Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Quantitative Analysis

<ul>
<li>The four major Korean metaverse ETFs' market caps surged by 934% from 76.2 billion won in 13 October to 788 billion won in 23 November.</li>
<li>Since 18 to 23 November, there has been a big sector rotation from the metaverse related stocks to Samsung Electronics and SK Hynix.</li>
<li>There will likely be high volatility among the metaverse related stocks with less than 1 trillion won in market cap in the upcoming metaverse ETFs rebalancing in December.</li>
</ul>


The four major Korean metaverse ETFs' market caps surged by 934% from 76.2 billion won in 13 October to 788 billion won in 23 November.
Since 18 to 23 November, there has been a big sector rotation from the metaverse related stocks to Samsung Electronics and SK Hynix.
There will likely be high volatility among the metaverse related stocks with less than 1 trillion won in market cap in the upcoming metaverse ETFs rebalancing in December.


Korean Metaverse ETFs Rebalancing & A Sector Rotation into Semis?

Event-Driven

<div class="content-highlight"><p>In the past few days, <a href="https://www.smartkarma.com/entities/hybe-co-ltd" target="_blank" data-smartkarma-citation="entities:28959:1" rel="noopener">HYBE (352820 KS)</a> announced an equity based partnership with Dunamu as well as the launch of the BTS NFT (non-fungible token). Dunamu will invest 700 billion won in HYBE through a third-party allocation and paid-in capital increase. HYBE will also invest 500 billion won in Dunamu through a third-party allocation and paid-in capital increase.</p></div><ul>
<li>HYBE will issue 2.3 million new shares (5.9% of current outstanding shares of 39 million) at a purchase price of 304,008 won in this transaction. HYBE currently has a stock price of 383,500 won so the purchase price is about 21% lower than the current price. </li>
<li>As a result of this transaction, HYBE will have a 2.48% stake in Dunamu, which would imply a value of 20.2 trillion won ($17.2 billion) for Dunamu. The date of this share acquisition completion will be on 24 November.</li>
</ul><div class="content-highlight"><p><strong>Metaverse &amp; NFT - A Re-Rating Factor for HYBE? </strong>The metaverse and NFT have taken the world by storm in 2021. One could argue that the extremely strong demand for NFT and metaverse in 2021 have been one of the key reasons for the re-rating of HYBE this year. Certainly, HYBE faces the risk associated with its high dependence on the BTS. However, it has been able to partly diffuse this risk with the acquisition of Ithaca Holdings in April 2021. Now, with the extraordinary demand for NTF and metaverse related contents and services, HYBE is well positioned to capitalize these trends.</p></div>

In the past few days, HYBE (352820 KS) announced an equity based partnership with Dunamu as well as the launch of the BTS NFT (non-fungible token). Dunamu will invest 700 billion won in HYBE through a third-party allocation and paid-in capital increase. HYBE will also invest 500 billion won in Dunamu through a third-party allocation and paid-in capital increase.
HYBE will issue 2.3 million new shares (5.9% of current outstanding shares of 39 million) at a purchase price of 304,008 won in this transaction. HYBE currently has a stock price of 383,500 won so the purchase price is about 21% lower than the current price. 
As a result of this transaction, HYBE will have a 2.48% stake in Dunamu, which would imply a value of 20.2 trillion won ($17.2 billion) for Dunamu. The date of this share acquisition completion will be on 24 November.
Metaverse &amp; NFT - A Re-Rating Factor for HYBE? The metaverse and NFT have taken the world by storm in 2021. One could argue that the extremely strong demand for NFT and metaverse in 2021 have been one of the key reasons for the re-rating of HYBE this year. Certainly, HYBE faces the risk associated with its high dependence on the BTS. However, it has been able to partly diffuse this risk with the acquisition of Ithaca Holdings in April 2021. Now, with the extraordinary demand for NTF and metaverse related contents and services, HYBE is well positioned to capitalize these trends.

