Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Korea Exchange (KRX) will announce the results of the December 2021 review of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> in November. The constituent changes will be effective after the close of trading on 9 December.There could be a change at the September futures expiry with <a href="https://www.smartkarma.com/entities/sd-biosensor-inc" target="_blank" data-smartkarma-citation="entities:33333:1" rel="noopener">SD Biosensor (SDBIOZ KS)</a> getting Fast Entry into the index. We see <a href="https://www.smartkarma.com/entities/lock-lock-co-ltd" target="_blank" data-smartkarma-citation="entities:4739:1" rel="noopener">Lock&amp;Lock (115390 KS)</a> as a potential deletion to make way for <a href="https://www.smartkarma.com/entities/sd-biosensor-inc" target="_blank" data-smartkarma-citation="entities:33333:1" rel="noopener">SD Biosensor (SDBIOZ KS)</a>. At the current time, we see 3 potential changes at the regular review in December with F&amp;F Co (383220 KS), <a href="https://www.smartkarma.com/entities/sl-corp" target="_blank" data-smartkarma-citation="entities:20694:1" rel="noopener">Sl Corp (005850 KS)</a> and <a href="https://www.smartkarma.com/entities/seah-besteel-corp" target="_blank" data-smartkarma-citation="entities:11760:1" rel="noopener">Seah Besteel (001430 KS)</a> replacing <a href="https://www.smartkarma.com/entities/samyang-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:9100:1" rel="noopener">Samyang Foods (003230 KS)</a>, <a href="https://www.smartkarma.com/entities/f-f-co-ltd" target="_blank" data-smartkarma-citation="entities:15983:1" rel="noopener">F&amp;F Co Ltd (007700 KS)</a> and <a href="https://www.smartkarma.com/entities/jw-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:18784:1" rel="noopener">Jw Pharmaceutical (001060 KS)</a>. These names could change over the next few months and their prices (and the prices of the other stocks) move around.After the 100%+ returns in the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> June review by buying the inclusions and selling the exclusions (or the KOSPI2 index futures), there will be a lot of interest in the December review.In this Insight we look at the KOSPI 200 index methodology, the historical performance of inclusions vs exclusions, at potential candidates for inclusion/exclusion in this review and some of the details around the names.

The Korea Exchange (KRX) will announce the results of the December 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in November. The constituent changes will be effective after the close of trading on 9 December.There could be a change at the September futures expiry with SD Biosensor (SDBIOZ KS) getting Fast Entry into the index. We see Lock&amp;Lock (115390 KS) as a potential deletion to make way for SD Biosensor (SDBIOZ KS). At the current time, we see 3 potential changes at the regular review in December with F&amp;F Co (383220 KS), Sl Corp (005850 KS) and Seah Besteel (001430 KS) replacing Samyang Foods (003230 KS), F&amp;F Co Ltd (007700 KS) and Jw Pharmaceutical (001060 KS). These names could change over the next few months and their prices (and the prices of the other stocks) move around.After the 100%+ returns in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) June review by buying the inclusions and selling the exclusions (or the KOSPI2 index futures), there will be a lot of interest in the December review.In this Insight we look at the KOSPI 200 index methodology, the historical performance of inclusions vs exclusions, at potential candidates for inclusion/exclusion in this review and some of the details around the names.

KOSPI200 Index Rebalance Preview: Focus Shifts to December After a Fantastic June Review

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

The Korea Exchange announced its KOSDAQ150 and KRX300 indices rebalances today. There were 17 new additions and 17 deletions for KOSDAQ150. Most of the stocks that were expected to be included in KOSDAQ 150 were officially included in the rebalance. However there were a few surprises. For example <a href="https://www.smartkarma.com/entities/nanos-co-ltd" target="_blank" data-smartkarma-citation="entities:16796:1" rel="noopener">Nanos Co Ltd (151910 KS),</a>which was one of the stocks that was expected to be included in KOSDAQ150, did not get included in this indext this time. On the other hand, the following stocks including <a href="https://www.smartkarma.com/entities/sang-a-frontec-co-ltd" target="_blank" data-smartkarma-citation="entities:20692:1" rel="noopener">Sang A Frontec (089980 KS)</a>, Novarex (194700 KS(, CIS (222080 KS), MedPacto (215980 KS), <a href="https://www.smartkarma.com/entities/koreacenter-com-co-ltd" target="_blank" data-smartkarma-citation="entities:28329:1" rel="noopener">Koreacenter.com Co Ltd (290510 KS)</a>, and Soulbrain (357780 KS) which were not on the top of the lists of getting selected into the KOSDAQ150 index by the locals, were formally selected be part of the new KOSDAQ150 inclusions.  The Korea Exchange also made changes to the KRX300 index. Although the KRX300 index is not currently as important as KOSPI200 and KOSDAQ150 indices, it is increasingly gaining in importance among the local institutional investors. The KRX300 had 33 new additions and 35 deletions.

