Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p>HK Inno.N announced its IPO book building results today. The IPO price has been determined at 59,000 won, which was at the high end of the IPO price range. The demand ratio among the institutional investors was 1,871 to 1.</p><p>There were 13.5% of shares that were applied under a lock-up. This is relatively low and is one of the concerning factors of the bookbuilding results.</p><div class="content-highlight"><p>We continue to have a POSITIVE view of the HK Inno.N IPO post book building results. Our base case valuation of HK Inno.N remains implied market cap of 2.2  trillion won or implied price of 75,534 won per share. This represents 28% higher than the high end of the IPO price range of 59,000 won. </p></div>

HK Inno.N announced its IPO book building results today. The IPO price has been determined at 59,000 won, which was at the high end of the IPO price range. The demand ratio among the institutional investors was 1,871 to 1.There were 13.5% of shares that were applied under a lock-up. This is relatively low and is one of the concerning factors of the bookbuilding results.We continue to have a POSITIVE view of the HK Inno.N IPO post book building results. Our base case valuation of HK Inno.N remains implied market cap of 2.2  trillion won or implied price of 75,534 won per share. This represents 28% higher than the high end of the IPO price range of 59,000 won. 

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.

HK Inno.N's offering price got fixed at ₩59,000, the upper end of the indicative price band, implying a market cap of ₩1.7T. There is no change in the offering volume.







Indicative price band
Low
High (final)


Price
₩50,000
₩59,000


Base deal size
₩505.9B
₩596.9B


- Institutional allotment
₩278.2B
₩328.3B


Implied market cap
₩1,445.2B
₩1,705.4B


- Discount
29.54%
16.85%


EV/EBITDA
15.77x
18.02x

Source: DART

The institutional subscription competition rate is 1,871 to 1, nearly hitting the record holder SKIET's 1,883 to 1. In this bookbuilding, it seems that local institutions have been overbetting quite aggressively. In particular, it seems that local publicly raised funds with long-term holding tendencies have been active in securing the stocks. This proves that many local institutional investors felt that this IPO was price attractive enough for long-term holding.









By investor type
Institution
%
Demand
%


Local publicly raised funds
713
43.82%
4,795,649,600
46.05%


Local brokerages/investment advisories
31
1.91%
202,086,750
1.94%


Local pensions, funds managing proprietary assets, banks, and insurance companies
220
13.52%
1,434,513,850
13.78%


Local others (mostly discretionary investment companies - local hedge funds))
392
24.09%
2,678,313,000
25.72%


Foreign (foreign IPO funds &amp; hedge funds)
74
4.55%
79,187,194
0.76%


Foreign others (mostly local hot money)
197
12.11%
1,223,144,000
11.75%


Total
1,627
100.00%
10,412,894,394
100.00%


Subscription rate
1,871.36

Source: DART

The "Unspecified" category usually indicates that they want the shares above the high end.With that in mind, about one-third have gone for the upper end or above. The remaining two-thirds selected 75-100% of the upper end. All of the orders are priced at 75-100% of the upper end or higher. So, yes, we can say the institutional pricing is quite aggressive.









By price
Institution
%
Demand
%


Above high end
536
32.94%
3,597,972,500
34.55%


75-100% of high end
1,061
65.21%
6,630,326,894
63.67%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
30
1.84%
184,595,000
1.77%


Total
1,627
100.00%
10,412,894,394
100.00%

Source: DART



HK Inno.N Bookbuilding Results: Subscription/Lockup Orders in Detail

<h2>Listing date</h2><p>The listing date of Krafton has been confirmed as August 10th.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Schedule"}'>Krafton IPO schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'>Book open</td>
<td data-sheets-value='{"1":3,"3":44391}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 14</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'>Book close</td>
<td data-sheets-value='{"1":3,"3":44404}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 27</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'>Allotment</td>
<td data-sheets-value='{"1":3,"3":44406}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 29</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'>Subscription</td>
<td data-sheets-value='{"1":3,"3":44410}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 2</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td data-sheets-value='{"1":3,"3":44413}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 5</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'><strong>Listing</strong></td>
<td data-sheets-value='{"1":3,"3":44418}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 8. 10</strong></td>
</tr>
<tr>
<td><em><strong> - Kakao Bank's listing</strong></em></td>
<td><em><strong>2021. 8. 5</strong></em></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><ul>
<li><strong>The initially scheduled date was August 10th. However, as Kakao Pay's listing date was set for August 12, Krafton could not easily finalize the listing date due to the issue of mutual interference for retail investors with Kakao Pay.</strong></li>
<li><strong>The fact that Krafton confirmed the listing date as soon as Kakao Pay's listing schedule was delayed shows how sensitive Krafton was to this retail interference issue.</strong></li>
</ul><div class="content-highlight">
<p>The listing date of Kakao Bank is August 5, and there is a gap of 3 business days until the listing date of Krafton. However, in this case, Krafton is in a position to absorb retail demand from Kakao Bank. More importantly, Kakao Bank must draw less attention from retail investors than Kakao Pay in terms of business nature, so there is no need to worry too much about potential interference with Kakao Bank.</p>
<p><strong>And then, at least until the end of August, there is no major listing. That is, there is enough temporal buffer for Krafton to drive retail demand.</strong></p>
</div>