A Equity-Based Partnership Between HYBE and Dunamu & The Upcoming Launch of BTS NFT

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.

<h2>Block deals regulatory filing summary</h2><p>It turned out that Netmarble's next target was the remaining 0.34% of its unlocked Kakao Bank shares. The company put out a regulatory filing after the market closed yesterday.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/226/139/original/Screen+Shot+2021-08-25+at+6.09.44+PM.png?1629929669" class="editor-image img-responsive" data-smartkarma-image-id="226139"></figure></section><p><strong>Netmarble revealed that it had sold 1</strong><strong>,619,591 shares through block deals during the pre-market trading on August 25 for ₩133.1B, suggesting a deal price per share of ₩82,200.</strong> This represents a 3.75% discount to the close price on August 24 and an 8.46% discount to the close price on August 23.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Block deal details"}'>Block deal details</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares sold"}'>Number of shares sold</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1619591}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,619,591</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total deal value"}'>Total deal value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":133.1303802}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>₩133.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Deal price per share"}'><strong>Deal price per share</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":82199.99999999999}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[-1]C[0]*1000000000/R[-2]C[0]"><strong>₩82,200</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kakao Bank on August 24"}'><strong> - Discount to the price on August 24</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.03747072599531633}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C[1]-R4C2)/R[0]C[1]"><strong>3.75%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kakao Bank on August 23"}'><strong> - Discount to the price on August 23</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.08463251670378635}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C[1]-R4C2)/R[0]C[1]"><strong>8.46%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kakao Bank on August 20"}'> - Discount to the price on August 20</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.09670329670329686}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C[1]-R4C2)/R[0]C[1]">9.67%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX KIND"}'>Source: KRX KIND</td></tr>
</tbody>
</table><p>The following is the number of Kakao Bank stock purchases by investor type on August 25. Netmarble's counterparties can be seen as foreign institutional investors in that there is only "Foreign" other than local retail that has purchased more than 1.6M on this day. Of course, this is by no means unusual.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/226/142/original/Screen+Shot+2021-08-25+at+6.30.30+PM.png?1629930722" class="editor-image img-responsive" data-smartkarma-image-id="226142"></figure></section>

Block deals regulatory filing summaryIt turned out that Netmarble's next target was the remaining 0.34% of its unlocked Kakao Bank shares. The company put out a regulatory filing after the market closed yesterday.Netmarble revealed that it had sold 1,619,591 shares through block deals during the pre-market trading on August 25 for ₩133.1B, suggesting a deal price per share of ₩82,200. This represents a 3.75% discount to the close price on August 24 and an 8.46% discount to the close price on August 23.





Block deal details

Number of shares sold
1,619,591


Total deal value
₩133.1B


Deal price per share
₩82,200


 - Discount to the price on August 24
3.75%


 - Discount to the price on August 23
8.46%


 - Discount to the price on August 20
9.67%

Source: KRX KIND

The following is the number of Kakao Bank stock purchases by investor type on August 25. Netmarble's counterparties can be seen as foreign institutional investors in that there is only "Foreign" other than local retail that has purchased more than 1.6M on this day. Of course, this is by no means unusual.

Netmarble Again Sold Kakao Bank: Real-World Float Change & Additional Stake Sale Possibility

