Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<blockquote><p><a href="https://twitter.com/TimSweeneyEpic/status/1432647669864878083?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1432647669864878083%7Ctwgr%5E%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.pcgamer.com%2Fsouth-korea-passes-law-with-major-implications-for-apple-vs-epic%2F" target="_blank" rel="noopener">Korea</a> is first in open platforms! Korea has rejected digital commerce monopolies and recognized open platforms as a right. This marks a major milestone in the 45-year history of personal computing. It began in Cupertino, but the forefront today is in Seoul. (Tim Sweeney - Founder of Epic Games)</p></blockquote><p>In a landmark case (an amendment of the Telecommunications Business Act), the <a href="https://www.wsj.com/articles/google-apple-hit-in-south-korea-by-worlds-first-law-ending-their-dominance-over-app-store-payments-11630403335" target="_blank" rel="noopener">Korean government</a> announced on 31 August that Google and Apple will need to open their app stores to alternative payment systems in South Korea. This change in regulation is likely to negatively impact Google and Apple's lucrative commissions on digital sales.</p><p>A new bill was passed by the Korean National Assembly on 31 August which will significantly reduce Google and Apple's dominance of digital sales on their app platforms. The final step is for President Moon to sign this bill but it is almost a near certainty that he will sign this bill. The following are the major companies/sectors that could benefit from the change in law:</p><ul>
<li><strong><a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a></strong></li>
<li><strong><a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a></strong></li>
<li><strong>Korean Telcos</strong></li>
<li><strong>Korean Game Companies</strong></li>
<li><strong>Korean Entertainment/Music/Movies/Drama Companies </strong></li>
</ul>

Korea is first in open platforms! Korea has rejected digital commerce monopolies and recognized open platforms as a right. This marks a major milestone in the 45-year history of personal computing. It began in Cupertino, but the forefront today is in Seoul. (Tim Sweeney - Founder of Epic Games)In a landmark case (an amendment of the Telecommunications Business Act), the Korean government announced on 31 August that Google and Apple will need to open their app stores to alternative payment systems in South Korea. This change in regulation is likely to negatively impact Google and Apple's lucrative commissions on digital sales.A new bill was passed by the Korean National Assembly on 31 August which will significantly reduce Google and Apple's dominance of digital sales on their app platforms. The final step is for President Moon to sign this bill but it is almost a near certainty that he will sign this bill. The following are the major companies/sectors that could benefit from the change in law:
Naver Corp (035420 KS)
Kakao Corp (035720 KS)
Korean Telcos
Korean Game Companies
Korean Entertainment/Music/Movies/Drama Companies 


Korean Government Forces Google & Apple To Open Their App Stores to Alternative Payments

Equity Bottom-Up

<ul>
<li>Disney+ finally plans to make its long-awaited launch in Korea in November 2021. There are millions of Disney fans in Korea and it is near-certain that Disney+ will become a big success. Disney+ will compete heads on with other leading OTT services available in Korea including Netflix and Wavve.</li>
<li>Disney will be pursuing its own mobile app service in Korea, similar to Netflix. However, it will partner with the local telcos for Internet TV services. On 24 August, it was reported in the local Korean media that KT's OTT service <a href="http://www.digitaltoday.co.kr/news/articleView.html?idxno=414324" target="_blank" rel="noopener">Seezn</a> plans to provide numerous Disney+ contents. Apparently, LG Uplus is still negotiating with Disney for a potential partnership as well for the OTT service. However, Disney plans to partner with LG Uplus for providing its contents on its IPTV services. </li>
<li>There will likely be two groups of companies that could benefit from the launch of Disney+ 'OTT services and Disney contents in Korea. They include the two local telcos (KT Corp and LG Uplus) as well as the major Korean drama producers such as Jcontentree Corp., Studio Dragon, and Astory.</li>
</ul>


Disney+ finally plans to make its long-awaited launch in Korea in November 2021. There are millions of Disney fans in Korea and it is near-certain that Disney+ will become a big success. Disney+ will compete heads on with other leading OTT services available in Korea including Netflix and Wavve.
Disney will be pursuing its own mobile app service in Korea, similar to Netflix. However, it will partner with the local telcos for Internet TV services. On 24 August, it was reported in the local Korean media that KT's OTT service Seezn plans to provide numerous Disney+ contents. Apparently, LG Uplus is still negotiating with Disney for a potential partnership as well for the OTT service. However, Disney plans to partner with LG Uplus for providing its contents on its IPTV services. 
There will likely be two groups of companies that could benefit from the launch of Disney+ 'OTT services and Disney contents in Korea. They include the two local telcos (KT Corp and LG Uplus) as well as the major Korean drama producers such as Jcontentree Corp., Studio Dragon, and Astory.