Listing dateThe listing date of Krafton has been confirmed as August 10th.





Krafton IPO schedule

Book open
2021. 7. 14


Book close
2021. 7. 27


Allotment
2021. 7. 29


Subscription
2021. 8. 2


Payment
2021. 8. 5


Listing
2021. 8. 10


 - Kakao Bank's listing
2021. 8. 5

Source: DART


The initially scheduled date was August 10th. However, as Kakao Pay's listing date was set for August 12, Krafton could not easily finalize the listing date due to the issue of mutual interference for retail investors with Kakao Pay.
The fact that Krafton confirmed the listing date as soon as Kakao Pay's listing schedule was delayed shows how sensitive Krafton was to this retail interference issue.

The listing date of Kakao Bank is August 5, and there is a gap of 3 business days until the listing date of Krafton. However, in this case, Krafton is in a position to absorb retail demand from Kakao Bank. More importantly, Kakao Bank must draw less attention from retail investors than Kakao Pay in terms of business nature, so there is no need to worry too much about potential interference with Kakao Bank.
And then, at least until the end of August, there is no major listing. That is, there is enough temporal buffer for Krafton to drive retail demand.


Krafton Listing Date Confirmed as August 10th: Rebalancing Trading Timeline

<div><div><h2>Offering size</h2></div></div><div>
<p>HK inno.N offers 10.1M shares, which account for 43.75% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSDAQ.</p>
<div class="content-highlight">
<p><strong>Who is HK inno.N?</strong></p>
<p>HK inno.N was a subsidiary of CJ Group, established in April 2014 through a physical spin-off of CJ CheilJedang's pharmaceutical business.</p>
<p>However, HK inno.N was acquired by Kolmar Korea on April 18, 2018, and <strong>the corporate name was changed from CJ Healthcare Co., Ltd. to HK Innoen Co., Ltd. in February 2020</strong>.</p>
</div>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}' data-sheets-formula="=R[-44]C[0]">Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"195940"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-44]C[0]">195940</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}' data-sheets-formula="=R[-44]C[0]">Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSDAQ"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-44]C[0]">KOSDAQ</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'><strong>Offering</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10117000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-41]C[0]"><strong>10,117,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of pre-IPO SO"}'><strong>- % of pre-IPO SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.43752029050620755}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-39]C[0]"><strong>43.75%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Institutional allotment"}'><strong>Institutional allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"55.00~75.00%"}'><strong>55.00~75.00%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<div><h2>Split</h2></div>
<div>
<p>This IPO is a split offering with a primary of 57.14% and a secondary of 42.86%. As a result, this offering will see a capital increase rate of 25% with a shareholding dilution of 20%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Split"}'>Split</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Primary %"}'><strong>Primary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.571414450924187}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-41]C[0]"><strong>57.14%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'><strong>Secondary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.428585549075813}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-40]C[0]"><strong>42.86%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'>Capital increase rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2500054165677954}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-38]C[0]">25.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.20000346658836743}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-38]C[0]">20.00%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><div><h2>Schedule</h2></div></div>
<div>
<p>The book opens on July 13 (for overseas investors) and runs until July 26. The allotment will be on July 28 as the offering price is finalized. The subscription falls on July 29.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'><strong>Book open</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44390}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 13</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'>Book close</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44403}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'><strong>Allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44405}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 28</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'><strong>Subscription</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44406}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 29</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44411}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 3</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"TBA"}'>TBA</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><h2>Pricing</h2></div>
<div>
<p>HK inno.N used EV/EBITDA. The corporate value was determined after selecting three local pharmaceutical companies: 1. Yuhan, 2. Chong Kun Dang Pharmaceutical, and 3. Daewoong Pharmaceutical. The respective EV/EBITDA multiples are 25.93x for Yuhan, 10.30x for Chong Kun Dang, and 26.8x for Daewoong Pharm.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Valuation peers: EV/EBITDA"}'>Valuation peers: EV/EBITDA</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yuhan Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Yuhan Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Chong Kun Dang Pharmaceutical Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Chong Kun Dang Pharmaceutical Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Daewoong Pharmaceutical Co., Ltd."}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Daewoong Pharmaceutical Co., Ltd.</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"000100"}' data-sheets-formula='="000100"'>000100</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"185750"}' data-sheets-formula='="185750"'>185750</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"069620"}' data-sheets-formula='="069620"'>069620</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":69972959}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>69,972,959</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11426099}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>11,426,099</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11586575}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>11,586,575</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference share price: MIN[1W Avg, 1M Avg, 1D Close] at June 22, 2021"}'>Reference share price: MIN[1W Avg, 1M Avg, 1D Close] on June 22, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":63300}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩63,300</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":130841}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩130,841</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":154000}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩154,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference market cap"}'>Reference market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4429.2883047}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$4,429.