Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<div class="content-highlight">
<p>Kakao Bank is offering 65.45 million shares in the IPO at the IPO price of 33,000 won to 39,000 won per share. The IPO deal size range is from $1.9 billion to $2.3 billion. According to the bankers' valuation, the expected market cap range would be from 15.8 trillion won to 18.6 trillion won.</p>
<p>At the high end of the market cap range (18.6 trillion won), this would represent the 22nd largest market cap in KOSPI. At double the market cap of the high end of IPO range (37.2 trillion won), Kakao Bank would represent the 10th largest stock in KOSPI. </p>
</div><p>The book building for the institutional investors starts on 20 July 2021. This IPO is scheduled to start trading on 5 August 20201. KB Securites, Credit Susse ,and Citi Global Markets are the lead underwriters of this IPO. </p><table class="table table-striped">
<colgroup>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="width: 229pt;"><div style="text-align: start;"><div>Deal Specifics of the Kakao Bank IPO:</div></div></td>
<td style="width: 227pt;"> </td>
</tr>
<tr>
<td>Lead underwriters of the IPO: </td>
<td style="width: 227pt;">KB Securities, Credit Suisse, Citi Global Markets, Korea Investment &amp; Securities</td>
</tr>
<tr>
<td>Expected IPO price per share: </td>
<td style="width: 227pt;">33,000 won (low)/39,000 won (high)</td>
</tr>
<tr>
<td>Number of Shares for IPO:</td>
<td style="width: 227pt;">65.45m shares (new shares)</td>
</tr>
<tr>
<td>IPO base deal size: </td>
<td style="width: 227pt;">US$1.9bn (low);  US$2.3bn (high)</td>
</tr>
<tr>
<td>Expected common shares outstanding, fully diluted (post-IPO):  </td>
<td style="width: 227pt;">477.77m shares</td>
</tr>
<tr>
<td>Expected market cap after IPO:</td>
<td style="width: 227pt;">15.8 trillion won (low)/18.6 trillion won (high)</td>
</tr>
<tr>
<td>Book open: </td>
<td style="text-align: left; width: 227pt;">20-Jul-21</td>
</tr>
<tr>
<td>Book closed:</td>
<td style="text-align: left; width: 227pt;">21-Jul-21</td>
</tr>
<tr>
<td>Listing date: </td>
<td style="text-align: left; width: 227pt;">5-Aug-21</td>
</tr>
<tr>
<td>Source: Company data</td>
<td> </td>
</tr>
</tbody>
</table>


Kakao Bank is offering 65.45 million shares in the IPO at the IPO price of 33,000 won to 39,000 won per share. The IPO deal size range is from $1.9 billion to $2.3 billion. According to the bankers' valuation, the expected market cap range would be from 15.8 trillion won to 18.6 trillion won.
At the high end of the market cap range (18.6 trillion won), this would represent the 22nd largest market cap in KOSPI. At double the market cap of the high end of IPO range (37.2 trillion won), Kakao Bank would represent the 10th largest stock in KOSPI. 
The book building for the institutional investors starts on 20 July 2021. This IPO is scheduled to start trading on 5 August 20201. KB Securites, Credit Susse ,and Citi Global Markets are the lead underwriters of this IPO. 






Deal Specifics of the Kakao Bank IPO:
 


Lead underwriters of the IPO: 
KB Securities, Credit Suisse, Citi Global Markets, Korea Investment &amp; Securities


Expected IPO price per share: 
33,000 won (low)/39,000 won (high)


Number of Shares for IPO:
65.45m shares (new shares)


IPO base deal size: 
US$1.9bn (low);  US$2.3bn (high)


Expected common shares outstanding, fully diluted (post-IPO):  
477.77m shares


Expected market cap after IPO:
15.8 trillion won (low)/18.6 trillion won (high)


Book open: 
20-Jul-21


Book closed:
21-Jul-21


Listing date: 
5-Aug-21


Source: Company data
 




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.

