity at about $120 per share when it purchased the last-minute room provider HotelTonight for $450 million. [recode]

And in August, Airbnb announced the acquisition of Urbandoor, a platform that offers extended stays to corporate clients.

In June, it launched Airbnb Luxe, another tier besides Airbnb Plus introduced in February 2018.

Source: Airbnb

Uber Card vs. Chase Sapphire Reserve (CSR)

Let’s compare the long-term value here.

Dining & Travel is 3.0x points for CSR and a $1.5x value per 100 points -> essentially a 4.5% reward.

Uber Card is 4% on dining and 3% on Travel.

The difference in annual fees are totally different: CSR is $150 ($450 fees minus $300 travel credit) while Uber Card is -$50. (YES, Negative 50 – Uber Card reimburses $50 each year for any subscription e.g. amazon prime while has $0 annul fee).

Assuming a person spends $5,000 per year in travel and dines for $20,000 per year (around $55 per day), then:

CSR will earn 1.5% premium on travel, so $75 more benefits than Uber Card.

And 0.5% premium on dining, so $100 more benefits than Uber Card.

Uber Card wins as the effective saving in annual fee is $200 while the incremental benefit CSR brings is only $175 with our assumptions.

What’s Up In Beer

An shrinking industry with huge impacts

Source: Statista

Also – a report on beer that includes 2011-2016 beer consumption growth by country.

So ~200,000,000,000 liters divided by world population of 7,500,000,000 = 26.67 liters per person annually.

Say a can of beer is 330 ml – then each person is consuming ~80 cans per year.

That is a larger than I expected.

Although beer still needs to compete with wines, spirits and others for total alcohol consumption, it is still the no.1 source of alcohol (worldwide, but varies by country) – the impacts on everyday life are huge!

A better graphic illustration of alcohol consumption can be found here. A few screenshots are listed below.

Trends: to more premium options & to craft beer

Source: brewersassociation.org, R.S. Weinberg, Beer Marketer’s Insights, and the Brewers Association

In the US, craft beers is a growing sector while the overall beer sales is declining in 2018.

Source: brewersassociation.org

And the number of brewpubs is growing rapidly in recent years in the US.

Source: brewersassociation.org

And stories have been told, for example, Corono has been very popular and growing fast in China.

Source: AB InBev

On a conference call following the release of Q1 2018 results yesterday, Carlos Brito told analysts that AB InBev’s more expensive offerings are doing “very well” in China. He singled out Corona, which became the number one imported beer in China in the three-month period. The brand “[is] growing very rapidly”, Brito added. A-B InBev boasts around a 20% market share in the country, with strength coming from its premium and super-premium brands. [just-drinks.com]

And sales of Budweiser in China overtook those in America in the first half of 2018. [beveragedaily.com]

Corona’s parent company Modelo was acquired by AB InBev in 2012 for $20 billion at an enterprise value to EBITDA multiple of 15.4 times.

一个非主流消费观（2）

上一篇说到通过asset转换的方式，可以把消费的属性改变。

对于体验类型的“消费”，也有相关的理论。

出去玩儿不是消费

这个逻辑的核心在于 – 一般来说，出去玩儿或者其它体验无法像买东西那样变成asset。一个小票或者票根，完全不能达到类似的效果。

解决的办法直到这个十年才算基本形成 – 照片/视频 + 社交媒体。

看上去十分简单和日常，但确实潜移默化地改变着人们的消费观念。一顿饭拍了照再发个朋友圈，就以另一种形式被保存了下来（不仅存在了朋友圈里，也存在了看到的人的印象里）。这可以说是一种intangible asset。

通常来说，食物通过外观（或者背景环境）也可以判断出价位，因此这样的intangible asset也有价值高低之分。标出餐厅名称或者地点可以更加透明地给intangible asset定价。

同时，拍得好不好可以很大程度地影响这个intangible asset的价值 – higher variation than in a bag。

所以近年来愈加流行的说法是没拍照等于没吃。某种程度上就是因为，如果只是吃，就是直接expense掉了。

养成了这样的习惯后会带来一个潜在的改变，即不愿意吃那种发不了社交媒体的。

吃只是体验型消费中的一类。

旅行会产生另一大类更高价值的intangible asset，也往往有更大variation，可能更容易更经常有大于成本的情况，直接带来equity上的gain。

另一个需要考虑的因素是社交媒体的广度。同样的旅行，follower更多的人发出来往往产生更高价值的intangible asset。由此可以带来的后续value，有些可以很直接（比如受邀去体验新开业酒店？）。