Toll-free: (877) 631-6311 | Local: (602) 626-3100 |
Office Closed
.(JavaScript must be enabled to view this email address)
Add the Amazon of South Korea to Your Watchlist

Add the Amazon of South Korea to Your Watchlist


How many cardboard boxes have landed on your porch in the last month?

For many Americans, between Christmas presents and their regular Amazon (AMZN) deliveries, the number is high. After all, Amazon delivers over 600 million packages a year. That’s a lot of cardboard.

Things are a little different in South Korea. The country’s ecommerce powerhouse, Coupang (CPNG), offers all the perks Amazon does, like free delivery. But it takes a “zero packaging” approach, with 75% of deliveries arriving in reusable packages.

Over time, those savings add up.

  • It’s one of the many reasons Coupang is growing like a weed…

Last week, we talked about the risks of owning Chinese stocks, like ecommerce giant Alibaba (BABA). I mentioned I liked a similar company, based in business-friendly South Korea, much better.

Well, that company is Coupang, which CEO Bom Kim founded in 2010.

By 2019, Coupang had captured 5% of South Korea’s $128 billion in ecommerce sales. Industry experts expect the country’s ecommerce sales to shoot to $206 billion by 2024. That’s a 10% annual compounded growth rate. Meaning Coupang would keep growing at a rapid clip simply by holding onto the market share it already has. But I expect it to do more than that.

As you can see in the chart below, Coupang’s total sales jumped 55% in 2019. And they jumped 91% in 2020, reaching $12 billion.

 

Looking out to 2024, I think Coupang could do $36 billion in sales. That would push its share of South Korea’s ecommerce market up to 17%. And it would still have plenty of room to grow. (For perspective, eMarketer expects Amazon to rake in 41% of all US ecommerce sales this year.)

  • Coupang’s ultra-fast delivery is one reason it’s growing so rapidly…

Nearly 100% of orders arrive the next day or faster. It even has a service called “Dawn Delivery.” If you’re out of coffee and eggs for breakfast, or anything else, you can place an order by midnight, and it arrives at your door at 7 am.

This is possible thanks to Coupang’s 25 million square feet of distribution facilities. And because South Korea is so densely populated. In fact, 70% of South Koreans live within seven miles of a Coupang distribution facility.

  • CEO Bom Kim is the kind of talented owner-operator I look for when I invest…

Like Walmart founder Sam Walton or Amazon founder Jeff Bezos, Kim is making a ton of money doing something better, faster, and cheaper than his competitors. Investing alongside this sort of savvy owner-operator is almost always a good bet.

However, shares are not quite cheap enough to pull the trigger on Coupang yet.

  • Coupang had one of the worst IPOs in the country this year…

It went public in March at around $50 per share. And it’s sunk around 40% since.

Meanwhile, 2021’s class of IPOs is down an average of 9.4%, according to iposcoop.com. And the Nasdaq has risen 16% year to date. So, the stock is pretty beaten up by any measure.

  • But I’m looking for Coupang to sink even further before buying in…

Buying radically undervalued stocks is a core part of my investing strategy. When I like a company, but it isn’t cheap enough, I watch and wait for an opening. That’s what I’m doing with Coupang.

Like Amazon in its early days, Coupang isn’t profitable yet. The company is investing in rapid growth. As it scales up, it should begin to show profits.

At roughly $30 per share, the market is valuing Coupang at 12x my $3.6 billion estimate of 2024 EBITDA. That’s a reasonable price, especially since Coupang would still have ample room to grow at that point.

So, for now, add Coupang (CPNG) to your watchlist. It’s the Amazon of South Korea. I’ll let you know if and when it’s time to buy.

Thanks for reading,

Thompson Clark

—Thompson Clark
Editor, Smart Money Monday


Smart Money Monday

Unknown stocks often deliver the highest rewards. Thompson Clark reveals unknown, underappreciated stocks... for big gains. If you want to start your week off right, sign up for Smart Money Monday—one fresh investing idea to start your week.

Read Latest Edition Now

Uncover the unknown investing opportunities you want—for the most lucrative Mondays.

Get Thompson Clark's Smart Money Monday

Free in your inbox every Monday

By opting in you are also consenting to receive Mauldin Economics' marketing emails. You can opt-out from these at any time. Privacy Policy

Get in Touch

PO Box 192495,
Dallas, Texas 75219

Toll-free: (877) 631-6311
Local: (602) 626-3100

Copyright © 2022 Mauldin Economics, LLC. All rights reserved.
×
Smart Money Monday

Wait! Don't leave without...

Thompson Clark's Smart Money Monday

The latest opportunities in tech... slam-dunk income plays... "special situation" investments... and everything in between. Get this free newsletter in your inbox every Monday!

By opting in you are also consenting to receive Mauldin Economics' marketing emails. You can opt-out from these at any time. Privacy Policy