Disney+ to Launch in Korea in November: Winners & Losers?

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Event-Driven

<p>is <a href="https://www.smartkarma.com/entities/lg-electronics-inc" target="_blank" data-smartkarma-citation="entities:8814:1" rel="noopener">LG Electronics (066570 KS)</a> overvalued or undervalued?   It depends on the what investors see as the right comps and given the current situation regards to <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a> ,  there is a growing possibility that <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple Inc (AAPL US)</a> looks to diversify away from <a href="https://www.smartkarma.com/entities/hon-hai-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:745:1" rel="noopener">Hon Hai Precision Industry (2317 TT)</a> sooner versus later. </p>

is LG Electronics (066570 KS) overvalued or undervalued?   It depends on the what investors see as the right comps and given the current situation regards to DiDi Chuxing (DIDI US) ,  there is a growing possibility that Apple Inc (AAPL US) looks to diversify away from Hon Hai Precision Industry (2317 TT) sooner versus later. 

Does LG Group Hold Leverage over Apple and Not the Other Way Around?

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<h2>Share buyback</h2><p>LG U+ announced a well-anticipated share buyback. Well, the announcement was made earlier than initially expected. Also, the size is much smaller than ₩300B that the local street anticipated.</p><p>It is a ₩100.0B buyback, representing 1.49% of the total shares at the last closing price and 1.35% of the total equity.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Overview (₩B)"}'>Buyback overview</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":436611361}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">436,611,361</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">3</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target qty."}'><strong>Target qty.</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6493506.493506493}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[2]C[0]"><strong>6,493,506</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of SO"}'><strong>- % of SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.014872509223383432}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-7]C[0]"><strong>1.49%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares after buyback"}'>Treasury shares after buyback</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6493509.493506493}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[-11]C[0]+R[-8]C[0]">6,493,509</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of SO"}'>- % of SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.014872516094482693}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-15]C[0]">1.49%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total value"}'>Total value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":100}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">₩100.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Equity"}'>Equity</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7418.124854889}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>₩7,418.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of equity"}'>- % of equity</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.013480495671907417}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-6]C[0]/R[-1]C[0]">1.35%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Daily buyback impact</h2><p>The buyback is a year. Well, the usual period for a buyback in Korea is 3 months. But we see more and more companies do a year-long buyback of late.</p><p>The buyback begins tomorrow and runs for a year until June 8 next year. We have a daily equal-weighted buyback of 25,871 shares, representing a measly 0.89% of the 30-day average daily trade volume.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Execution"}'>Execution</td></tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Buyback begins"}'><strong>Buyback begins</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":44356}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 6. 9</strong></td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Buyback ends"}'><strong>Buyback ends</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":44720}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2022. 6. 8</strong></td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Banker"}'>Banker</td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":2,"2":"KB Securities Co., Ltd."}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>KB Securities Co., Ltd.</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Method"}'>Method</td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":2,"2":"Openly in the market (no off-hours block trade)"}'>Openly in the market (no off-hours block trade)</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Number of trading days"}'>Number of trading days</td>
<td style="text-align: right; width: 352.514px;" data-sheets-numberformat='{"1":2,"2":"#,##0"}'>251</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Daily equal-weighted buyback qty."}'><strong>Daily equal-weighted buyback qty.</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":25870.54379883065}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[-35]C[0]/251"><strong>25,871</strong></td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":" - % of 1-month average daily trade volume"}'><strong>- % of 30-day average daily trade volume</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":0.008940932608776117}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[-1]C[0]/googlefinance(R[-43]C[0], "volumeavg")'><strong>0.89%</strong></td>
</tr>
<tr><td colspan="2" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: DART &amp; Google Finance"}'>Source: DART &amp; Google Finance</td></tr>
</tbody>
</table>

Share buybackLG U+ announced a well-anticipated share buyback. Well, the announcement was made earlier than initially expected. Also, the size is much smaller than ₩300B that the local street anticipated.It is a ₩100.0B buyback, representing 1.49% of the total shares at the last closing price and 1.35% of the total equity.





Buyback overview

Shares outstanding
436,611,361


Treasury shares
3


Target qty.
6,493,506


- % of SO
1.49%


Treasury shares after buyback
6,493,509


- % of SO
1.49%


Total value
₩100.0B


Equity
₩7,418.1B


- % of equity
1.35%

Source: DART

Daily buyback impactThe buyback is a year. Well, the usual period for a buyback in Korea is 3 months. But we see more and more companies do a year-long buyback of late.The buyback begins tomorrow and runs for a year until June 8 next year. We have a daily equal-weighted buyback of 25,871 shares, representing a measly 0.89% of the 30-day average daily trade volume.