<h2>KOSPI 200 Fast Entry screening</h2><p>Kakao Bank and Krafton's KOSPI 200 Fast Entry are 100% certain at this point.</p><div class="content-highlight"><p><strong>They need to be within the top 50 full market cap rankings on the KOSPI for 15 trading days after listing.</strong></p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/223/755/original/Screen+Shot+2021-08-15+at+3.07.46+AM.png?1629011369" class="editor-image img-responsive" data-smartkarma-image-id="223755"></figure></section><p>Currently, LG Display ranks 50th in the KOSPI market cap, and its market cap is in the 7.4-8 trillion range. Fast entry is possible as long as the market caps of both Kakao Bank and Krafton do not plunge below half in the next ten trading days.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"KOSPI 200 Fast Entry"}'>KOSPI 200 Fast Entry</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KakaoBank Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>KakaoBank Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Krafton Inc"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Krafton Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"LG Display Co Ltd"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'><div><div>LG Display Co Ltd, currently at the 50th spot</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":3,"3":44414}' data-sheets-numberformat='[null,5,"mm. dd",1]'>08. 06</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33.1619965426}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C2/1000000000000">₩33.16T</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.961399325}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C4/1000000000000">₩7.96T</td>
</tr>
<tr>
<td data-sheets-value='{"1":3,"3":44417}' data-sheets-numberformat='[null,5,"mm. dd",1]' data-sheets-formula="=R[-1]C[0]+3">08. 09</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":37.2953686045}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C2/1000000000000">₩37.30T</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.854054615}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C4/1000000000000">₩7.85T</td>
</tr>
<tr>
<td data-sheets-value='{"1":3,"3":44418}' data-sheets-numberformat='[null,5,"mm. dd",1]' data-sheets-formula="=R[-1]C[0]+1">08. 10</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33.9221569218}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C2/1000000000000">₩33.92T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":22.19972378}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C3/1000000000000">₩22.20T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.925617755}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C4/1000000000000">₩7.93T</td>
</tr>
<tr>
<td data-sheets-value='{"1":3,"3":44419}' data-sheets-numberformat='[null,5,"mm. dd",1]' data-sheets-formula="=R[-1]C[0]+1">08. 11</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":35.3474576328}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C2/1000000000000">₩35.35T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":19.90151449}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C3/1000000000000">₩19.90T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.90772697}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C4/1000000000000">₩7.91T</td>
</tr>
<tr>
<td data-sheets-value='{"1":3,"3":44420}' data-sheets-numberformat='[null,5,"mm. dd",1]' data-sheets-formula="=R[-1]C[0]+1">08. 12</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":35.0623974906}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C2/1000000000000">₩35.06T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":19.85261642}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C3/1000000000000">₩19.85T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.710928335}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C4/1000000000000">₩7.71T</td>
</tr>
<tr>
<td data-sheets-value='{"1":3,"3":44421}' data-sheets-numberformat='[null,5,"mm. dd",1]' data-sheets-formula="=R[-1]C[0]+1">08. 13</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":36.3926781542}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C2/1000000000000">₩36.39T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":21.36845659}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C3/1000000000000">₩21.37T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.44256656}' data-sheets-numberformat='[null,2,"₩#,##0.00T",1]' data-sheets-formula="=R[0]C[3]*R3C4/1000000000000">₩7.44T</td>
</tr>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>

KOSPI 200 Fast Entry screeningKakao Bank and Krafton's KOSPI 200 Fast Entry are 100% certain at this point.They need to be within the top 50 full market cap rankings on the KOSPI for 15 trading days after listing.Currently, LG Display ranks 50th in the KOSPI market cap, and its market cap is in the 7.4-8 trillion range. Fast entry is possible as long as the market caps of both Kakao Bank and Krafton do not plunge below half in the next ten trading days.








KOSPI 200 Fast Entry
KakaoBank Corp
Krafton Inc
LG Display Co Ltd, currently at the 50th spot


08. 06
₩33.16T
-
₩7.96T


08. 09
₩37.30T
-
₩7.85T


08. 10
₩33.92T
₩22.20T
₩7.93T


08. 11
₩35.35T
₩19.90T
₩7.91T


08. 12
₩35.06T
₩19.85T
₩7.71T


08. 13
₩36.39T
₩21.37T
₩7.44T

Source: KRX



Why Would Kakao Bank/Krafton's KOSPI 200 Fast Entry Float Estimations Be Such an Extraordinary Task?

