Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

Sajo Industries is one of the mid-sized food companies in Korea, specializing in tuna fish, pet food, Korean condiments, and other food products.
A group of minority shareholders are "going activist" on this company and requesting an EGM.
<ul>
<li>They believe that the market value of Sajo Industries' real estate is worth nearly 10x what is recorded on the balance sheet (about 5 trillion won in market value versus book value of about 0.5 trillion won). </li>
<li>This group of minority shareholders are also balking at the proposed merger of Castlex Seoul and Castlex Jeju, a couple of golf courses in Seoul and Jeju, which clearly appears to be a move that could benefit the controlling shareholder but not the minority shareholders of Sajo Industries. </li>
</ul>

Sajo Industries is one of the mid-sized food companies in Korea, specializing in tuna fish, pet food, Korean condiments, and other food products.
A group of minority shareholders are "going activist" on this company and requesting an EGM.

They believe that the market value of Sajo Industries' real estate is worth nearly 10x what is recorded on the balance sheet (about 5 trillion won in market value versus book value of about 0.5 trillion won). 
This group of minority shareholders are also balking at the proposed merger of Castlex Seoul and Castlex Jeju, a couple of golf courses in Seoul and Jeju, which clearly appears to be a move that could benefit the controlling shareholder but not the minority shareholders of Sajo Industries. 


Korea Small Cap Gem #8: Sajo Industries - Minority Activists Take Charge

Equity Bottom-Up

In this insight, we discuss <a href="https://www.smartkarma.com/entities/cj-cheiljedang-corp" target="_blank" data-smartkarma-citation="entities:1970:1" rel="noopener">CJ Cheiljedang (097950 KS)</a>'s 4Q 2020 and 2020 full year results and how this company is becoming one of the chief beneficiaries of Korean food going global.<a href="https://www.smartkarma.com/entities/cj-cheiljedang-corp" target="_blank" data-smartkarma-citation="entities:1970:1" rel="noopener">CJ Cheiljedang (097950 KS)</a> has benefited from a combination of improving earnings and higher valuation multiples. The company's shares have an average P/E and P/B of 17.4x and 1.3x, respectively. The company's current P/E and P/B valuation multiples in 2021 are currently 28% and 14% below the historical average valuation multiples of the company from 2015 to 2020.One could argue that the company's valuation multiples should be higher than the historical average which would result in higher implied valuations for CJ Cheiljedang. The company's Bibigo branded foods (such as dumplings), sauces, and other food products are becoming more popular in many key countries such as in the U.S., China, and Japan.

In this insight, we discuss CJ Cheiljedang (097950 KS)'s 4Q 2020 and 2020 full year results and how this company is becoming one of the chief beneficiaries of Korean food going global.CJ Cheiljedang (097950 KS) has benefited from a combination of improving earnings and higher valuation multiples. The company's shares have an average P/E and P/B of 17.4x and 1.3x, respectively. The company's current P/E and P/B valuation multiples in 2021 are currently 28% and 14% below the historical average valuation multiples of the company from 2015 to 2020.One could argue that the company's valuation multiples should be higher than the historical average which would result in higher implied valuations for CJ Cheiljedang. The company's Bibigo branded foods (such as dumplings), sauces, and other food products are becoming more popular in many key countries such as in the U.S., China, and Japan.

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

Whilst Q4's list posted strong price performance it was a case that a rising tide floated most boats. As in the previous few quarters, we are on the watch for the risk of deteriorating credit metrics, but in particular during H1 2021. In Q1, the Altman Z score is at a market-cap-weighted 1.03 times, a significant decrease on the 1.52 in Q4. This deterioration needs to be monitored since earnings continue to be adjusted by analysts and their limited visibility of any bottoming. 25 stocks appear in our Q1 2021 screen, versus 15 in Q4 2020.

Whilst Q4's list posted strong price performance it was a case that a rising tide floated most boats. As in the previous few quarters, we are on the watch for the risk of deteriorating credit metrics, but in particular during H1 2021. In Q1, the Altman Z score is at a market-cap-weighted 1.03 times, a significant decrease on the 1.52 in Q4. This deterioration needs to be monitored since earnings continue to be adjusted by analysts and their limited visibility of any bottoming. 25 stocks appear in our Q1 2021 screen, versus 15 in Q4 2020.

