Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>It has been reported that Kakao has hired local brokerage firms to discuss the details of another tender offer of SM Entertainment shares (at more than 130,000 won).</li>
<li>We believe that this has been the key reason why SM Entertainment's shares rose an additional 5% on 15 February.</li>
<li>We believe that eventually Kakao Group will win the M&amp;A fight for SM Entertainment and shares of SM could rise further in the coming weeks. </li>
</ul>


It has been reported that Kakao has hired local brokerage firms to discuss the details of another tender offer of SM Entertainment shares (at more than 130,000 won).
We believe that this has been the key reason why SM Entertainment's shares rose an additional 5% on 15 February.
We believe that eventually Kakao Group will win the M&amp;A fight for SM Entertainment and shares of SM could rise further in the coming weeks. 


Who Wants SM Entertainment More? Kim Bum-Soo (Kakao) Or Bang Si-Hyuk (Hybe)?

<ul>
<li>On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia's Sovereign Fund (Public Investment Fund - PIF) and GIC (Singapore).</li>
<li>Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.</li>
<li>This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.</li>
</ul>


On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia's Sovereign Fund (Public Investment Fund - PIF) and GIC (Singapore).
Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.
This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.


PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

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.

<ul>
<li>KT's foreign room has been rising since early September last year. If this trend continues, it will likely approach the inclusion borderline of 15% within a month or two.</li>
<li>This trend is expected to continue for the time being as the tough relationship between the KT CEO and the government seems unlikely to be resolved in the short term.</li>
<li>The February inclusion is pretty tight, but May seems like we could be looking out for it.</li>
</ul>


KT's foreign room has been rising since early September last year. If this trend continues, it will likely approach the inclusion borderline of 15% within a month or two.
This trend is expected to continue for the time being as the tough relationship between the KT CEO and the government seems unlikely to be resolved in the short term.
The February inclusion is pretty tight, but May seems like we could be looking out for it.


Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight

<ul>
<li>More than 20 trillion won (US$16 billion) worth of deals are up for M&amp;As in 2023.</li>
<li>However, due to high interest rates and differences on valuations among buyers and sellers, the M&amp;A market in Korea is likely to continue to be weak in 2023.</li>
<li>In this insight, we discuss 24 companies that are up for M&amp;As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.</li>
</ul>


More than 20 trillion won (US$16 billion) worth of deals are up for M&amp;As in 2023.
However, due to high interest rates and differences on valuations among buyers and sellers, the M&amp;A market in Korea is likely to continue to be weak in 2023.
In this insight, we discuss 24 companies that are up for M&amp;As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.


Korea M&A Outlook in 2023: What's for Sale?

Equity Bottom-Up

<ul>
<li>On 17 October, the Korean government made a final official decision to have the BTS members serve in the mandatory military service.</li>
<li>We believe this will have a major negative impact on the sales and profits of HYBE in the next several years.</li>
<li>As a result of the Korean government formalizing the BTS members to enlist in the military, we believe that HYBE's share price could fall more than 50% from current levels.</li>
</ul>


On 17 October, the Korean government made a final official decision to have the BTS members serve in the mandatory military service.
We believe this will have a major negative impact on the sales and profits of HYBE in the next several years.
As a result of the Korean government formalizing the BTS members to enlist in the military, we believe that HYBE's share price could fall more than 50% from current levels.


HYBE: Korean Govt Mandates BTS Members to Enlist in Military - 50% Further Downside Risk Ahead

South Korea

Hyundai Home Shopping Network Corporation  mechandises consumer products. The Company's products include clothes, home appliances, food, and luxuries. Hyundai Home Shopping retails through TV home shoppoing channels, catalogs, and the Inte rnet shopping mall.

Hyundai Home Shopping Network (057050 KS)

ISE Commerce Co., Ltd. provides overseas online shopping service.  The company allows customers to buy overseas items with foreign registered credit cards acting as buying agent on behalf of them.  The service also includes local language description and delivery.

YES24 Co.,Ltd is an on-line retailer.  The company markets and sells books. The company also provides online advertising service.

Lotte Shopping Co., Ltd. operates department stores and discount stores in South Korea.  The Company retails clothing, household goods, foods and other items through several branches.  Lotte Shopping also operates supermarkets and movie theaters.

