“I never invest in anything
I don’t understand.”
Warren Buffet
Rene Marius Köhler has been investing a large part of his liquid assets in international online businesses since 2008. To date, his strategy has paid off and a change in this development is not in sight.
Portfolio Splitting Status Q4/2019:
Alibaba
Business model: Alibaba Holding operates online and mobile e-commerce platforms with its holdings. Core assets are Taobao (digital marketplace) and Tmall (trading platform for third-party providers). The Group includes various other e-commerce platforms such as Alibaba Health (pharmaceuticals and healthcare), Alibaba.com (wholesale platform for dealers) or Lazada and Aliexpress (other retail platforms). In addition to trading, the company also operates platform businesses in logistics (Cainao Network), delivery services (Ele.me), restaurants and tourism (Koubei) and online travel (Fliggy). In similar style to Amazon, Alibaba links video content and music streaming services to its offerings. Alibaba also uses ad and marketing strategies to monetise the platforms. Computing, data analytics and cloud solutions round off the Group’s offering.
Product mix: Alibaba divides its activities into four business segments: Core Commerce (85.5%), Cloud Computing (5.4%), Digital Media and Entertainment (7.8%) and Innovation Initiatives and Others (1.2%). The Group shows strong growth rates in all areas (Group: 58.1% yoy). The greatest momentum is in the cloud business (101.0%). However, growth is also still strong in Core Commerce (59.9%) and Digital Media and Entertainment (32.8%). So far, however, Core Commerce is the only profitable segment.
Selected key facts:
- Number 1 in Chinese e-commerce (market share according to eMarketer 60%)
- China’s share of global retail e-commerce transaction volume has increased by 41.4 percentage points to 42.4% from 2005 to 2016
- Alibaba has monopoly access to 755 million MAUs
- Gross Merchandise Value (GMV) recently grew by approx. 50.0%
- Global number 3 and number 1 in Asia in the cloud business
- On “Singles Day” in 2019, 554,000 orders per second were placed on Tmall alone
- Sales in the 24 hours of “Singles Day” in 2019 is roughly USD 38.4 billion
- Performance 2019: +55.2%
| Alibaba valuation | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| EV/Sales FWD | 7.9 | 6.1 | 4.9 | 4.0 | 3.3 |
| P/E FWD | 30.3 | 24.2 | 19.2 | 14.2 | 9.8 |
| EV/EBIT FWD | 43.0 | 31.6 | 24.3 | 16.1 | 10.0 |
| P/CFPS FWD | 23.5 | 24.9 | 19.7 | 17.1 | - |
| Alibaba Key operating information | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| Sales (million USD) | 74,419.3 | 96,095.5 | 119,138.4 | 146,649.5 | 178,374.0 |
| Sales growth yoy | 32.5% | 29.1% | 24.0% | 23.1% | 21.6% |
| EBIT | 13,675.8 | 18,605.5 | 24,211.9 | 36,527.0 | 59,082.2 |
| EBIT margin | 18.4% | 19.4% | 20.3% | 24.9% | 33.1% |
| Net Income | 19,193.8 | 24,060.4 | 30,370.9 | 40,958.6 | 59,531.0 |
| EPS | 7.31 | 9.01 | 11.30 | 15.36 | 21.84 |
| FCF | 24,744.4 | 23,349.5 | 29,591.5 | 34,060.0 | - |
| FCF Yield | 3.0% | 4.0% | 5.0% | 5.8% | - |
Source: Capital IQ; Koehler Group; Montega Equity Research
Amazon
Business model: Amazon has set itself the goal of becoming the most customer-oriented company in the world. To this end, the Group operates one of the world’s most successful platform businesses, which is monetised via multidimensional business models. Amazon’s businesses focus on the retail of consumer products and various subscription models. The Group sells its own merchandise, as well as merchandise from retailers and digital content from third-party producers through its online platforms and physical stores. This also includes own electronic devices, such as the Kindle Reader, the Fire Tablet, Fire TVs or Echo Devices (Alexa). In addition, there are programmes that enable partners to distribute their content via the Amazon platforms. With Amazon Web Services (AWS), the company is also considered the largest cloud computing provider at present.
Product mix: Amazon divides its activities into three segments. North America, International and AWS. The Group continues to generate the lion’s share of its sales (60.7%) with North America. Internationally, it is still responsible for 28.3% of sales revenues. Although Amazon Web Services only contributed 11.0% to sales, it is considered the company’s most important growth market with a recent growth rate of 46.9% (North America 33.2%, International 21.3%). At the same time, a significant portion of the Group’s EBIT (AWS: USD 7,296 million vs. Group: USD 12,421 million) was achieved with AWS.
