Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>E Mart Inc (139480 KS) has been a strong outperformer this year (up 5.6% YTD) versus KOSPI which is down 5.8% in the same period. </li>
<li>We expect E Mart to outperform the market in the rest of 2024 driven by two major factors including "open on Sundays" policy and focus on low P/B stocks. </li>
<li>E Mart is trading at P/B of 0.2x versus Coupang which is trading at P/B of 8.3x. E Mart is more attractive than Coupang, especially considering the recent catalysts. </li>
</ul>


E Mart Inc (139480 KS) has been a strong outperformer this year (up 5.6% YTD) versus KOSPI which is down 5.8% in the same period. 
We expect E Mart to outperform the market in the rest of 2024 driven by two major factors including "open on Sundays" policy and focus on low P/B stocks. 
E Mart is trading at P/B of 0.2x versus Coupang which is trading at P/B of 8.3x. E Mart is more attractive than Coupang, especially considering the recent catalysts. 


Emart: Double Catalysts Of "Open on Sundays" + Focus on Low P/B Stocks

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>PDD US/BABA US/JD US/3690 HK/VIPS US: NBS publishes data social retail consumption data for May 2024 (+/+/+/+/-)</li>
<li>700 HK: &lt;Need for Speed Mobile&gt; to officially launch on July 11, with pre-registration surpassed 26 mn (+)</li>
<li>CPNG/BABA/TEMU/139480.KR:Coupang told to stop favoring its own products in its algorithm (-/+/+)</li>
</ul>


PDD US/BABA US/JD US/3690 HK/VIPS US: NBS publishes data social retail consumption data for May 2024 (+/+/+/+/-)
700 HK: &lt;Need for Speed Mobile&gt; to officially launch on July 11, with pre-registration surpassed 26 mn (+)
CPNG/BABA/TEMU/139480.KR:Coupang told to stop favoring its own products in its algorithm (-/+/+)


[Blue Lotus Daily - TMT Update]:PDD/BABA /JD/3690HK/VIPS/700HK/CPNG/TEMU/13948 KR/TCOM/ATAT/BILI

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.

Event-Driven

<ul>
<li>Talks circulate that E-Mart may sell its 5% stake in Samsung Life Insurance, valued around ₩1T, due to fundraising needs linked to SSG.com investors' put options.</li>
<li>Initially, Starbucks Korea was a potential sale, but U.S. HQ approval makes it unfeasible. Shinsegae L&amp;B and Food weren't enough to raise funds, leading E-Mart to focus on Samsung Life.</li>
<li>E-Mart's block deal timing is uncertain due to potential legal disputes over unmet put option conditions, yet recent local market discussions suggest E-Mart may avoid legal battles.</li>
</ul>


Talks circulate that E-Mart may sell its 5% stake in Samsung Life Insurance, valued around ₩1T, due to fundraising needs linked to SSG.com investors' put options.
Initially, Starbucks Korea was a potential sale, but U.S. HQ approval makes it unfeasible. Shinsegae L&amp;B and Food weren't enough to raise funds, leading E-Mart to focus on Samsung Life.
E-Mart's block deal timing is uncertain due to potential legal disputes over unmet put option conditions, yet recent local market discussions suggest E-Mart may avoid legal battles.


Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart

Douglas Research Advisory

<ul>
<li>Emart and Shinsegae are facing concerns about put options of nearly 1 trillion won on private equity investors' investment in SSG.com nearly six years ago. </li>
<li>From AEP and BRV's point of views, they want to get their money back through put options since an IPO is not likely in the near term.</li>
<li>The most probable result appears to be that this is likely to be dragged on for some time, which will cause continued concerns on both Emart and Shinsegae. </li>
</ul>


Emart and Shinsegae are facing concerns about put options of nearly 1 trillion won on private equity investors' investment in SSG.com nearly six years ago. 
From AEP and BRV's point of views, they want to get their money back through put options since an IPO is not likely in the near term.
The most probable result appears to be that this is likely to be dragged on for some time, which will cause continued concerns on both Emart and Shinsegae. 


Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae

<ul>
<li>The Korean government has introduced policies ahead of April's elections, with a recent notable announcement addressing the "Korea Discount" by enhancing low PBR stock valuations.</li>
<li>A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.</li>
<li>Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, &amp; DL E&amp;C.</li>
</ul>


The Korean government has introduced policies ahead of April's elections, with a recent notable announcement addressing the "Korea Discount" by enhancing low PBR stock valuations.
A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.
Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, &amp; DL E&amp;C.


Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

South Korea

Dongsuh Companies Inc. imports, manufactures, processes, markets and distributes general food products such as vegetable cooking oils. The Company also produces packaging materials and ceramic products including food and oil containers. Dongsuh has a cooperative relationship with Kraft Foods Inc.

BGF Retail Co., Ltd. operates convenience stores. The Company retails delicatessen, sweets, snacks, beverages, tobacco, and other related products. BGF Retail markets its products throughout South Korea.

GS Retail Co., Ltd. operates a chain of retail stores. The Company provides beauty and skincare products, candles, gifts, perfumes, ornaments, bathroom accessories, and other products. GS Retail serves its customers in the Republic of South Korea.

Hyundai G.F. Holdings Co., Ltd. operates as a office furniture distribution company. The Company produces built in furniture, upcycling waste materials bottles furniture, wood furniture, and other related products. Hyundai G.F. Holdings also offers food, information and technology, groceries sale, and food materials distribution services.

BGF Retail Co. Ltd. operates convenience store chains called CU in South Korea. The Company, through company owned stores or franchise, sells general groceries such as food and beverage.  The Company also offers ticketing, parcel pick-up, ATM machine and bill payment service.

