Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

We visited HDC Shilla Duty Free Shop today. Its grand formal opening was on 25 March 2016. It opened the duty free shop on a limited basis back in December 2015. HDC Shilla Duty Free Shop (JV between <a href="https://www.smartkarma.com/entities/107" target="_blank" data-smartkarma-citation="entities:107">Hotel Shilla Co Ltd</a> and <a href="https://www.smartkarma.com/entities/7699" target="_blank" data-smartkarma-citation="entities:7699">Hyundai Development Co Engg &amp; Cnstn</a>) is one of the largest duty free shops in Asia, composing of five floors (27,000 square meters). In its grand formal opening, HDC Shilla Duty Free Shop featured about 200 more brands in fashion, jewelry, and cosmetics since four months ago…

We visited HDC Shilla Duty Free Shop today. Its grand formal opening was on 25 March 2016. It opened the duty free shop on a limited basis back in December 2015. HDC Shilla Duty Free Shop (JV between Hotel Shilla Co Ltd and Hyundai Development Co Engg &amp; Cnstn) is one of the largest duty free shops in Asia, composing of five floors (27,000 square meters). In its grand formal opening, HDC Shilla Duty Free Shop featured about 200 more brands in fashion, jewelry, and cosmetics since four months ago…

First Look at HDC Shilla Duty Free Shop After Its Grand Formal Opening

Thematic (Sector/Industry)

<ul><li>We highlight 27 Korean companies that are seeking to find new owners through M&amp;A in 2016. Key sectors of M&amp;A in Korea in 2016 include financials, shipbuilding, and logistics.&nbsp;Our analysis is based on publicly available information.&nbsp;</li><li>To recap the M&amp;A market in Korea last year, 427 M&amp;A deals were struck in 2015 worth nearly US$65 billion. 2016 is likely to fare even better.&nbsp;</li><li>Korea Inc. is becoming less of an octopus and more of a shark. Korea is still dominated by the chaebols but several chaebols such as the Samsung Group are clearly trying to become more of a shark (greater focus on key industries such as tech) and less of an octopus, being diversified in so many different industries.</li><li>Korean companies' top&nbsp;300 largest companies by market capitalization had cash of about 128 trillion won at end of 2015, up&nbsp;33% YoY.&nbsp;</li><li>Among the various M&amp;A sectors in Korea in 2016, we find logistics and securities sectors to be quite interesting. In the logistics sector, Coupang (private company) is really revolutionizing the entire competitive structure of the industry. The companies that have been competing in this&nbsp;old, dull industry of packing products in boxes and delivering them must compete effectively against Coupang and catch up to them in terms of customer service, speed, and execution or else exit the industry.</li><li>In the securities sector, the recent acquisition of KDB Securities by Mirae Asset Securities, should lead to greater consolidation of this industry. In addition, despite the weak brokerage market, the IPO and M&amp;A markets in Korea should flourish this year, barring severe economic distress. The Korean government is also trying to accelerate the M&amp;A market in Korea this year.&nbsp;The Korean National Assembly passed the revisions to the Commercial Code in November 2015 (effective March 2016) which should help to facilitate companies&rsquo; restructuring and investment through M&amp;A.</li></ul>

We highlight 27 Korean companies that are seeking to find new owners through M&amp;A in 2016. Key sectors of M&amp;A in Korea in 2016 include financials, shipbuilding, and logistics.&nbsp;Our analysis is based on publicly available information.&nbsp;To recap the M&amp;A market in Korea last year, 427 M&amp;A deals were struck in 2015 worth nearly US$65 billion. 2016 is likely to fare even better.&nbsp;Korea Inc. is becoming less of an octopus and more of a shark. Korea is still dominated by the chaebols but several chaebols such as the Samsung Group are clearly trying to become more of a shark (greater focus on key industries such as tech) and less of an octopus, being diversified in so many different industries.Korean companies' top&nbsp;300 largest companies by market capitalization had cash of about 128 trillion won at end of 2015, up&nbsp;33% YoY.&nbsp;Among the various M&amp;A sectors in Korea in 2016, we find logistics and securities sectors to be quite interesting. In the logistics sector, Coupang (private company) is really revolutionizing the entire competitive structure of the industry. The companies that have been competing in this&nbsp;old, dull industry of packing products in boxes and delivering them must compete effectively against Coupang and catch up to them in terms of customer service, speed, and execution or else exit the industry.In the securities sector, the recent acquisition of KDB Securities by Mirae Asset Securities, should lead to greater consolidation of this industry. In addition, despite the weak brokerage market, the IPO and M&amp;A markets in Korea should flourish this year, barring severe economic distress. The Korean government is also trying to accelerate the M&amp;A market in Korea this year.&nbsp;The Korean National Assembly passed the revisions to the Commercial Code in November 2015 (effective March 2016) which should help to facilitate companies&rsquo; restructuring and investment through M&amp;A.