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1495.002219259}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$1,495.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1784.33255}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$1,784.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preferred share market cap"}'>Preferred share market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":71.683}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$71.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$0.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$0.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-440.398}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>-$440.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-7.554}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>-$7.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":225.79}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$225.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4060.5733046999994}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$4,060.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1487.4482192589999}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$1,487.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2010.12255}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$2,010.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EBITDA: 2Q20~1Q21"}'>EBITDA: 2Q20~1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":156.583}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$156.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":144.368}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$144.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":75.002}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$75.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EV/EBITDA"}'><strong>EV/EBITDA</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":25.93240201490583}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>25.93x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10.303171196241548}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>10.30x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":26.800919308818433}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>26.80x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average EV/EBITDA"}'><strong>Average EV/EBITDA</strong></td>
<td colspan="3" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":21.012164173321935}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=average(R[-1]C[0]:R[-1]C[2])"><strong>21.01x</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><div>The combined EV/EBITDA multiple of 21.01 times was applied to the EBITDA of ₩115.5B from the second quarter of last year to the first quarter of this year.</div></div>
<div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"HK inno.N: EV/EBITDA"}'>HK inno.N: EV/EBITDA</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EBITDA: 2Q20~1Q21"}'>EBITDA: 2Q20~1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":115.526}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩115.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EV/EBITDA"}'>EV/EBITDA</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":21.012164173321935}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-5]C[0]">21.01x</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2427.194}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩2,427.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"C = A X B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>C = A X B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":376.158}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩376.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>D</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market cap"}'><strong>Market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2051.036}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]"><strong>₩2,051.0B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"E = C - D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>E = C - D</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Post-IPO total shares"}'>Post-IPO total shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":28904499}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=Terms!R[-2]C[0]">28,904,499</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>F</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price per share"}'><strong>Price per share</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":70959.05727340232}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]"><strong>₩70,959</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"G = E / F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>G = E / F</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div>
<div><p>The indicative price band is between ₩50,000 and ₩59,000. This is obtained by applying a discount rate of 16.85% to 29.54% to the market cap of ₩2,051.0B calculated through EV/EBITDA.</p></div>
<div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Indicative price band"}'>Indicative price band</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'><strong>Price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":50000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩50,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":59000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩59,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'>Base deal size</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":505.85}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩505.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":596.903}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩596.9B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment"}'>- Institutional allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":278.21750000000003}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩278.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":328.29665000000006}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩328.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'><strong>Implied market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1445.22495}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*Terms!R18C2/1000000000"><strong>₩1,445.2B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1705.365441}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*Terms!R18C2/1000000000"><strong>₩1,705.4B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Discount"}'><strong>- Discount</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2953683163045407}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R21C2-R[-4]C[0])/R21C2"><strong>29.54%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.16853461323935803}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R21C2-R[-4]C[0])/R21C2"><strong>16.85%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div>
</div>

Offering size
HK inno.N offers 10.1M shares, which account for 43.75% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSDAQ.

Who is HK inno.N?
HK inno.N was a subsidiary of CJ Group, established in April 2014 through a physical spin-off of CJ CheilJedang's pharmaceutical business.
However, HK inno.N was acquired by Kolmar Korea on April 18, 2018, and the corporate name was changed from CJ Healthcare Co., Ltd. to HK Innoen Co., Ltd. in February 2020.







Offering size

Ticker
195940


Bourse
KOSDAQ


Offering
10,117,000


- % of pre-IPO SO
43.75%


Institutional allotment
55.00~75.00%

Source: DART


Split

This IPO is a split offering with a primary of 57.14% and a secondary of 42.86%. As a result, this offering will see a capital increase rate of 25% with a shareholding dilution of 20%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.