Selected key facts:
- AWS as the market leader in the global cloud business (approx. 17.5% market share)
- Tenfold increase of TAM expected in cloud business; CAGR AWS 13’18’: 50.1%
- Global No. 1 in e-commerce; worldwide market share of 13.7%
- TAM e-commerce USD 2,928 billion; expected CAGR 19’23’: 17.4%
- More than 2.5 million traders on Amazon Marketplace
- 2.1 billion visits per month
- Performance 2019: +20.1%
| Amazon valuation | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| EV/Sales FWD | 3.4 | 2.9 | 2.5 | 2.1 | 1.9 |
| P/E FWD | 90.7 | 68.6 | 46.6 | 33.3 | 25.8 |
| EV/EBIT FWD | 71.7 | 54.4 | 37.8 | 27.8 | 21.9 |
| P/CFPS FWD | 37.9 | 28.5 | 21.9 | 17.4 | 14.3 |
| Amazon - Key operating information | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| Sales (million USD) | 279,159.9 | 331,271.0 | 387,940.8 | 449,170.8 | 509,758.7 |
| Umsatzwachstum yoy | 19.9% | 18.7% | 17.1% | 15.8% | 13.5% |
| EBIT | 13,392.3 | 17,677.7 | 25,399.1 | 34,610.2 | 43,934.3 |
| EBIT margin | 4.8% | 5.3% | 6.5% | 7.7% | 8.6% |
| Net Income | 10,352.3 | 13,684.3 | 20,140.3 | 28,169.2 | 36,409.4 |
| EPS | 20.67 | 27.51 | 39.44 | 54.01 | 68.94 |
| FCF | 24,497.5 | 32,650.7 | 42,424.1 | 53,481.5 | 65,015.3 |
| FCF Yield | 2.5% | 3.4% | 4.4% | 5.6% | 6.8% |
Source: Capital IQ; Koehler Group; Montega Equity Research
Tencent
Business model: Tencent Holding owns various participations with a digital platform character and operates with its products on a global basis. The Group is primarily active in the areas of online gaming, social media, messaging services, mobile payment, online advertising, music and video streaming and information technology. One of the core assets is Tencent’s “super app” WeChat, which has more than 1 billion users and combines the functions of many well-known apps (Facebook, WhatsApp, Instagram, news feeds, payment) in a single app.
Product mix: Tencent divides its activities into the areas of Value Added Services (VAS), Online Advertising and Others (from Q1/20 further subdivided into FinTech and Others). The VAS segment, in which Tencent bundles its activities from online gaming and social network services, is responsible for the lion’s share of Group revenues and gross profits (56.5% and 72.3% respectively). However, the online advertising business (ads and online marketing) as well as the FinTech business (especially mobile payment) of the Group are considered the growth drivers of the company (CAGR ’14’18: 62.6% and 80.7% respectively). With them, Tencent is currently monetising its platform and its monopoly-like customer access.
Selected key facts:
- Global number 1 in online gaming
- 10% of worldwide gaming sales are accounted for by Tencent products
- WeChat as a prime example of a successful platform business (Leveraging the platform via a browser, online advertising, payment, messaging and social media functions, among others)
- Monopolistic customer access to approximately 1.2 billion MAUs (83% of the Chinese population)
- China’s number 1 in mobile payment
- The transaction volume in mobile payment in China amounts to approx. USD 790 billion (11 times larger than in the USA)
- Performance 2019: +22.5%
| Tencent valuation | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| EV/Sales FWD | 8.7 | 7.0 | 5.8 | 4.8 | 4.2 |
| P/E FWD | 34.1 | 27.6 | 22.7 | 21.0 | 16.6 |
| EV/EBIT FWD | 28.1 | 23.9 | 19.5 | 17.3 | 13.8 |
| P/CFPS FWD | 30.3 | 24.6 | 21.7 | 19.6 | 16.1 |
| Tencent – Key operating information | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| Sales (million USD) | 54,014.1 | 67,037.1 | 81,117.0 | 97,821.9 | 112,730.0 |
| Sales growth yoy | 18.8% | 24.1% | 21.0% | 20.6% | 15.2% |
| EBIT | 16,698.3 | 19,610.5 | 24,057.8 | 27,042.6 | 33,851.5 |
| EBIT margin | 30.9% | 29.3% | 29.7% | 27.6% | 30.0% |
| Net Income | 13,515.0 | 16,706.2 | 20,323.7 | 21,898.3 | 27,684.1 |
| EPS | 1.43 | 1.74 | 2.13 | 2.51 | 2.89 |
| FCF | 15,222.1 | 18,717.9 | 21,259.4 | 23,546.6 | 28,637.2 |
| FCF Yield | 3.2% | 4.0% | 4.5% | 5.0% | 6.1% |
Source: Capital IQ; Koehler Group; Montega Equity Research
Business model: Facebook operates a platform business consisting of various products for networking and displaying digital content on smartphones, computers and other devices. The product portfolio includes the social media platform “Facebook”, the digital community “Instagram” and the messenger services “Messenger” and “WhatsApp”. With the virtual reality glasses “Oculus”, the Group also markets a hardware, software and development ecosystem that connects people virtually.