The Korea Exchange announced its KOSDAQ150 and KRX300 indices rebalances today. There were 17 new additions and 17 deletions for KOSDAQ150. Most of the stocks that were expected to be included in KOSDAQ 150 were officially included in the rebalance. However there were a few surprises. For example Nanos Co Ltd (151910 KS),which was one of the stocks that was expected to be included in KOSDAQ150, did not get included in this indext this time. On the other hand, the following stocks including Sang A Frontec (089980 KS), Novarex (194700 KS(, CIS (222080 KS), MedPacto (215980 KS), Koreacenter.com Co Ltd (290510 KS), and Soulbrain (357780 KS) which were not on the top of the lists of getting selected into the KOSDAQ150 index by the locals, were formally selected be part of the new KOSDAQ150 inclusions.  The Korea Exchange also made changes to the KRX300 index. Although the KRX300 index is not currently as important as KOSPI200 and KOSDAQ150 indices, it is increasingly gaining in importance among the local institutional investors. The KRX300 had 33 new additions and 35 deletions. 

KOSDAQ150 and KRX300 Indices Rebalances (Overlapping Additions & Deletions)

Equity Capital Markets

Our base case valuation of Kyochon F&amp;B IPO is EV of 380 billion won, a market cap of 411 billion won, and an implied price of 16,288 won (representing 32% higher than the high-end of the IPO price range of 12,300 won per share). Given the attractive upside to the IPO price range, we have a positive view of this IPO. We are also including Kyochon F&amp;B in our model portfolio. The book-building for the institutional investors starts on 28 October.

Our base case valuation of Kyochon F&amp;B IPO is EV of 380 billion won, a market cap of 411 billion won, and an implied price of 16,288 won (representing 32% higher than the high-end of the IPO price range of 12,300 won per share). Given the attractive upside to the IPO price range, we have a positive view of this IPO. We are also including Kyochon F&amp;B in our model portfolio. The book-building for the institutional investors starts on 28 October.

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The fried chicken business is big in Korea. Established in 1991, Kyochon F&amp;B ("Kyochon Chicken") is the top fried chicken franchise in Korea and it is getting ready to complete its IPO in November. In the world of F&amp;B, you have Coke vs. Pepsi, Shake Shack vs. Five Guys, and McDonalds vs. Burger King. In the Korean fried chicken business, you have Kyochon vs. other major players including BBQ, BHC, and Pelicana. 
The IPO price range of Kychon F&amp;B is from 10,600 won to 12,300 won. The IPO base deal size is from $53 million to $61 million. The expected market cap after the IPO is from 267 billion won to 310 billion won, according to bankers' valuation. The book-building for the institutional investors starts on 28 October 2020.
Kyochon F&amp;B is much smaller in size than the top three IPOs in Korea this year (SK Biopharm, Kakao Games, and Big Hit Entertainment). However, we believe that the Kyochon F&amp;B will draw a lot of interest among many institutional investors, especially that have long-term investment horizons. 
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The fried chicken business is big in Korea. Established in 1991, Kyochon F&amp;B ("Kyochon Chicken") is the top fried chicken franchise in Korea and it is getting ready to complete its IPO in November. In the world of F&amp;B, you have Coke vs. Pepsi, Shake Shack vs. Five Guys, and McDonalds vs. Burger King. In the Korean fried chicken business, you have Kyochon vs. other major players including BBQ, BHC, and Pelicana. 
The IPO price range of Kychon F&amp;B is from 10,600 won to 12,300 won. The IPO base deal size is from $53 million to $61 million. The expected market cap after the IPO is from 267 billion won to 310 billion won, according to bankers' valuation. The book-building for the institutional investors starts on 28 October 2020.
Kyochon F&amp;B is much smaller in size than the top three IPOs in Korea this year (SK Biopharm, Kakao Games, and Big Hit Entertainment). However, we believe that the Kyochon F&amp;B will draw a lot of interest among many institutional investors, especially that have long-term investment horizons. 