<div><h2>Offering size</h2></div><div>
<p>Kakao Bank released an IPO prospectus. Kakao Bank is the second Internet-only bank in Korea. It was officially launched on July 27, 2017. Unlike K-Bank, the first Internet-only bank, Kakao Bank is 100% mobile-only. Kakao Bank offers 65.45M shares, which account for 15.98% of the total shares, of which 55-75% are allocated to institutions.</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":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":323410}'>323410</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}'>Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSPI"}'>KOSPI</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":65450000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>65,450,000</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":0.1598}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>15.98%</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 is a 100% primary offering. As a result, this offering will see a capital increase rate of 15.98%. In addition, this IPO is free of any additional options: cornerstone, clawback, or greenshoe.</p></div>
<div>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" 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":0.6987911807185323}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[3]C[0]"><strong>100.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'>Secondary %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3012088192814677}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[0]">0.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.16245294237403599}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[0]"><strong>15.98%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'><strong>Dilution</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.139750123598349}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[0]"><strong>13.78%</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<div><h2>Schedule</h2></div>
<div><p>The book opens on July 9 (for overseas investors) and runs until July 21. The allotment will be on July 22 with a final offering price. The subscription follows on July 26.</p></div>
<div>
<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":"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":44375}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 9</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":44386}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 21</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'>Allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44389}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 22</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":44391}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 26</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'><strong>Payment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44396}' 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":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"TBA"}'>2021. 8. 5</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<div><h2>Pricing</h2></div>
<div>
<p>This IPO selected the following 4 valuation peers: Rocket Companies, PagSeguro Digital, TCS Group, and Nordnet AB. They calculated an average PBR of 7.3x by applying net assets as of 1Q11 to the market cap as of June 21.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Valuation peers"}'>PBR valuation</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Rocket Companies Inc"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Rocket Companies Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"PagSeguro Digital Ltd"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>PagSeguro Digital Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"TCS Group Holding PLC"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>TCS Group Holding PLC</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Nordnet AB (publ)"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Nordnet AB (publ)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"RKT"}' data-sheets-formula='="RKT"'>NYSE: RKT</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"PAGS"}' data-sheets-formula='="PAGS"'>NYSE: PAGS</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"MCX:TCSG"}' data-sheets-formula='="MCX:TCSG"'>MCX: TCSG</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"STO:SAVE"}' data-sheets-formula='="STO:SAVE"'>STO: SAVE</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference market cap: MIN[1M Avg, 1W Avg, 1D Close] as of June 21"}'>Reference market cap: MIN[1M Avg, 1W Avg, 1D Close] as of June 21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":43184.655}'>₩43,184.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18918.666}'>₩18,918.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":16522.978}'>₩16,523.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4923.031}'>₩4,923.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Equity, as of 1Q21"}'>Equity, as of 1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":9404.053}'>₩9,404.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2152.996}'>₩2,153.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2057.841}'>₩2,057.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":644.004}'>₩644.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PBR"}'><strong>PBR</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4.592132243406114}' data-sheets-numberformat='{"1":2,"2":"0.0x","3":1}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>4.6x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8.787134764765007}' data-sheets-numberformat='{"1":2,"2":"0.0x","3":1}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>8.8x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8.029278258135589}' data-sheets-numberformat='{"1":2,"2":"0.0x","3":1}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>8.0x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.64441059372302}' data-sheets-numberformat='{"1":2,"2":"0.0x","3":1}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>7.6x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average PBR"}'><strong>Average PBR</strong></td>
<td colspan="4" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":7.2632389650074325}' data-sheets-numberformat='{"1":2,"2":"0.0x","3":1}' data-sheets-formula="=average(R[-1]C[0]:R[-1]C[3])"><strong>7.3x</strong></td>
</tr>
<tr><td colspan="5" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><div><p>After applying the 7.3x multiple to Kakao Bank's equity in Q1 of this year, they added funds from the public offering to derive a market cap of ₩22.97T. This was then divided by the post-IPO total shares to arrive at ₩48,058 per share.</p></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":"Kakao PBR"}'>Kakao PBR</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PBR"}'>PBR</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.3}' data-sheets-numberformat='{"1":2,"2":"0.0x","3":1}'>7.3x</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Equity, as of 1Q21"}'>Equity, as of 1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2849.5}' data-sheets-formula="=2849.5">₩2,849.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"B"}'>B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital inflow from IPO (based on the lower end of the indicative price band)"}'>Capital inflow from IPO (based on the lower end of the indicative price band)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2159.9}'>₩2,159.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"C"}'>C</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":22961.25}' data-sheets-formula="=R[-2]C[0]*R[-3]C[0]+R[-1]C[0]"><strong>₩22,961.3B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A × B + C"}'><strong>A × B + C</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Post-IPO SO"}'>Post-IPO SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":477773037}'>477,773,037</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</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":48058}'><strong>₩48,058</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</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><div>An 18.85~31.33% discount sets up an indicative price band of ₩33,000~39,000, implying a market cap of ₩15.77~18.63T.</div></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":33000}'><strong>₩33,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":39000}'><strong>₩39,000</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":2159.85}' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩2,159.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2552.55}' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩2,552.6B</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":1187.9175}' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩1,187.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1403.9025000000001}' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩1,403.9B</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":15766.510221}' data-sheets-formula="=R[-3]C[0]*R14C2/1000000000"><strong>₩15,766.5B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18633.148443}' data-sheets-formula="=R[-3]C[0]*R14C2/1000000000"><strong>₩18,633.1B</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":0.3133426873101421}' data-sheets-formula="=(R13C2-R[-1]C[0])/R13C2"><strong>31.33%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.18849590318471346}' data-sheets-formula="=(R13C2-R[-1]C[0])/R13C2"><strong>18.85%</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>
</div>
</div>

