Coupang: Online Shopping Is The Wave Of The Future

I got into trouble with a US Zionist reader yesterday because I wrote about the rights of Arabs who wound up in East Jerusalem after being forced out of their homes in the new state of Israel. He called them “squatters”. I'm unrepentant. There is no mileage today for one-sidedness. If you need to learn more, please read the New York Times op-ed article posted today by Peter Beinert, editor of Jewish Currents. I am supportive of the State of Israel which provided refuge to my German Jewish uncle and aunt (and later 3 cousins) in Haifa, and where a female 2nd cousin became a fighter pilot trainer. But denying rights to Muslims or Bahai residents of the Israeli port city is inaccurate and encourages extremism. Arabs were ousted and given refuge in East Jerusalem because King Hussein of Jordan didn't want them there, and Golda Meir was in agreement.

For the record, a Muslim reader who identified as such sent me a note about how a burning tree in Jerusalem was misrepresented in a video clip showing Israeli celebrants dancing and singing in the Kotel plaza while a fire blazed near Al Aksa mosque. It has gone viral but was created by careful misleading photography. The same thing is used to show Palestinians dancing on rooftops as Scud missiles landed on Tel Aviv buildings, or handing out sweets in Gaza following successful Palestinian terror attacks on Israelis. Both sides do propaganda and trick photography, it seems.

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Wall Street tried a recovery today despite new statistics showing inflation risks. The Down Jones (my new joke) gained 400 points but I think the snap-back is too soon.

My deal with authorize.net to waive the fees from when our website was down because of the Blue Host fines has been overridden by my bank, JP Morgan Chase, because I think the guy doing the web order system is hoping to get money for his work this way. My bank refused to collect for this but my rep is on vacation this week and I fear the system will again turn against a small business customer. Meanwhile, our return to profit is being delayed by our inability to take on-line orders. The whole world seems to be stacked up against small businesses, even our banks. Our Mexican techies should switch to PayPal, I think.

Colonial Pipeline is up again after the company paid a handsome ransom to the bad guys. A bit less panic today over-reporting companies. There are a bunch.

*Compugen, the Israeli specialist in predictive drug discovery, reported mixed financial results for its Q1 financial results. R&D expenses hit $7.3 mn vs $4.7 mn for Q1 2020, because of more manufacturing and clinical trials. General and administrative expenses came to $2.7 mn, barely over the $2.5 mn level for the prior Q1. However, the quarterly net loss came to $9.9 mn, or 12¢/sh, up from a net loss of $7.1 mn, or 10¢/sh a year ago. CGEN has cash, cash-related accounts, and short- and long-term bank deposits totaling $119.4 mn, down from the $124.4 mn close of 2020. It has no debt.

"2021 will be an important year of milestones and execution for Compugen," said Anat Cohen-Dayag, Ph.D., President, and CEO of Compugen. "During this year we expect to share data readouts for COM701 in monotherapy, dual and triple combination studies, as well as our COM902 monotherapy study. These important readouts will build upon our earlier COM701 clinical data which have shown durable responses, including a confirmed complete response, in a highly refractory patient population in indications unlikely to respond to checkpoint inhibitors. Our data shared to date reinforce our confidence that COM701 is clinically active, and that PVRIG has the potential to act as an important and untapped target in the immune-oncology space."

She also highlighted two new trials, a Phase 1b cohort expansion of COM701 plus Opdivo® to be initiated in this quarter with Bristol-Myers against ovarian, breast, endometrial, and stable colorectal cancers; and a Phase 1 COM701 with COM902 combination study planned in H2. These will evaluate the role of DNAM axis members PVRIG and TIGIT with the intersecting PD-1 pathway. CGEN owns both PVRIG and TIGIT which are potential immunotherapy checkpoints against cancers that may work against normally unresponsive tumors. It also will expand its research with Johns Hopkins on a novel myeloid target discovery by CGEN.

In the quarter, CGEN published peer-reviewed preclinical data in Cancer Immunology on the synergism of COM902 with PVRIG and PD-1 blockade. In vitro and in vivo, the reduced Fc receptor engagement of COM902 does not result in T cell depletion. In vitro COM902 enhances human T and NK cell function and enhances anti-tumor lymphocyte responses and inhibits tumor growth in vivo and another on the relevance of the DNAM-1 axis. In the current quarter CGEN will present on COM701 as a monotherapy and in combination at the American Society of Clinical Oncology 2021 Annual Meeting and a lecture by its VP for research Eran Ophir on the TIGIT Pathway at the Society for Immunotherapy of Cancer (SITC) Targets for Cancer Immunotherapy.

A brokerage says CGEN beat its own profit forecast by a penny (minus 12¢ vs estimated 13¢). Analyst's target price ranges from $16 to $28. It is now $6.55. More drug news below.

*South Korean Coupang today reported on its first Q1 as a listed company. CEO Bom Kim stressed that online shopping is the wave of the future in his country as long as its prices are fair and shoppers appreciate the convenience. “It is like Christmas every day”, he claimed. He also pointed out a green element from CPNG because 75% of deliveries do not use boxes at all, but merely paper sleeves. It also added food products (Rocket Fresh) and more ads.

But CPNG also delivered meh results. Q1 revenues rose 74% or 63% in constant currencies and active customer numbers rose 21% to 16 mn. It kept up deliveries despite covid-19. However quarterly sales from the prior quarter were only up 11% or 9% in constant currencies sequentially, although up 126% y/y from 2020. Gross profit did not spare margins which fell 40 basis points, because of costs. Its trailing 12-mo numbers showed a loss of $197 mn in Q1 from spending on inventory, investment, and payment help, and failed to rise as they had in Q1 2020 when the first covid-19 outbreak boosted demand. It took some digging but the total Q1 21 loss was $295 mn, essentially double that of the prior year. Sales were up at $6.21 bn from $2.41 bn before, but the loss per share was 68¢ vs the consensus estimate of merely 16¢. One reason for this is that the grocery delivery charges are the lowest on earth.

