Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<div>Hyundai Robotics will start trading on May 10th, 2017. We are bullish on Hyundai Robotics, which has spun off from <a href="https://www.smartkarma.com/entities/10155" target="_blank" data-smartkarma-citation="entities:10155:1">Hyundai Heavy Industries (009540 KS)</a>.Rebalance in KOSPI 200 Index - Starting May 10th, Hyundai Robotics will replace <a href="https://www.smartkarma.com/entities/12531" target="_blank" data-smartkarma-citation="entities:12531:1">Daewoo Shipbuilding &amp; Marine Engineering (042660 KS)</a>. This will also have a positive impact on Hyundai Robotics shares since there will be a lot of passive large scale institutional investors who will be required to purchase Hyundai Robotics as part of KOSPI 200 index.<h2>Seven Components of Hyundai Robotics' Valuation</h2>The following are our estimates of the seven components of Hyundai Robotics' valuation:<table class="table table-striped"><tbody><tr><td></td><td></td><td style="text-align: center;">(Trillion won)</td></tr><tr><td>1</td><td>91.1% stake in Hyundai Oilbank</td><td style="text-align: center;">4.80</td></tr><tr><td>2</td><td>13.37% stake in Hyundai Heavy Industries (treasury shares)</td><td style="text-align: center;">1.10</td></tr><tr><td>3</td><td>13.37% stake in Hyundai Electric &amp; Energy Systems </td><td style="text-align: center;">0.14</td></tr><tr><td>4</td><td>13.37% stake in Hyundai Construction Equipment </td><td style="text-align: center;">0.08</td></tr><tr><td>5</td><td>100% stake in Hyundai Global Service </td><td style="text-align: center;">0.13</td></tr><tr><td>6</td><td>Hyundai Robotics' Core Robotics Business </td><td style="text-align: center;">0.13</td></tr><tr><td>7</td><td>Hyundai Robotics' Net Debt</td><td style="text-align: center;">1.69</td></tr><tr><td></td><td>Total valuation (pre holdco discount): </td><td style="text-align: center;">4.70 </td></tr><tr><td></td><td>Total valuation (post 30% holdco discount):  </td><td style="text-align: center;">3.30 </td></tr></tbody></table>Hyundai Robotics Valuation Post Holding Company Discount: The combined value of these seven components is 4.7 trillion won. Typically, a holding company has a discount ranging 20-30%. Using a  30% holdco discount results in a valuation of 3.3 trillion won for Hyundai Robotics, representing a 65% upside from the initial market cap valuation of 2.0 trillion won (using spin off ratio of 0.15843). </div>

Hyundai Robotics will start trading on May 10th, 2017. We are bullish on Hyundai Robotics, which has spun off from Hyundai Heavy Industries (009540 KS).Rebalance in KOSPI 200 Index - Starting May 10th, Hyundai Robotics will replace Daewoo Shipbuilding &amp; Marine Engineering (042660 KS). This will also have a positive impact on Hyundai Robotics shares since there will be a lot of passive large scale institutional investors who will be required to purchase Hyundai Robotics as part of KOSPI 200 index.Seven Components of Hyundai Robotics' ValuationThe following are our estimates of the seven components of Hyundai Robotics' valuation:(Trillion won)191.1% stake in Hyundai Oilbank4.80213.37% stake in Hyundai Heavy Industries (treasury shares)1.10313.37% stake in Hyundai Electric &amp; Energy Systems 0.14413.37% stake in Hyundai Construction Equipment 0.085100% stake in Hyundai Global Service 0.136Hyundai Robotics' Core Robotics Business 0.137Hyundai Robotics' Net Debt1.69Total valuation (pre holdco discount): 4.70 Total valuation (post 30% holdco discount):  3.30 Hyundai Robotics Valuation Post Holding Company Discount: The combined value of these seven components is 4.7 trillion won. Typically, a holding company has a discount ranging 20-30%. Using a  30% holdco discount results in a valuation of 3.3 trillion won for Hyundai Robotics, representing a 65% upside from the initial market cap valuation of 2.0 trillion won (using spin off ratio of 0.15843). 

South Korea

HD Hyundai Co.,Ltd. operates as a oil refining company. The Company provides crude oil refining, petroleum refinery, and other related products. HD Hyundai markets its products worldwide.

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HD Hyundai (267250 KS)

Its All About Hyundai Robotics

Hyundai Robotics will start trading on May 10th, 2017. We are bullish on Hyundai Robotics, which has spun off from Hyundai Heavy Industries...

Douglas Kim

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