Offering size
Kakao Bank released an IPO prospectus. Kakao Bank is the second Internet-only bank in Korea. It was officially launched on July 27, 2017. Unlike K-Bank, the first Internet-only bank, Kakao Bank is 100% mobile-only. Kakao Bank offers 65.45M shares, which account for 15.98% of the total shares, of which 55-75% are allocated to institutions.






Offering size

Ticker
323410


Bourse
KOSPI


Offering
65,450,000


- % of pre-IPO SO
15.98%


Institutional allotment
55.00~75.00%

Source: DART


Split
This is a 100% primary offering. As a result, this offering will see a capital increase rate of 15.98%. In addition, this IPO is free of any additional options: cornerstone, clawback, or greenshoe.







Split

Primary %
100.00%


Secondary %
0.00%


Capital increase rate
15.98%


Dilution
13.78%

Source: DART


Schedule
The book opens on July 9 (for overseas investors) and runs until July 21. The allotment will be on July 22 with a final offering price. The subscription follows on July 26.







Schedule

Book open
2021. 7. 9


Book close
2021. 7. 21


Allotment
2021. 7. 22


Subscription
2021. 7. 26


Payment
2021. 7. 29


Listing
2021. 8. 5

Source: DART


Pricing

This IPO selected the following 4 valuation peers: Rocket Companies, PagSeguro Digital, TCS Group, and Nordnet AB. They calculated an average PBR of 7.3x by applying net assets as of 1Q11 to the market cap as of June 21.










PBR valuation
Rocket Companies Inc
PagSeguro Digital Ltd
TCS Group Holding PLC
Nordnet AB (publ)


Ticker
NYSE: RKT
NYSE: PAGS
MCX: TCSG
STO: SAVE


Reference market cap: MIN[1M Avg, 1W Avg, 1D Close] as of June 21
₩43,184.7B
₩18,918.7B
₩16,523.0B
₩4,923.0B


Equity, as of 1Q21
₩9,404.1B
₩2,153.0B
₩2,057.8B
₩644.0B


PBR
4.6x
8.8x
8.0x
7.6x


Average PBR
7.3x

Source: DART



After applying the 7.3x multiple to Kakao Bank's equity in Q1 of this year, they added funds from the public offering to derive a market cap of ₩22.97T. This was then divided by the post-IPO total shares to arrive at ₩48,058 per share.