Following the conference call, CEO Bom Kim appeared on CNBC to tout the online challenger to Amazon, and Deutsche Bank, one of the IPO underwriters, issued a buy rating for Coupang. It is now over 30% below its IPO price. As you know I didn't buy at the opening because the share felt pricey but I didn't realize how bad it would be. You can always get business if you under charge, but this is not the way to grow, something that all the talk about internationalizing Coupang only worried participants even more because of the obvious uncertainties. Do you trust them to recoup the giveaways to gain market share? I have no idea. But having bought this baby I averaged down at $32.0699. It opened at $35.33 and crashed lower. Now it is $31.26 if you want to follow me in, down by 36% from the IPO.

*In yesterday's pileup I did not cover Taiwan Fund which I recently bought and recommended. It reported that it gained 34.03% in the 6 months to the end of this February, a 5.1% underperformance compared to the TAIEX (benchmark). The reason was lower investment income and distributions. However, the net assets of our fund rose just under 29% to $28.93. while as is an unusual pattern for closed-end funds, the market value kept pace, up 35.28%. That is because Taiwan Fund is no longer a closed-end fund trading here. It added a tiny number of new shares from distribution reinvestment, 2,216 in the half and 13,610 in the full year. Having ended repurchases last April it now will tender for up to 25% of its outstanding shares at 98% of NAV for the 5 year period until Dec. 31, 2025—if it fails to beat the TAIEX. You will win either way. This is no longer a listed closed-end fund.

The US work from home trend has boosted notebook and PC demand and produced chip shortages and higher prices in the leading source, Taiwan. These will continue at least into the middle of this year according to the fund.

*The fund's largest holding, Taiwan Semiconductor, TSM, (just under 20%) gained 3.36% today hitting $111.12.

*CBOE rose another $4.25 (3.82%) today. It hit a 52 week high at $115.36. The market info firm plans to list Fidelity's bitcoin ETF despite Elon Musk deciding that he will not sell Tesla cars for crypto-currencies after all. It was tipped by Value Line after we bought it; I worried it was too exotic for our readers but they are more adventurous than Value Lines.

*Bank of Nova Scotia rose 1.07% today on gender equality moves which took it near its YTD high of Monday. I am a woman and my mother worked in banking thanks to her command of German as a part-timer but I am not a zealot for equality. But I do like new highs.

Miscellaneous

*Mexican Bimbo, a global bakery raised $600 mn with a 30-yr bond paying 4% issued under rule 144A which was 6.5X oversubscribed, writes Eduardo Garcia in sentidocommun.co.mx. The bond issued by Bimbo's US sub was rated investment grade by Moody'sS&P, and Fitch. Underwriters were HSBC, JP Morgan, Mizuho, and Banco Santander.

*Swiss ABB which makes electrical equipment rose 1.88% today. It is a holding of our Swedish Investor fund which Joe Shaefer and I bought into earlier this year.

*Both Swedish Ericsson and Finnish Nokia gained after their deal on patent violations by the former, ERIC up 0.77% and NOK up 1.4% in European trading today.

*Ecopetrol of Colombia, which we exited from over the Bogota control of the oil distribution there, has dropped 2.5% after oil prices fell.

*Vale, which I refuse to buy given its failure to help victims of its Brazil tailings dam disasters, dropped today with the iron ore price. It is now $21.4, still near its high.

*Energy Fuels, UUUU, fell 5.65% to $5.08. Just hang in there despite the volatility.

*China's new licensing rules for electric vehicles boosted shares of NIO by 1.13% to $34.25 today.

*Mexican Cemex recuperated 2.6% today, hitting $8.1/sh. However, Irish CRH fell 0.29%.

*German ute Eon.SE rose 1.2% today to $12.8 after its report yesterday.

*Kirkland Lake gold, KL, lost 17¢ to $40.6. It is doing better than bitcoins.

*Ormat, the US-Israeli geothermal energy firm which also does storage, gained 2.46% today. ORA.

*Tomra Systems is up 3.05% to $48.85.

Drugmakers

*Merck's Keytruda hit its target in triple-negative breast cancer trials.

*Takeda which reported yesterday is up a fraction today. TAK.

*Bioline RX rose 5.5% to $3.09 I think in the wake of CGEN. Both are Israeli small caps. It later fell back.

*Zymeworks gained 1%.

*Teva rose 1.66% hitting $10.50.

*Enlivex which reports next Thursday on its Q1 fell sharply despite winning an FDA patent.

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Frank J. Williams 1 year ago Member's comment

Vivian, legally the term "squatters" is quite legally accurate. You can read a clear and easy to understand explanation of the situation here: www.jihadwatch.org/.../is-israel-really-trying-to-evict-innocent-palestinians-from-their-homes-in-sheikh-jarrah

But this paragraph in the article sums it up quite well:

"The headlines from Sheikh Jarrah almost all ignore the basic facts of the issue: The buildings in question are owned by Jews and the Arab residents have refused to pay rent – even though they had agreed in a 1982 court case."

Carl Schwartz 1 year ago Member's comment

I assume you are referring to me and the "squatters" comment I left on your other article here: talkmarkets.com/.../a-down-day?post=311691

I still stand by that comment. I'd recommend you read Joseph Cox's article about the current situation and the comments there as well: talkmarkets.com/.../things-you-cant-see-from-there