Split

Primary %
57.14%


Secondary %
42.86%


Capital increase rate
25.00%


Dilution
20.00%

Source: DART



Schedule

The book opens on July 13 (for overseas investors) and runs until July 26. The allotment will be on July 28 as the offering price is finalized. The subscription falls on July 29.






Schedule

Book open
2021. 7. 13


Book close
2021. 7. 26


Allotment
2021. 7. 28


Subscription
2021. 7. 29


Payment
2021. 8. 3


Listing
TBA

Source: DART



Pricing

HK inno.N used EV/EBITDA. The corporate value was determined after selecting three local pharmaceutical companies: 1. Yuhan, 2. Chong Kun Dang Pharmaceutical, and 3. Daewoong Pharmaceutical. The respective EV/EBITDA multiples are 25.93x for Yuhan, 10.30x for Chong Kun Dang, and 26.8x for Daewoong Pharm.









Valuation peers: EV/EBITDA
Yuhan Corp
Chong Kun Dang Pharmaceutical Corp
Daewoong Pharmaceutical Co., Ltd.


Ticker
000100
185750
069620


Shares outstanding
69,972,959
11,426,099
11,586,575


Reference share price: MIN[1W Avg, 1M Avg, 1D Close] on June 22, 2021
₩63,300
₩130,841
₩154,000


Reference market cap
$4,429.3B
$1,495.0B
$1,784.3B


Preferred share market cap
$71.7B
$0.0B
$0.0B


Net debt
-$440.4B
-$7.6B
$225.8B


Enterprise value (EV)
$4,060.6B
$1,487.4B
$2,010.1B


EBITDA: 2Q20~1Q21
$156.6B
$144.4B
$75.0B


EV/EBITDA
25.93x
10.30x
26.80x


Average EV/EBITDA
21.01x

Source: DART



The combined EV/EBITDA multiple of 21.01 times was applied to the EBITDA of ₩115.5B from the second quarter of last year to the first quarter of this year.







HK inno.N: EV/EBITDA

EBITDA: 2Q20~1Q21
₩115.5B
A


EV/EBITDA
21.01x
B


Enterprise value (EV)
₩2,427.2B
C = A X B


Net debt
₩376.2B
D


Market cap
₩2,051.0B
E = C - D


Post-IPO total shares
28,904,499
F


Price per share
₩70,959
G = E / F

Source: DART


The indicative price band is between ₩50,000 and ₩59,000. This is obtained by applying a discount rate of 16.85% to 29.54% to the market cap of ₩2,051.0B calculated through EV/EBITDA.








Indicative price band
Low
High


Price
₩50,000
₩59,000


Base deal size
₩505.9B
₩596.9B


- Institutional allotment
₩278.2B
₩328.3B


Implied market cap
₩1,445.2B
₩1,705.4B


- Discount
29.54%
16.85%

Source: DART




HK Inno.N (Formerly CJ Healthcare) IPO: Offering Detail & Valuation Issues

<div class="content-highlight"><p><strong>Our base case valuation of HK Inno.N is EV of 2.6 trillion won and implied market cap of 2.2 trillion won (75,534 won per share). This is based on 24x EV/EBIT using our 2022 EBIT estimate of 108.8 billion won.</strong> Our base case valuation of 75,534 won per share represents a 28% upside from the high end of the IPO price range of 59,000 won. Given the solid upside, we have a Positive Rating of the HK Inno.N IPO. </p></div><p>HK inno.N mainly provides prescription drugs and H&amp;B (health &amp; beauty) products. About 86% of its sales were derived from the prescription drug segment and the remaining 14% from the Health Beauty &amp; Beverage (HB &amp; B) segment in 2020.</p>

Our base case valuation of HK Inno.N is EV of 2.6 trillion won and implied market cap of 2.2 trillion won (75,534 won per share). This is based on 24x EV/EBIT using our 2022 EBIT estimate of 108.8 billion won. Our base case valuation of 75,534 won per share represents a 28% upside from the high end of the IPO price range of 59,000 won. Given the solid upside, we have a Positive Rating of the HK Inno.N IPO. HK inno.N mainly provides prescription drugs and H&amp;B (health &amp; beauty) products. About 86% of its sales were derived from the prescription drug segment and the remaining 14% from the Health Beauty &amp; Beverage (HB &amp; B) segment in 2020.

South Korea

HK inno.N Corp. develops and manufactures pharmaceuticals products. The Company develops and sells immune anticancer drugs, blood disease drugs, kidney disease drugs, and other products. HK inno.N conducts businesses across worldwide.

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HK inno.N (195940 KS)

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