Shinsegae Co., Ltd. operates department stores in South Korea.  The Company retails food, clothing, household goods, electronics, and other items through several branch stores.

Hotel Shilla Co.,Ltd operates and manages hotels in Seoul and Jeju. The Company also operates duty free shops, bakeries, restaurants, and catering and laundry service businesses.

Hyundai Department Store Co., Ltd. operates department stores under the name of Hyundai Department over nationwide.  The Company also produces home shopping programs for cable channels and sells merchandise through home shopping programs.

Shinsegae International Co., Ltd. was spun off from Shinsegae in 1996.  The company imports and distributes famous foreign brands and manufactures/distribut es domestic brand.  The Company's line of business includes the wholesale distribution of men's and women's apparel.

Cuckoo Homesys Co. Ltd. manufactures kitchen appliances. The Company produces and sells electric pressure cookers, dishwashers, blenders, water purifiers, and other products. Cuckoo Homesys also provides kitchen appliances exporting services. Cuckoo Homesys markets its products worldwide.

Kolao Holdings retails new and used cars, and provided repairs and maintenance services in Laos.  The company also retails motorcycles and automobile parts.

ASKUL Corporation sells office equipment products to medium and small sized business offices via the Internet and facsimiles.  The Company provides next day delivery services throughout Japan.

eDreams ODIGEO SA is a European online travel company.  The Company offers flights, hotels, vacation packages, train tickets, and car rentals with localized sites across countries worldwide.

Infibeam Avenues Limited operates as an e-commerce platform. The Company focuses on e-retail business including home and lifestyle products, books, automobile accessories, electronics, watches, health equipment, jewelry, footwear, apparel, baby products, movies, music, posters, magazines, toys, and gifts. Infibeam Avenues serves customers in India.

Jumia Technologies AG provides e-commerce services. The Company offers on-line products as well as delivery of packages to the consumers. Jumia Technologies serves customers in Germany and Africa.

Takkt AG provides one-stop shopping for equipment, supplies, and accessories for offices and warehouses.  The Company's products include office furniture and accessories, file systems, delivery carts, and related supplies.  Takkt offers its products through CD-ROMs, catalogs and the Internet, and operates throughout Europe and North America.

AO World PLC retails a range of home appliances. The Company sells refrigerators, freezers, dishwashers, washers/dryers, and other small appliances.

Despegar.com, Corp. provides online travel booking services. The Company offers online hotels, car, flights, vacation rentals, packages, and ticket booking services. Despegar.com also provides an online platform to compare tickets and packages.

1-800-FLOWERS.COM, Inc. is an e-commerce provider of floral products and gifts. The Company's product offerings, including fresh-cut and seasonal flowers, plants, floral arrangements, and home and garden merchandise, can be purchased online or by calling its toll-free telephone number.

Overstock.com, Inc. offers discounted brand-name merchandise for sale over the Internet. Products include bed-and-bath goods, kitchenware, jewelry, sporting goods, electronics, and designer accessories.

zooplus AG retails pet supplies over the Internet.

CJ ENM, Ltd. retails clothes, kitchen utensils, home appliances, and jewelry.  The Company sells its merchandise through TV home shopping channels, catalogs, and the Internet shopping mall.  CJ ENM operates cable television business through a subsidiary.

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CJ ENM (035760 KS)

Who Wants SM Entertainment More? Kim Bum-Soo (Kakao) Or Bang Si-Hyuk (Hybe)?

It has been reported that Kakao has hired local brokerage firms to discuss the details of another tender offer of SM Entertainment shares (at more...

Douglas Kim

PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

Maekyung Business Daily reported on 11 January that PIF (Saudi Arabia) and GIC combined invested about 1.2 trillion won in Kakao Entertainment,...

Douglas Kim

Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight

This post examines Korea's foreign ownership-restricted stocks and discusses potential momentum trading opportunities for KT.

Sanghyun Park

Korea M&A Outlook in 2023: What's for Sale?

In this insight, we discuss 24 companies that are up for M&As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.

Douglas Kim

HYBE: Korean Govt Mandates BTS Members to Enlist in Military - 50% Further Downside Risk Ahead

As a result of the Korean government formalizing the BTS members to enlist in the military, we believe that HYBE's share price could fall more than...

Douglas Kim

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