Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

KISWIRE Ltd. manufactures secondary steel products, such as wire ropes and wire strands for electric wire and springs.  The Company markets to the shipbuilding and construction industries, and exports products to overseas markets.  KISWIRE also has a financial subsidiary.

<ul>
<li>Kiswire Ltd (002240 KS) is the number one player for steel wire and rope products in Korea. More than 85% of its sales are generated overseas. </li>
<li>The company has a consistent record of generating positive net profit. It is trading at low valuations (P/B of 0.3x and EV/EBITDA of 4.5x).</li>
<li>Its average net profit from 2021 to 2023 are much higher than previous three years from 2018 to 2020, which is a testament of increasing demand for its products globally. </li>
</ul>


Kiswire Ltd (002240 KS) is the number one player for steel wire and rope products in Korea. More than 85% of its sales are generated overseas. 
The company has a consistent record of generating positive net profit. It is trading at low valuations (P/B of 0.3x and EV/EBITDA of 4.5x).
Its average net profit from 2021 to 2023 are much higher than previous three years from 2018 to 2020, which is a testament of increasing demand for its products globally. 


Com2uS Corporation develops and markets game software based on digital convergence contents for internet mobile application.  The Company provides its products to domestic and overseas markets such as Asia, Europe, and North America.

<ul>
<li>Com2Us's net cash (including long-term financial investments) is 151% of its market cap. It is trading at P/B ratio of only 0.45x. </li>
<li>The company paid out 2,600 won in DPS in FY23. If we assume the same DPS, this would suggest a dividend yield of 6.7% at current price of 38,900 won. </li>
<li>Com2Us is a turnaround story. It had an operating profit of 1.2 billion won in 1Q 2024, improving from an operating loss of 13.3 billion won in 1Q 2023. </li>
</ul>


Com2Us's net cash (including long-term financial investments) is 151% of its market cap. It is trading at P/B ratio of only 0.45x. 
The company paid out 2,600 won in DPS in FY23. If we assume the same DPS, this would suggest a dividend yield of 6.7% at current price of 38,900 won. 
Com2Us is a turnaround story. It had an operating profit of 1.2 billion won in 1Q 2024, improving from an operating loss of 13.3 billion won in 1Q 2023. 


Chokwang Leather Co., Ltd. manufactures and exports grain leathers.  The Company produces various types of finished leather to make shoes, car seats, bags, luggage, furniture, belts, and wallets.

<ul>
<li>At the end of 2023, Chokwang Leather owned 190.3 billion won worth of Berkshire Hathaway shares, which represents 56% of Chokwang Leather's market cap. </li>
<li>Chokwang Leather also has 3.1 million treasury shares (46.6% of outstanding shares). It has the highest levels of treasury shares as a percentage of outstanding shares among Korean stocks.</li>
<li>Chokwang Leather is likely to be one of the key companies to be targeted to improve its corporate governance as part of the Corporate Value Up program. </li>
</ul>


At the end of 2023, Chokwang Leather owned 190.3 billion won worth of Berkshire Hathaway shares, which represents 56% of Chokwang Leather's market cap. 
Chokwang Leather also has 3.1 million treasury shares (46.6% of outstanding shares). It has the highest levels of treasury shares as a percentage of outstanding shares among Korean stocks.
Chokwang Leather is likely to be one of the key companies to be targeted to improve its corporate governance as part of the Corporate Value Up program. 


Korea Small Cap Gem #28: Chokwang Leather - A Cheaper Way to Invest in Berkshire Hathaway

Wins Co Ltd. provides security network services. The Company provides various security solutions to protect networks from cyber threats and viruses.

<ul>
<li>Wins Co. is engaged in the business of developing and supplying information security solutions and developing software related to network security to protect networks from cyber threats and viruses. </li>
<li>The company has a consistent growth in sales and profits. It also has a strong balance sheet. At the end of 2023, it had a debt ratio of 15.4%. </li>
<li>Wins Co is trading at EV/EBITDA of 1.7x, P/E of 7.8x, and P/B of 0.9x in 2024 which are 75%, 26%, and 25% lower than the historical valuation multiples.</li>
</ul>


Wins Co. is engaged in the business of developing and supplying information security solutions and developing software related to network security to protect networks from cyber threats and viruses. 
The company has a consistent growth in sales and profits. It also has a strong balance sheet. At the end of 2023, it had a debt ratio of 15.4%. 
Wins Co is trading at EV/EBITDA of 1.7x, P/E of 7.8x, and P/B of 0.9x in 2024 which are 75%, 26%, and 25% lower than the historical valuation multiples.


LF Corp. is a fashion clothing company and was spun off from LG International Corp. in 2006.  The company imports and distributes famous foreign brands into Korea.  The company's lines of business include men's/women's apparel, accessories and sports wear.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lf-corp" target="_blank" data-smartkarma-citation="entities:11985:1" rel="noopener">Lf Corp (093050 KS)</a> is the 26th company in our Korea Small Cap Gems series. </li>
<li>LF Corp is one of the leading apparel companies in Korea which has a market cap of 411 billion won. LF Corp is trading at 0.3x P/B and 4x P/E.</li>
<li>A key near-term catalyst is better than expected sales of the Reebok branded apparel that are promoted by the pop icon Lee Hyori. </li>
</ul>



Lf Corp (093050 KS) is the 26th company in our Korea Small Cap Gems series. 
LF Corp is one of the leading apparel companies in Korea which has a market cap of 411 billion won. LF Corp is trading at 0.3x P/B and 4x P/E.
A key near-term catalyst is better than expected sales of the Reebok branded apparel that are promoted by the pop icon Lee Hyori. 


Korea Small Cap Gem #26: LF Corp - A Deep Value Play and the Lee Hyori Effect