Screening the Silk Road: Q1 2021 High Risk Names to Avoid

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/687/original/BANNER-TTOtherDec20_GreyOrange.png?1610257340" class="editor-image img-responsive" data-smartkarma-image-id="181687"></figure>
It's been a long time since we looked at and wrote about <a href="https://www.smartkarma.com/entities/cj-korea-express-corp" target="_blank" data-smartkarma-citation="entities:11557:1" rel="noopener">CJ Logistics (000120 KS)</a>. In a note we published here way back in June 2017, we said it was highly unlikely CJ Logistics would see the margin improvement needed to hit analysts' consensus forecast of 6,400 won per share in 2018.
</section>
Specifically, we doubted that higher margins would be driven by growth of the company's Global segment, which includes CJ's international freight forwarding business and several overseas logistics units CJ had acquired in an effort to create a "Pan-Asian Logistics Network".
Since we last wrote about the company, CJ Logistics has apparently abandoned its push to become a major player in logistics outside of Korea, focusing instead on a disparate list of domestic initiatives. Overall profitability remains similar to depressed levels from 3-4 years ago. 
Since we last tracked them, CJ Logistics' shares haven't performed well: they're down about 24% compared to their 5-year high reached in mid-2016, though like many stocks they have risen from depressed Q120 levels. Unless CJ Logistics can articulate a winning long-term strategy, and then show consistent progress towards executing it successfully, we would avoid the shares.



It's been a long time since we looked at and wrote about CJ Logistics (000120 KS). In a note we published here way back in June 2017, we said it was highly unlikely CJ Logistics would see the margin improvement needed to hit analysts' consensus forecast of 6,400 won per share in 2018.

Specifically, we doubted that higher margins would be driven by growth of the company's Global segment, which includes CJ's international freight forwarding business and several overseas logistics units CJ had acquired in an effort to create a "Pan-Asian Logistics Network".
Since we last wrote about the company, CJ Logistics has apparently abandoned its push to become a major player in logistics outside of Korea, focusing instead on a disparate list of domestic initiatives. Overall profitability remains similar to depressed levels from 3-4 years ago. 
Since we last tracked them, CJ Logistics' shares haven't performed well: they're down about 24% compared to their 5-year high reached in mid-2016, though like many stocks they have risen from depressed Q120 levels. Unless CJ Logistics can articulate a winning long-term strategy, and then show consistent progress towards executing it successfully, we would avoid the shares. 

CJ Logistics: Still Lacking Focus, Still Unlikely to Reach 6,000+ EPS Any Time Soon

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

We highlight 14 stocks in Asia that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Asian markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.

We highlight 14 stocks in Asia that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Asian markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.

South Korea

Samyang Foods Co., Ltd. manufactures instant and processed food products, such as noodles, snacks, cooking oil, and feed.  The Company also produces dairy goods including milk, cheese, and ice cream.

Orion Corp. manufactures and distributes snacks and beverages. The Company also engages in movie production and investments.

Nongshim Co., Ltd. manufactures, and markets instant noodles, snacks, and beverages.  The Company also produces refined palm oil and food ingredients.

LOTTE Corporation is a pure holding company of Lotte Group Korea. It was established in 2017. Lotte Group Korea develops various high quality products and services in the five main business areas: food production/sales, distribution, sightseeing service, heavy chemical/construction and finance/investment.

Dongwon Industries Co., Ltd. is a deep-sea fishing company.  The Company produces and distributes fish can goods and processed seafood products including tuna sashimi.

Ottogi Corporation manufactures food seasonings and instant food, such as mayonnaise, ketchup, salad dressing, sesame and cooking oils, and instant curry. The Company also produces frozen salads, fruit preservatives, instant noodles, and canned tuna.

Lotte Confectionery Co., Ltd. operates as a snack food manufacturing company. The Company produces and sells chewing gum, candy, biscuits, chocolates, pies, snacks, and other products. Lotte Confectionery markets its products worldwide.