<p>It is now clear that Netmarble sold part of its stake in Kakao Bank yesterday in the market to finance the acquisition of SpinX, a social casino company.</p><p>In other words, Netmarble sold its Kakao Bank stake because it needed immediate cash. <span>Earlier this month, Netmarble announced that it would purchase a 100% stake in Leonardo Interactive Holdings Limited, the parent company of SpinX.</span></p><div class="content-highlight"><p><strong>The 100% stake acquisition price is ₩2.513T.</strong></p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/223/219/original/Screen+Shot+2021-08-11+at+1.48.24+AM.png?1628661029" class="editor-image img-responsive" data-smartkarma-image-id="223219"></figure></section><p>Netmarble said in a regulatory filing that it would pay 80% of the acquisition price at the time of contract termination and the remaining 20% ​​over the next four years.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/223/225/original/Screen+Shot+2021-08-11+at+1.51.07+AM.png?1628661602" class="editor-image img-responsive" data-smartkarma-image-id="223225"></figure></section><p><strong>It means that the total money Netmarble needs right now is ₩2.104T, which is 80% of the acquisition amount. Netmarble revealed that ₩1.779T of this ₩2.104T was covered by short-term borrowing. In other words, the immediate cash needed right now is ₩232B.</strong></p><p>However, Netmarble's cash assets at the end of this first quarter stood at ₩260B. Even ₩232B is a size that needs to use up all of its cash holdings, so it places a significant financial burden on Netmarble.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/223/228/original/Screen+Shot+2021-08-11+at+2.05.56+AM.png?1628662449" class="editor-image img-responsive" data-smartkarma-image-id="223228"></figure></section>

It is now clear that Netmarble sold part of its stake in Kakao Bank yesterday in the market to finance the acquisition of SpinX, a social casino company.In other words, Netmarble sold its Kakao Bank stake because it needed immediate cash. Earlier this month, Netmarble announced that it would purchase a 100% stake in Leonardo Interactive Holdings Limited, the parent company of SpinX.The 100% stake acquisition price is ₩2.513T.Netmarble said in a regulatory filing that it would pay 80% of the acquisition price at the time of contract termination and the remaining 20% ​​over the next four years.It means that the total money Netmarble needs right now is ₩2.104T, which is 80% of the acquisition amount. Netmarble revealed that ₩1.779T of this ₩2.104T was covered by short-term borrowing. In other words, the immediate cash needed right now is ₩232B.However, Netmarble's cash assets at the end of this first quarter stood at ₩260B. Even ₩232B is a size that needs to use up all of its cash holdings, so it places a significant financial burden on Netmarble.

Three Local Stocks Exposed to Netmarble's Stake Sale Risk: NCsoft, HYBE, & Kakao Games

South Korea

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

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HYBE (352820 KS)

Korean Metaverse ETFs Rebalancing & A Sector Rotation into Semis?

Despite the tremendous surge in the Korean metaverse ETFs in the past five weeks, the metaverse ETFs have been underperforming relative to Samsung...

Douglas Kim

A Equity-Based Partnership Between HYBE and Dunamu & The Upcoming Launch of BTS NFT

In the past few days, HYBE announced an equity based partnership with Dunamu as well as the launch of the BTS NFT (non-fungible token).

Douglas Kim

Netmarble Again Sold Kakao Bank: Real-World Float Change & Additional Stake Sale Possibility

This post details Netmarble's block deals involving its remaining unlocked shares of Kakao Bank. The post examines Kakao Bank's real-world float...

Sanghyun Park

Why Would Kakao Bank/Krafton's KOSPI 200 Fast Entry Float Estimations Be Such an Extraordinary Task?

This post explains why Kakao Bank and Krafton's KOSPI 200 Fast Entry float estimations would be such an extraordinary task.

Sanghyun Park

Three Local Stocks Exposed to Netmarble's Stake Sale Risk: NCsoft, HYBE, & Kakao Games

Netmarble will continue to need short-term cash. Perhaps, for this reason, the stock prices of all three stocks exposed to this risk have undergone...

Sanghyun Park

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