Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>On 12 August, Skylake Equity Partners announced a tender offer of 6.58 million shares (28.9% stake) of BusinessOn Communication. The tender offer price is 15,849 won.</li>
<li>BusinessOn is one of the leading digital tax invoice software providers in Korea. It also provides digital contracts, market intelligence, banner advertising, and supply chain management services. </li>
<li>Skylake plans to purchase all of the shares subscribed in this deal, regardless of the subscription rate. If the public offering target quantity is successful, Skylake plans to delist BusinessOn. </li>
</ul>


On 12 August, Skylake Equity Partners announced a tender offer of 6.58 million shares (28.9% stake) of BusinessOn Communication. The tender offer price is 15,849 won.
BusinessOn is one of the leading digital tax invoice software providers in Korea. It also provides digital contracts, market intelligence, banner advertising, and supply chain management services. 
Skylake plans to purchase all of the shares subscribed in this deal, regardless of the subscription rate. If the public offering target quantity is successful, Skylake plans to delist BusinessOn. 


Tender Offer of BusinessOn Communications by Skylake Equity Partners

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/20161" target="_blank" data-smartkarma-citation="entities:20161:1">Duzonbizon (012510 KS)</a> (also spelled "Douzonbizon"), is a leading beneficiary of the expanding cloud based CRM software market in Korea. <a href="http://www.zdnet.co.kr/view/?no=20181218134731" target="_blank">The Korean public cloud market is expected to grow from 2.0 trillion won in 2018 to 2.4 trillion won in 2019. </a>In the case of the domestic public cloud market, SaaS will continue to be strong. One of the catalysts that could positively impact the cloud industry in Korea is that there could be a change in the regulations which may allow many of the government related offices to start using private cloud services starting in 2019. 
The company has very little competition in the Lite ERP segment, where it has a near monopoly position. The customers that use this product are typically small companies with annual sales of less than 10 billion won to 20 billion won. Other major competitors have not chosen to aggressively fight against Duzonbizon in this segment.  The company's cloud business is based on providing cloud-based ERP products. The company has been able to significantly increase its total sales by providing the ERP products as a cloud based service. The customers can reduce costs on servers and personnel by relying on the company's cloud based ERP software and services. 
Duzonbizon is currently trading at 29x P/E (2019E) and 24x P/E (2020E), using consensus earnings estimates. The company's P/E valuation multiples have been rising in the past several years and the valuation multiples have ranged in the 20-40x. While the company's valuation multiples are relatively higher than the KOSPI market average, they are lower than the global CRM software leaders such as <a href="https://www.smartkarma.com/entities/19124" target="_blank" data-smartkarma-citation="entities:19124:1">Salesforce.Com Inc (CRM US)</a>, which is currently trading at 49x P/E. Despite the recent volatility in Duzonbizon's share price in the past few months, we are positive on the stock over the next one year and we think the stock could climb by an additional 20-30% over the next year. We believe that the company has a very strong business moat with a very loyal customer base. We want to start 2019 recommending a solid, emerging growth company in the Korean tech space and so we believe that Duzonbizon is a good company to start off with.

Duzonbizon (012510 KS) (also spelled "Douzonbizon"), is a leading beneficiary of the expanding cloud based CRM software market in Korea. The Korean public cloud market is expected to grow from 2.0 trillion won in 2018 to 2.4 trillion won in 2019. In the case of the domestic public cloud market, SaaS will continue to be strong. One of the catalysts that could positively impact the cloud industry in Korea is that there could be a change in the regulations which may allow many of the government related offices to start using private cloud services starting in 2019. 
The company has very little competition in the Lite ERP segment, where it has a near monopoly position. The customers that use this product are typically small companies with annual sales of less than 10 billion won to 20 billion won. Other major competitors have not chosen to aggressively fight against Duzonbizon in this segment.  The company's cloud business is based on providing cloud-based ERP products. The company has been able to significantly increase its total sales by providing the ERP products as a cloud based service. The customers can reduce costs on servers and personnel by relying on the company's cloud based ERP software and services. 
Duzonbizon is currently trading at 29x P/E (2019E) and 24x P/E (2020E), using consensus earnings estimates. The company's P/E valuation multiples have been rising in the past several years and the valuation multiples have ranged in the 20-40x. While the company's valuation multiples are relatively higher than the KOSPI market average, they are lower than the global CRM software leaders such as Salesforce.Com Inc (CRM US), which is currently trading at 49x P/E. Despite the recent volatility in Duzonbizon's share price in the past few months, we are positive on the stock over the next one year and we think the stock could climb by an additional 20-30% over the next year. We believe that the company has a very strong business moat with a very loyal customer base. We want to start 2019 recommending a solid, emerging growth company in the Korean tech space and so we believe that Duzonbizon is a good company to start off with. 

Duzonbizon: Capitalizing on the Growth of Cloud Based CRM Software in Korea

South Korea

BusinessOn Communication Co., Ltd operates software as a service company. The Company provides electronic tax bill, integrated purchase management, electronic contract, purchase confirmation, and default registration services. BusinessOn Communication also offers online advertising services.

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BusinessOn Communication (138580 KS)

Tender Offer of BusinessOn Communications by Skylake Equity Partners

On 12 August, Skylake Equity Partners announced a tender offer of 6.58 million shares (28.9% stake) of BusinessOn Communication. The tender offer...

Douglas Kim

Duzonbizon: Capitalizing on the Growth of Cloud Based CRM Software in Korea

Duzonbizon (012510 KS) (also spelled "Douzonbizon"), is a leading beneficiary of the expanding cloud based CRM software market in Korea. The Korean...

Douglas Kim

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