Kakao PBR

PBR
7.3x
A


Equity, as of 1Q21
₩2,849.5B
B


Capital inflow from IPO (based on the lower end of the indicative price band)
₩2,159.9B
C


Market cap
₩22,961.3B
A × B + C


Post-IPO SO
477,773,037
-


Price per share
₩48,058
-

Source: DART


An 18.85~31.33% discount sets up an indicative price band of ₩33,000~39,000, implying a market cap of ₩15.77~18.63T.








Indicative price band
Low
High


Price
₩33,000
₩39,000


Base deal size
₩2,159.9B
₩2,552.6B


- Institutional allotment
₩1,187.9B
₩1,403.9B


Implied market cap
₩15,766.5B
₩18,633.1B


- Discount
31.33%
18.85%

Source: DART






Kakao Bank IPO: Offering Detail, Valuation Issue, & Index Fast Entry

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<p>STIC aims to raise around US$750m via selling all of its remaining stake in <a href="https://www.smartkarma.com/entities/big-hit-entertainment-co-ltd" target="_blank" data-smartkarma-citation="entities:28959:1" rel="noopener">HYBE (352820 KS)</a>. </p><p>This will be the first major selldown in the company, post its listing last year. In this note, we will run the deal through our ECM framework and talk about deal dynamics.</p>

STIC aims to raise around US$750m via selling all of its remaining stake in HYBE (352820 KS). This will be the first major selldown in the company, post its listing last year. In this note, we will run the deal through our ECM framework and talk about deal dynamics.

Hybe Block/Placement - Big Block for Big Hit

Event-Driven

<p>Kakao has seen around 9% correction in the last two trading days.</p><p>In the case of last Thursday, Kakao was attacked by a short sale of ₩121.5B, which is the largest amount of short selling among KOSPI stocks that day.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/215/412/original/Kakao.png?1624677796" class="editor-image img-responsive" data-smartkarma-image-id="215412"></figure></section><p>Nevertheless, Kakao is still recording a share price increase of close to 100% on a YTD basis. Therefore, it is necessary to examine Kakao's valuation at this point carefully.</p><p>This is to determine whether to continue to hold the short position or to use the stock price correction of the last two trading days as the time to close the position.</p>

Kakao has seen around 9% correction in the last two trading days.In the case of last Thursday, Kakao was attacked by a short sale of ₩121.5B, which is the largest amount of short selling among KOSPI stocks that day.Nevertheless, Kakao is still recording a share price increase of close to 100% on a YTD basis. Therefore, it is necessary to examine Kakao's valuation at this point carefully.This is to determine whether to continue to hold the short position or to use the stock price correction of the last two trading days as the time to close the position.

Kakao Valuation Studies: 12M Forward PER, Enterprise Multiples, & Discount to NAV

