Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul><li>Have you owned a pet before? Having been a pet owner before, you know the joys and trials of owning and raising a dog or a cat. Well, it just happens that the pet care market is one of the fastest growing sectors in Korea. We expect the pet care market to increase 25% CAGR from 0.9 trillion won in 2012 to 5.5 trillion won in 2020 in Korea. The pet care market (includes items such as dog food, cat food, pet treats, and other ancillary products) was about 1.8 trillion won in 2015.</li><li>CJ Cheiljedang (097950 KS) - the largest food company in Korea) entered the pet care market in Korea in 2013 and is currently the largest domestic player in the pet care market in Korea and the fifth largest overall. </li><li>CJ Cheiljedang signed an MOU with MeiHua Holdings Group (600873CH - China) for a controlling stake in the company  in January 2016. MeiHua is one of the largest food and animal feed additives producers in China.  </li><li>The acquisition of MeiHua will further enhance the company's economies of scale in the production of lysine, which is mainly used to produce animal feed. CJ Cheiljedang has about 30% share of the global lysine market, which was about US$4 billion in size in 2015. </li></ul>

Have you owned a pet before? Having been a pet owner before, you know the joys and trials of owning and raising a dog or a cat. Well, it just happens that the pet care market is one of the fastest growing sectors in Korea. We expect the pet care market to increase 25% CAGR from 0.9 trillion won in 2012 to 5.5 trillion won in 2020 in Korea. The pet care market (includes items such as dog food, cat food, pet treats, and other ancillary products) was about 1.8 trillion won in 2015.CJ Cheiljedang (097950 KS) - the largest food company in Korea) entered the pet care market in Korea in 2013 and is currently the largest domestic player in the pet care market in Korea and the fifth largest overall. CJ Cheiljedang signed an MOU with MeiHua Holdings Group (600873CH - China) for a controlling stake in the company  in January 2016. MeiHua is one of the largest food and animal feed additives producers in China.  The acquisition of MeiHua will further enhance the company's economies of scale in the production of lysine, which is mainly used to produce animal feed. CJ Cheiljedang has about 30% share of the global lysine market, which was about US$4 billion in size in 2015. 

CJ Cheiljedang Is Trying to Acquire China's MeiHua Holdings Group - What Does It Mean?

<ul><li>Kimchi exports from Korea to China began in December 2015. This resumption in kimchi exports was after a long drought of no kimchi exports as it was blocked by the Chinese government for five years. The resumption in kimchi exports was part of the greater opening up of the Chinese market as part of the FTA agreement between China and Korea.</li><li>A major beneficiary of this change in law will be Daesang (001680 KS), an F&amp;B company in Korea. Daesang owns a 100% stake in a private subsidiary Daesang FNF (which is the entity that is a major producer of kimchi in Korea. Daesang FNF (Jong Ga Jib kimchi brand) has a dominant 63% market share in the kimchi market in Korea. </li></ul>

Kimchi exports from Korea to China began in December 2015. This resumption in kimchi exports was after a long drought of no kimchi exports as it was blocked by the Chinese government for five years. The resumption in kimchi exports was part of the greater opening up of the Chinese market as part of the FTA agreement between China and Korea.A major beneficiary of this change in law will be Daesang (001680 KS), an F&amp;B company in Korea. Daesang owns a 100% stake in a private subsidiary Daesang FNF (which is the entity that is a major producer of kimchi in Korea. Daesang FNF (Jong Ga Jib kimchi brand) has a dominant 63% market share in the kimchi market in Korea.   

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.

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CJ Cheiljedang (097950 KS)

CJ Cheiljedang Is Trying to Acquire China's MeiHua Holdings Group - What Does It Mean?

Have you owned a pet before? Having been a pet owner before, you know the joys and trials of owning and raising a dog or a cat. Well, it just...

Douglas Kim

Kimchi Exports to China Begin

Kimchi exports from Korea to China began in December 2015. This resumption in kimchi exports was after a long drought of no kimchi exports as it...

Douglas Kim

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