2016 Korea M&A Market Outlook - What's For Sale?

South Korea

Sambu Construction Co., Ltd. specializes in government construction, such as dams, expressways, and subways.  The Company also constructs office buildings, industrial plants, hotels, apartments, schools, shopping malls, museums, and sports facilities.

DL Construction Co., Ltd. provides construction and civil engineering services. The Company offers general outsourcing, public building, housing, landscaping, and other related services. DL Construction offers services throughout South Korea.

LS Marine Solution Co., Ltd. operates as a submarine communication cables and offshore plants construction and maintenance company. The Company provides submarine fiber optic cable installation, submarine power cable installation, and other related services. LS Marine Solution also offers offshore energy sources development and derrick assembly services.

Dohwa Engineering Co., Ltd. is a construction company that provides architectural, supervision, and engineering services.  The Company constructs water facilities, roads and urban planning services.

Kolon Global Corp., a civil engineering and architectural firm, constructs highways, railroads, subways, bridges, tunnels, buildings, industrial plants, and apartment complexes.  The Company also operates leisure business, such as country clubs, family hotels, and ski resorts.

Seohee Construction Co., Ltd. provides domestic civil engineering, architectural, and residential building construction, and other construction related services.  Seohee Construction constructs roadway, apartment complexes, governmental buildings, water and waste treatment facilities, and sports facilities.

Dong-Ah Geological Engineering Co., Ltd. is a construction company which performs site preparation services for private and public entities.  The Company uses shield, grouting, and excavating methods to prepare sites for a variety of construction works, such as tunnels, dams, highways, subways, and factories.

Dong Ah Geological Engineering (028100 KS)

Hanmiglobal Co., Ltd. is a construction and engineering company.  The Company  p rovides project management services, construction, and financing services.

Dongsin Engineering & Construction provides construction and engineering services. The Company constructs sewage disposal plants, city water facilities, non-hazardous sanitary landfills, and roadways.

Halla Corporation provides civil engineering and architectural services to governmental and industrial customers.  The Company's business focuses on civil works, such as construction of roadways, dockyards, and airports.  Halla Corporation also builds commercial, residential, and educational buildings.

PT Surya Semesta Internusa Tbk and its subsidiaries develop and manage industrial and residential real estates, provide construction services, and manufacture building materials. The Company also operates hotels and provides information technology-related businesses design to support its main businesses.

Beijing Airport High-Tech Park Co., Ltd. develops and constructs Beijing's airport industrial zone, the Tianzhu export processing zone, and the airport logistics park. The Company leases land, builds commercial properties, and provides property management services in these areas.

KAWADA TECHNOLOGIES, INC. is established through reorganization.  The company designs, builds, and maintains a variety of bridges.  The company develops and uses long suspension bridge construction methods.  Kawada also constructs steel frame structures such as buildings, recreational facilities, and infrastructure. Additionally, the Company manufactures and sells aircrafts and machineries

TOKYO ENERGY & SYSTEMS INC. designs and constructs thermal, nuclear, and hydro-electric power plant facilities.  The company also builds transformer substation facilities.  Additionally, Tokyo Energy & Systems performs electrical works for telecommunication, air-conditioning, and water supply systems as well as civil engineering works.

Lycopodium Limited is an engineering consulting firm. The Company, through its subsidiaries, provides consulting engineering services to both the mining and manufacturing industries as well as provides specialist services to the minerals resource industry. Lycopodium serves customers worldwide.

Xinjiang Urban Construction (Group) Co., Ltd. constructs and operates urban infrastructures such as roads, bridges and water supply facilities. The Company also develops real estate.

Xinjiang Urban Construction (Group) Co (600545 CH)

FUKUDA CORPORATION is a general contractor based in Niigata Prefecture. The Company constructs commercial, residential, and institutional buildings. Fukuda builds cultural, educational, medical, welfare, and recreational facilities.  The Company, through its subsidiary, also paves roads and performs infrastructure construction.

China Steel Structure Co., Ltd. manufactures steel structures for constructing bridges, plants, and high-rises.  Through its subsidiaries,  China Steel also operates in the construction business.

SRG Global Limited operates as a construction services company. The Company constructs skyscrapers, bridges, dams, structures, transport infrastructures, and oil and gas projects, as well as offers drilling support, civil engineering, and industrial maintenance services. SRG Global serves customers worldwide.

Ekovest Berhad is an investment holding company. Through its subsidiaries, the Company provides civil engineering and building works, construction services, and project management designs.

HDC Holdings Co.,Ltd operates as a real estate owner and developer. The Company develops residential areas, office buildings, hotels, restaurants, and other related areas. HDC Holdings offers services throughout South Korea.

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HDC Holdings (012630 KS)

First Look at HDC Shilla Duty Free Shop After Its Grand Formal Opening

We visited HDC Shilla Duty Free Shop today. Its grand formal opening was on 25 March 2016. It opened the duty free shop on a limited basis back in...

Douglas Kim

2016 Korea M&A Market Outlook - What's For Sale?

We highlight 27 Korean companies that are seeking to find new owners through M&A in 2016. Key sectors of M&A in Korea in 2016 include...

Douglas Kim

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