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> and <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec Co. Ltd. (2359 HK)</a>. Shorts increased in the Information Technology, Real Estate and Communication Services sectors, while decreasing in the Financials sector.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/yamaha-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:7411:1" rel="noopener">Yamaha Motor (7272 JP)</a>, <a href="https://www.smartkarma.com/entities/tamura-corp" target="_blank" data-smartkarma-citation="entities:9782:1" rel="noopener">Tamura Corp (6768 JP)</a>, <a href="https://www.smartkarma.com/entities/asics-corp" target="_blank" data-smartkarma-citation="entities:16287:1" rel="noopener">ASICS Corp (7936 JP)</a>, <a href="https://www.smartkarma.com/entities/sumco-corp" target="_blank" data-smartkarma-citation="entities:379:1" rel="noopener">SUMCO Corp (3436 JP)</a> and <a href="https://www.smartkarma.com/entities/mizuho-financial-group-inc" target="_blank" data-smartkarma-citation="entities:219:1" rel="noopener">Mizuho Financial Group (8411 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a>, <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a>, <a href="https://www.smartkarma.com/entities/resona-holdings-inc" target="_blank" data-smartkarma-citation="entities:6841:1" rel="noopener">Resona Holdings (8308 JP)</a> and <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" data-smartkarma-citation="entities:3700:1" rel="noopener">Anritsu Corp (6754 JP)</a>. Shorts decreased the most in the Consumer Discretionary, Consumer Staples, Information Technology and Health Care sectors.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/oci-co-ltd" target="_blank" data-smartkarma-citation="entities:1904:1" rel="noopener">Oci Co Ltd (010060 KS)</a> and <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/mando-corp" target="_blank" data-smartkarma-citation="entities:8119:1" rel="noopener">Mando Corp (204320 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-wia-corp" target="_blank" data-smartkarma-citation="entities:12283:1" rel="noopener">Hyundai Wia (011210 KS)</a> and <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a>. </p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/wan-hai-lines-ltd" target="_blank" data-smartkarma-citation="entities:14262:1" rel="noopener">Wan Hai Lines (2615 TT)</a>, <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a>, <a href="https://www.smartkarma.com/entities/winbond-electronics-corp" target="_blank" data-smartkarma-citation="entities:9177:1" rel="noopener">Winbond Electronics (2344 TT)</a>, <a href="https://www.smartkarma.com/entities/nantex-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:1865:1" rel="noopener">Nantex Industry (2108 TT)</a> and <a href="https://www.smartkarma.com/entities/gigabyte-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:17486:1" rel="noopener">Gigabyte Technology (2376 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a>, <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a>, <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> and <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Xiaomi Corp (1810 HK), Alibaba Group (9988 HK), Sunny Optical (2382 HK), Kuaishou Technology (1024 HK) and Anta Sports Products (2020 HK) while there was short covering on Meituan (3690 HK), HKEX (388 HK), JD.com Inc. (9618 HK), BYD (1211 HK) and WuXi AppTec Co. Ltd. (2359 HK). Shorts increased in the Information Technology, Real Estate and Communication Services sectors, while decreasing in the Financials sector.In Japan, stocks increased on Yamaha Motor (7272 JP), Tamura Corp (6768 JP), ASICS Corp (7936 JP), SUMCO Corp (3436 JP) and Mizuho Financial Group (8411 JP) while there was short covering on Oriental Land (4661 JP), Rakuten Inc (4755 JP), Takeda Pharmaceutical (4502 JP), Resona Holdings (8308 JP) and Anritsu Corp (6754 JP). Shorts decreased the most in the Consumer Discretionary, Consumer Staples, Information Technology and Health Care sectors.In Korea, shorts increased on Kakao Corp (035720 KS), Hyundai Motor Co (005380 KS), Doosan Heavy Industries &amp; Construction (034020 KS), Oci Co Ltd (010060 KS) and SK Hynix (000660 KS) while shorts were covered on LG Chem Ltd (051910 KS), Celltrion Inc (068270 KS), Mando Corp (204320 KS), Hyundai Wia (011210 KS) and Doosan Infracore (042670 KS). In Taiwan, shorts increased on Wan Hai Lines (2615 TT), Asustek Computer (2357 TT), Winbond Electronics (2344 TT), Nantex Industry (2108 TT) and Gigabyte Technology (2376 TT) while shorts covered on TSMC (2330 TT), Taiwan Cement (1101 TT), Largan Precision (3008 TT), United Microelectronics Corp (2303 TT) and Evergreen Marine Corp (2603 TT). 

Asia Shorts: Xiaomi, Anta, HKEX, BYD, Yamaha, ASICS, Rakuten, Resona, Kakao, HMC, Doosan, Wan Hai

South Korea

Kakao Corp. provides Internet portal services such as news, free e-mail, and leisure information.  The Company also offers cross-platform mobile messaging application that allows users to exchange messages.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Kakao Corp (035720 KS)

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This is a valuation study of Kakao to determine whether to continue to hold the short position or to use the stock price correction of the last two...

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The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

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52-week Range

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