Product mix: Facebook generates the majority of its sales with advertising revenue (98.9%). Previously marginal shares came from payment services and other revenues (1.1%). Other revenues also include Oculus revenues. Geographically, Facebook’s home market (the USA) accounts for the majority of sales (43.2%). The remaining sales are divided between the regions Europe (24.4%), Asia-Pacific (21.0%) and Rest of the World (8.5%).
Selected key facts:
- Facebook (#1), Messenger (#4), Instagram (#6) as leading social media solutions worldwide by users
- WhatsApp the No. 1 messaging service worldwide with 1.5 billion MAU
- Group-wide approx. 2.5 billion MAU (Q3/19); Instagram approx. 1.0 billion MAU (Q3/19)
- Approximately 65 billion WhatsApp messages per day worldwide
- Operating cash flow CAGR 14’18’: 41.4%
- Digital advertising sales forecasting with Instagram: CAGR 18’21’: 36.3%; USD 15.65 billion (source: eMarketer)
- Average revenue per user (ARPU) worldwide 24.96 USD; CAGR 09’18’: 26.2%
- Performance 2019: +51.3%
| Facebook valuation | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| EV/Sales FWD | 7.8 | 6.4 | 5.4 | 4.6 | 4.0 |
| P/E FWD | 24.5 | 23.1 | 19.2 | 15.9 | 15.0 |
| EV/EBIT FWD | 22.4 | 17.7 | 14.8 | 12.3 | 10.7 |
| P/CFPS FWD | 30.0 | 26.8 | 22.5 | 18.1 | 14.6 |
| Facebook – Key operating information | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| Sales (million USD) | 70,471.5 | 85,852.2 | 102,656.0 | 119,813.6 | 137,693.9 |
| Sales growth yoy | 26.2% | 21.8% | 19.6% | 16.7% | 14.9% |
| EBIT | 24,590.0 | 31,191.7 | 37,377.1 | 44,868.5 | 51,421.0 |
| EBIT margin | 34.9% | 36.3% | 36.4% | 37.4% | 37.3% |
| Net Income | 24,241.3 | 25,753.4 | 31,004.3 | 37,382.6 | 39,798.2 |
| EPS | 8.46 | 9.05 | 10.90 | 13.46 | 15.93 |
| FCF | 19,830.5 | 22,210.0 | 26,480.8 | 32,829.1 | 40,854.8 |
| FCF Yield | 3.6% | 4.0% | 4.8% | 5.9% | 7.4% |
Source: Capital IQ; Koehler Group; Montega Equity Research
Alphabet
Business model: Alphabet primarily offers online advertising services via the associated search engine Google and the YouTube platform. The product portfolio includes both performance-based and brand-oriented advertising services, and the company also has numerous growth options in technology markets. In addition to research on autonomous driving, this also includes, for example, cloud business or the provision of Internet and television solutions.
Product mix: The Group’s business is divided into the divisions “Google” and “Other Bets”, with Google contributing 99.6% of sales. Google’s business segments are Ads (advertising system), Android (smartphone operating system), Chrome (browser), Google Maps (map and navigation services), Google Play (video game solutions), YouTube (video portal) and Search (search engine). Other Bets includes Alphabet’s investments Calico (biotechnology), CapitalG (a venture capital company), Waymo (autonomous driving), Verily (biotechnology) and X (a research company). In principle, Google is globally active. The majority of sales are generated in the USA (46.2%) and EMEA (32.6%), while Asia Pacific (15.6%), Canada (15.6%) and Latin America (5.6%) are of minor importance.