Kyochon F&B IPO Preview - Korean Fried Chicken At Its Best

Thematic (Sector/Industry)

<ul><li>In this report, we highlight nine new, innovative products in the Korean F&amp;B sector introduced in 2018 that are having significant impact on the consumer buying patterns. This report is Part III of the Innovative Foods series in Korea - <a href="https://www.smartkarma.com/insights/innovative-foods-portfolio-outperformance" target="_blank" data-smartkarma-citation="insights:3891">Innovative Foods = Portfolio Outperformance</a> &amp; <a href="https://www.smartkarma.com/insights/innovative-foods-portfolio-outperformance-ii" target="_blank" data-smartkarma-citation="insights:11356">Innovative Foods = Portfolio Outperformance (II)</a>.</li><li>Recent, new innovative products in the Korean F&amp;B sector include <a href="https://www.smartkarma.com/entities/24221" target="_blank" data-smartkarma-citation="entities:24221:1">Orion Corp (271560 KS)</a>'s Fresh Cream Pies, <a href="https://www.smartkarma.com/entities/6735" target="_blank" data-smartkarma-citation="entities:6735:1">Ottogi Corporation (007310 KS)</a>'s Jinjia Jjolmyeon, and <a href="https://www.smartkarma.com/entities/3274" target="_blank" data-smartkarma-citation="entities:3274:1">Dongwon F&amp;B Co Ltd (049770 KS)</a>'s Meal Drink. </li><li>Product innovation is one of several critical factors that impact share price performance of a stock. In the Korean F&amp;B sector, companies such as <a href="https://www.smartkarma.com/entities/7615" target="_blank" data-smartkarma-citation="entities:7615:1">Orion Corp (001800 KS)</a>, <a href="https://www.smartkarma.com/entities/9100" target="_blank" data-smartkarma-citation="entities:9100:1">Samyang Foods Co Ltd (003230 KS)</a>, and <a href="https://www.smartkarma.com/entities/6420" target="_blank" data-smartkarma-citation="entities:6420:1">Maeil Dairy Industry (005990 KS)</a> that have introduced innovative foods and also are beneficiaries of the improved South Korea and China relations have been superior outperformers. The nine companies with innovative products in 2018 that we include in this report are up 14.3% on average YTD versus KOSPI which is down 1.2% YTD. </li></ul>

In this report, we highlight nine new, innovative products in the Korean F&amp;B sector introduced in 2018 that are having significant impact on the consumer buying patterns. This report is Part III of the Innovative Foods series in Korea - Innovative Foods = Portfolio Outperformance &amp; Innovative Foods = Portfolio Outperformance (II).Recent, new innovative products in the Korean F&amp;B sector include Orion Corp (271560 KS)'s Fresh Cream Pies, Ottogi Corporation (007310 KS)'s Jinjia Jjolmyeon, and Dongwon F&amp;B Co Ltd (049770 KS)'s Meal Drink. Product innovation is one of several critical factors that impact share price performance of a stock. In the Korean F&amp;B sector, companies such as Orion Corp (001800 KS), Samyang Foods Co Ltd (003230 KS), and Maeil Dairy Industry (005990 KS) that have introduced innovative foods and also are beneficiaries of the improved South Korea and China relations have been superior outperformers. The nine companies with innovative products in 2018 that we include in this report are up 14.3% on average YTD versus KOSPI which is down 1.2% YTD. 

Innovative Foods = Portfolio Outperformance (III)

South Korea

Dongwon F&B Co., Ltd. manufactures various processed food products. The Company' s products include agricultural and marine products, beverages, dairy products, processed meat, fast food, frozen food, and ginseng. The company's main product in early stage was canned tuna and expanded their business into a variety of food production.

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Dongwon F&B (049770 KS)

KOSPI200 Index Rebalance Preview: Focus Shifts to December After a Fantastic June Review

We see 1 potential change in September and 3 potential changes at the KOSPI200 December review. Post the excellent returns at the June rebalance,...

Brian Freitas

KOSDAQ150 and KRX300 Indices Rebalances (Overlapping Additions & Deletions)

We highlight the KOSDAQ150 and KRX300 indices rebalances. There are some interesting new names, especially among those that are over lapping in...

Douglas Kim

Kyochon F&B IPO Valuation Analysis

Our base case valuation of Kyochon F&B IPO is EV of 380 billion won, a market cap of 411 billion won, and an implied price of 16,288 won (32%...

Douglas Kim

Kyochon F&B IPO Preview - Korean Fried Chicken At Its Best

The fried chicken business is big in Korea. Kyochon F&B ("Kyochon Chicken") is the top fried chicken franchise in Korea and it is getting...

Douglas Kim

Innovative Foods = Portfolio Outperformance (III)

In this report, we highlight nine new, innovative products in the Korean F&B sector introduced in 2018 that are having significant impact on...

Douglas Kim

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