CJ Freshway Corp. markets and provides various groceries to food service companies and restaurants.  The Company also caters to company's restaurants, schools, airports, and private restaurants and processes agricultural products.

Cosmax, Inc. is a cosmetics manufacturer. The Company develops and produces a variety of cosmetics for men and women, such as basic and special skin care, makeup, hair care, and other beauty products. Cosmax manufactures its products on original equipment manufacturing (OEM) basis.

Lotte Chilsung Beverage Co., Ltd. manufactures alcoholic and non-alcoholic beverages such as carbonic acid drinks, fruit juices, soybean drinks, teas, and traditional health beverages.

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.

Hite Jinro Co., Ltd. specializes in manufacturing Soju, vodka-like distilled Korean liquor. The Company also produces and sells other alcoholic beverages, such as wine, whiskey, and ginseng liquors as well as non-alcoholic beverages including mineral water and soft drinks. In addition, Jinro also provides information processing and financial services as well as construction services.

LIFE CORPORATION operates a supermarket chain mainly in Kansai and Kanto areas. The Company sells mainly groceries, and also clothing, and household utensils.

Shenzhen Agricultural Products Co., Ltd. operates chain supermarkets and wholesale markets for agricultural products.  The Company also provides agricultural products processing and other related services.

Shenzhen Agricultural Products Co, Ltd. (000061 CH)

KANSAI SUPER MARKET LTD. is a food supermarket chain operator which mainly deals in foodstuffs, daily products, and miscellaneous goods.  The Company has markets in Hyogo and Osaka areas.

SAN-A CO., LTD. operates supermarkets, restaurants, and hotels in the Okinawa area.  The Company sells groceries, clothing, and household items.  San-A also operates restaurants, including Japanese and Italian restaurants, coffee shops, and food courts.

COFCO Joycome Foods Limited engages in animal meat production. The Company produces, processes, distributes, and sells fresh pork, pork products, and animal feeds. COFCO Joycome Foods also operates and manages slaughterhouse throughout China.

HelloFresh SE provides online food services. The Company offers a subscription service in which customers receive a weekly box of recipes and meal ideas. HelloFresh also provides ice packs, plastic packaging, meat packing, insulation materials, and other related products. HelloFresh serves customers worldwide.

The Spar Group Limited is a wholesale distributor of goods and services to independently owned SPAR, TOPS and Build It stores. The Company is also involved in the management of voluntary trading groups.

Yixintang Pharmaceutical Group Co., Ltd. operates pharmaceutical stores. The Company retails Chinese medicines, western medicines, and other products. Yixintang Pharmaceutical Group also provides medical equipment.

Yixintang Pharmaceutical Group (002727 CH)

VALOR HOLDINGS CO., LTD. is a chain store operator which handles perishables, general foods, and daily-use sundry goods.  The Company is active to diversify into new business including home centers, restaurants, fitness clubs, and pet shops. Valor is based in Gifu area and moving into Aichi, Kanagawa, and Tokyo.

PT Midi Utama Indonesia Tbk operates a chain of retail stores.  The Company operates convenience stores in Indonesia.

E-MART Inc. operates E-Mart discount stores. The Company retails food, clothing, household goods, electronics, and other items through several branch stores.

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E Mart Inc (139480 KS)

Emart: Double Catalysts Of "Open on Sundays" + Focus on Low P/B Stocks

We expect E Mart to outperform the market in the rest of 2024 driven by two major factors including "open on Sundays" policy and focus on low P/B...

Douglas Kim

[Blue Lotus Daily - TMT Update]:PDD/BABA /JD/3690HK/VIPS/700HK/CPNG/TEMU/13948 KR/TCOM/ATAT/BILI

NBS releases social retail consumption data for May 2024, Need for Speed Mobile to launch on July 11 with 26 mn pre-registrations, Coupang told to...

Blue Lotus Research Institute

Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart

SSG.com’s major shareholders, E-Mart and Shinsegae, are expected to approve the repurchase of a 30% FI stake for 1.15 trillion KRW at a board...

Sanghyun Park

Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae

Emart and Shinsegae are facing concerns about put options of nearly 1 trillion won on private equity investors' investment in SSG.com nearly six...

Douglas Kim

Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

You'll find the Excel file with targeted names related to low PBR attached below in the DISCUSSION Section. I screened based on estimated consensus...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Emart: Double Catalysts Of "Open on Sundays" + Focus on Low P/B Stocks

We expect E Mart to outperform the market in the rest of 2024 driven by two major factors including "open on Sundays" policy and focus on low P/B...

Douglas Kim

[Blue Lotus Daily - TMT Update]:PDD/BABA /JD/3690HK/VIPS/700HK/CPNG/TEMU/13948 KR/TCOM/ATAT/BILI

​NBS releases social retail consumption data for May 2024, Need for Speed Mobile to launch on July 11 with 26 mn pre-registrations, Coupang told to...

Blue Lotus Research Institute

Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart

SSG.com’s major shareholders, E-Mart and Shinsegae, are expected to approve the repurchase of a 30% FI stake for 1.15 trillion KRW at a board...

Sanghyun Park

Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae

Emart and Shinsegae are facing concerns about put options of nearly 1 trillion won on private equity investors' investment in SSG.com nearly six...

Douglas Kim

Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

You'll find the Excel file with targeted names related to low PBR attached below in the DISCUSSION Section. I screened based on estimated consensus...

Sanghyun Park

NBS releases social retail consumption data for May 2024, Need for Speed Mobile to launch on July 11 with 26 mn pre-registrations, Coupang told to...