Daesang Corporation manufactures food seasonings, fermentations, sweeteners, starches, coffee, fodder, and bulk pharmaceutical ingredients.  The Company also constructs commercial buildings, infrastructures, and environmental facilities.

Orion Holdings Corp. manufactures snacks products. The Company produces and sells candies, gums, chocolates, pies, and other products. Orion Holdings also develops smart systems. Orion Holdings serves customers worldwide.

Dongwon F&B Co., Ltd. manufactures various processed food products. The Company' s products include agricultural and marine products, beverages, dairy products, processed meat, fast food, frozen food, and ginseng. The company's main product in early stage was canned tuna and expanded their business into a variety of food production.

Nisshin Seifun Group Inc. produces and sells flour, fodder, processed foods, and medicines. The Company offers specialized pasta sauce, frozen foods, and gourmet soup. Nisshin Seifun Group also markets pet foods.

PPB Group Berhad is an investment holding company. The Company operations include grains trading, flour and animal feed milling industry as well as downstream activities including livestock farming, food processing and consumer products distribution with primary focus in Indonesia, Malaysia, China, India and Europe.

PT Indofood Sukses Makmur Tbk and its subsidiaries manufacture instant noodles, wheat flour, baby food, food seasonings, coffee, cooking oil, and snacks.

IOI Corporation Berhad cultivates and processes oil palm and rubber.  The Company, through its subsidiaries, operates in property development and investment, provides landscape services, and sells ornamental plants and turfing grass. IOI Corporation also manufactures industrial and medical gases, and provides building, engineering, and construction services.

Flowers Foods, Inc. produces and markets packaged bakery foods for retail and foodservice customers. The Company offers fresh packaged and frozen bakery products, as well as pastries, doughnuts, and bakery snack products. Flowers Foods serves customers in the State of Georgia.

Universal Robina Corporation manufactures, markets, and distributes branded consumer foods. The Company's products include hogs and poultry farming, animal feeds, corn products, and animal health products.

YAMAZAKI BAKING CO., LTD. produces baking foods including bread, pastry, and cake.  The Company operates nationwide sales network.  YAMAZAKI BAKING also operates franchised cafeterias and convenience stores.

Hatsun Agro Products Limited manufactures skimmed milk powder, skimmed milk powd er blends, instant skimmed milk powder, whole milk powder, and full cream milk p owder.

Heilongjiang Agriculture Co., Ltd. plants, processes, and sells rice, soybean, wheat, corn, and other grain products.  The Company also produces fertilizers and sells paper products.

Kewpie Corporation mainly produces and sells mayonnaise, salad dressing, egg products, and health foods.  The Company also purchases and sells jam, sauce, canned and frozen foods.  Kewpie sells canned foods under Aohata brand.

CJ CheilJedang Corp. manufactures processed food products.  The Company's products include refined sugar, monosodium glutamate (MSG), condiment, wheat powder, flour, cooking oil, processed meats, and animal feed.  CJ CheilJedang also manufactures pharmaceutical and household products.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

CJ Cheiljedang (097950 KS)

Korea Small Cap Gem #8: Sajo Industries - Minority Activists Take Charge

A group of minority shareholders are "going activist" on Sajo Industries. They believe that the market value of Sajo Industries' real estate is...

Douglas Kim

CJ Cheiljedang - Korean Food Goes Global

In this insight, we discuss CJ Cheiljedang (097950 KS)'s 4Q 2020 and 2020 full year results and how this company is becoming one of the chief...

Douglas Kim

Screening the Silk Road: Q1 2021 High Risk Names to Avoid

As in the previous few quarters, we are on the watch for the risk of deteriorating credit metrics, but in particular during H1 2021. 25 stocks...

David Lepper

CJ Logistics: Still Lacking Focus, Still Unlikely to Reach 6,000+ EPS Any Time Soon

We check in on CJ Logistics, which appears to have pivoted away from its much-hyped international expansion plan from a few years ago. What hasn't...

Tracking Traffic

The Stocks to Own in Asia – Vol. 31

The Stocks to Own in Asia – Vol. 31. We highlight 14 stocks in Asia that look interesting to us based upon our FVMR Methodology.

A. Stotz Investment Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)