Selected key facts:
- 2 trillion search queries and over 1 billion hours of YouTube watch time per day
- YouTube is the number 2 social network when measured by MAUs
- Market share among search engines: 93.3% for mobile and 76.1% for desktop applications
- Average search queries of a user: 3.4 x per day
- CAGR advertising sales ’12’18: 17.7%
- Performance 2019: +27.0%
| Alphabet valuation | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| EV/Sales FWD | 5.1 | 4.3 | 3.7 | 3.3 | 3.0 |
| P/E FWD | 27.2 | 25.0 | 22.0 | 19.4 | 17.3 |
| EV/EBIT FWD | 23.7 | 19.6 | 16.9 | 14.7 | 13.4 |
| P/CFPS FWD | 35.3 | 27.6 | 22.9 | 19.6 | 17.6 |
| Alphabet – Key operating information | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| Sales (million USD) | 162,674.7 | 191,584.1 | 222,545.0 | 251,678.1 | 281,041.6 |
| Sales growth yoy | 18.9% | 17.8% | 16.2% | 13.1% | 11.7% |
| EBIT | 35,065.9 | 42,548.7 | 49,200.5 | 56,696.5 | 62,018.9 |
| EBIT margin | 21.6% | 22.2% | 22.1% | 22.5% | 22.1% |
| Net Income | 34,546.3 | 37,570.6 | 42,668.3 | 48,416.8 | 54,334.1 |
| EPS | 48.75 | 53.76 | 61.11 | 69.93 | 78.05 |
| FCF | 26,580.4 | 33,979.2 | 40,926.5 | 47,956.8 | 53,282.3 |
| FCF Yield | 3.2% | 4.1% | 4.9% | 5.8% | 6.4% |
Source: Capital IQ; Koehler Group; Montega Equity Research
Apple
Business model: Apple develops, manufactures and distributes smartphones, computers, tablets, wearables and accessories. At the same time, the Group operates a platform business that includes various additional services for the terminal equipment. Core products are the iPhone (smartphone), iPad (tablet), Mac (computer/laptop) and wearables (including Apple Watch). Other accessories and electronic devices such as AirPods, Beats (both headphones), Apple TV (TV stick) or digital offerings such as Apple Music or Apple iCloud are also available. The range of services is ultimately completed by the Apple Arcade gaming solution and ApplePay, Apple’s mobile payment service. The Group has an excellent understanding of how to monetise the power of platform business in addition to its hardware and thus participate in the success of end devices in several stages.
Product mix: Apple only publishes segment reporting on a geographical basis. America (44.9%) remains Apple’s core market, followed by Europe (23.2%). “Greater China” (16.8%), Japan (8.3%) and the Asia Pacific region (6.8%).
Selected key facts:
- More than 10% market share of worldwide smartphone sales
- iOS operating system with more than 13.4% market share
- Market share of iPad tablets greater than 20%; market share of Apple wearables: 14.8% (Q3/19); market share of the Mac: 7.5%
- Service sales from iTunes, software and other services recently increased to USD 46.3 billion (17.8% of total sales)
- Roughly 60 million subscribers to Apple Music (06/19)
- Research and development expenditure in 2019: USD 16.2 billion
- 64% of all Americans own an Apple product
- Currently the largest company in the world by market capitalization (as of 01/20)
- Performance 2019: +86.0%
| Apple valuation | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| EV/Sales FWD | 4.7 | 4.4 | 4.3 | 4.3 | 4.1 |
| P/E FWD | 23.0 | 21.5 | 21.4 | 22.1 | 20.7 |
| EV/EBIT FWD | 19.7 | 18.4 | 17.7 | - | - |
| P/CFPS FWD | 20.8 | 19.4 | 19.9 | 19.5 | 19.3 |
| Apple - Key operating information | 2019e | 2020e | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| Sales (million USD) | 276,201.1 | 296,055.9 | 307,208.3 | 303,967.0 | 317,521.0 |
| Sales growth yoy | 6.2% | 7.2% | 3.8% | -1.1% | 4.5% |
| EBIT | 66,738.8 | 71,338.1 | 74,233.6 | - | - |
| EBIT margin | 24.2% | 24.1% | 24.2% | - | - |
| Net Income | 56,645.3 | 60,737.7 | 60,925.7 | 59,073.0 | 63,098.0 |
| EPS | 13.09 | 14.84 | 16.00 | 13.98 | 14.87 |
| FCF | 62,783.5 | 67,093.5 | 65,613.0 | 66,713.0 | 67,590.5 |
| FCF Yield | 4.8% | 5.1% | 5.0% | 5.1% | 5.2% |
Source: Capital IQ; Koehler Group; Montega Equity Research