Execution

Buyback begins
2021. 6. 9


Buyback ends
2022. 6. 8


Banker
KB Securities Co., Ltd.


Method
Openly in the market (no off-hours block trade)


Number of trading days
251


Daily equal-weighted buyback qty.
25,871


- % of 30-day average daily trade volume
0.89%

Source: DART &amp; Google Finance



LG U+ Buyback Announcement: Details & Impacts

<p>After the market close today (8 June), <a href="https://www.smartkarma.com/entities/lg-uplus-corp" target="_blank" data-smartkarma-citation="entities:1113:1" rel="noopener">LG Uplus Corp (032640 KS)</a> announced that it will complete share buyback worth 100 billion won as well the start of interim dividends starting this year. LG Uplus currently has a market cap of 6.7 trillion won so this buyback would be worth 1.5% of outstanding shares. The start of the 100 billion won worth of share buyback program starts on 9 June 2021 and ends on 8 June 2022.</p><p>There have been some rumors in the local media (previous to today's announcement) that there could be a buyback worth nearly 300 billion won. So today's announcement of 100 billion won in share buyback would be only about 1/3 of the amount mentioned in recent local media. With regards to share buyback, LG Uplus follows SK Telecom and KT Corp that have both announced share buyback programs in the past year. </p><div class="content-highlight">
<h2><strong>Conclusion:</strong></h2>
<p>LG Uplus' announcement to buyback 100 billion won worth of shares should have slightly positive impact on its share price. Its decision to make dividend payments bi-annually is also a step in the right direction. In the near term, there is an increasing probability that LG Uplus partners with Disney to provide Disney Plus OTT services in Korea. </p>
<p>Over a longer-term, there has definitely been a rotation from growth to value oriented stocks and sectors this year. The telcos have remained a key favorite and has been outperforming the market significantly. In the midst of these near-term and longer term catalysts and sector rotation, we have a positive view of LG Uplus. </p>
</div>

After the market close today (8 June), LG Uplus Corp (032640 KS) announced that it will complete share buyback worth 100 billion won as well the start of interim dividends starting this year. LG Uplus currently has a market cap of 6.7 trillion won so this buyback would be worth 1.5% of outstanding shares. The start of the 100 billion won worth of share buyback program starts on 9 June 2021 and ends on 8 June 2022.There have been some rumors in the local media (previous to today's announcement) that there could be a buyback worth nearly 300 billion won. So today's announcement of 100 billion won in share buyback would be only about 1/3 of the amount mentioned in recent local media. With regards to share buyback, LG Uplus follows SK Telecom and KT Corp that have both announced share buyback programs in the past year. 
Conclusion:
LG Uplus' announcement to buyback 100 billion won worth of shares should have slightly positive impact on its share price. Its decision to make dividend payments bi-annually is also a step in the right direction. In the near term, there is an increasing probability that LG Uplus partners with Disney to provide Disney Plus OTT services in Korea. 
Over a longer-term, there has definitely been a rotation from growth to value oriented stocks and sectors this year. The telcos have remained a key favorite and has been outperforming the market significantly. In the midst of these near-term and longer term catalysts and sector rotation, we have a positive view of LG Uplus. 


LG Uplus: A 100 Billion Won in Buyback, Bi-Annual Dividends, & A Potential Partnership with Disney

South Korea

LG Uplus Corp., an affiliate of LG Group, provides a wide range of personal communications services (PCS) using code division multiple access (CDMA) technology.  The Company offers call forwarding, call and data transfer, call waiting, voice mail, Internet-phone, prepaid call, and authentication text-to-speech (TTS) services.

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LG Uplus Corp (032640 KS)

Korean Government Forces Google & Apple To Open Their App Stores to Alternative Payments

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Douglas Kim

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Apple needs LG more than vice versa? The current situation might force Apple to diversify away from Hon Hai faster than anticipated

Ken S. Kim

LG U+ Buyback Announcement: Details & Impacts

LG U+ finally announced a buyback. This post has the details and impacts of the buyback along with trading angles with the local peers.

Sanghyun Park

LG Uplus: A 100 Billion Won in Buyback, Bi-Annual Dividends, & A Potential Partnership with Disney

After the market close today (8 June), LG Uplus Corp (032640 KS) announced that it will complete share buyback worth 100 billion won as well the...

Douglas Kim

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