Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Equity Capital Markets

Big Hit came up a little short of beating the previous record-holder (Kakao Games), but still, it proved that it could become another hot IPO in Korea.The final subscription rate was 1,117 to 1 as a total of 1,420 institutions bothered to care for this IPO. Of them, 125 (excluding those categorized in Foreign Others) came from overseas. Well, it isn't a lot for an IPO of this size.









By investor type
Institution
%
Demand
%


Local PO funds
478
33.66%
1,775,621,000
37.15%


Local BR/IA
31
2.18%
124,161,000
2.60%


Local pension/bank/insurance
253
17.82%
911,131,000
19.06%


Local others (hedge funds)
325
22.89%
1,163,673,000
24.35%


Foreign (foreign funds)
125
8.80%
90,662,789
1.90%


Foreign others (local hot money)
208
14.65%
714,365,000
14.95%


Total
1,420
100.00%
4,779,613,789
100.00%


Subscription rate
1,117.25

Source: DART

The pricing was aggressive. Everyone priced it at 75% of the upper end or higher.But there is a tendency here. The local institutions showed greater affection as they priced it more aggressively. The foreign institutions? Well, none of them placed their orders above the upper end.









By price
Institution
%
Demand
%


Above high end
422
29.74%
1,544,842,000
32.32%


75-100% of high end
959
67.58%
3,121,231,789
65.30%


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


25-50% of high end
1
0.07%
8,000
0.00%


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


Median
0
0.00%
1,000
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
37
2.61%
113,531,000
2.38%


Total
1,419
100.00%
4,779,613,789
100.00%

Source: DART











Local PO funds
Institution
%
Demand
%


Above high end
195
40.79%
715,327,000
40.29%


75-100% of high end
258
53.97%
984,017,000
55.42%


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
25
5.23%
76,277,000
4.30%


Total
478
100.00%
1,775,621,000
100.00%

Source: DART











Local BR/IA
Institution
%
Demand
%


Above high end
5
16.13%
21,390,000
17.23%


75-100% of high end
26
83.87%
102,771,000
82.77%


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
0
0.00%
0
0.00%


Total
31
100.00%
124,161,000
100.00%

Source: DART











Local pension/bank/insurance
Institution
%
Demand
%


Above high end
104
41.11%
384,988,000
42.25%


75-100% of high end
145
57.31%
513,301,000
56.34%


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


25-50% of high end
1
0.40%
8,000
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
3
1.19%
12,834,000
1.41%


Total
253
100.00%
911,131,000
100.00%

Source: DART











Local others (hedge funds)
Institution
%
Demand
%


Above high end
118
36.31%
423,137,000
36.36%


75-100% of high end
197
60.62%
716,115,000
61.54%


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%
1,000
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
9
2.77%
24,420,000
2.10%


Total
325
100.00%
1,163,673,000
100.00%

Source: DART











Foreign (foreign funds)
Institution
%
Demand
%


Above high end
0
0.00%
0
0.00%


75-100% of high end
125
100.00%
90,662,789
100.00%


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
0
0.00%
0
0.00%


Total
125
100.00%
90,662,789
100.00%

Source: DART











Foreign others (local hot money)
Institution
%
Demand
%


Above high end
0
0.00%
0
0.00%


75-100% of high end
208
100.00%
714,365,000
100.00%


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 the median
0
0.00%
0
0.00%


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


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


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


Low end or below
0
0.00%
0
0.00%


Unspecified
0
0.00%
0
0.00%


Total
208
100.00%
714,365,000
100.00%

Source: DART

Lock-up is also a bit disappointing. The final result is 44%, but nearly two-thirds are one month or less, suggesting there is a long-term trust issue here.








Lock-up

6 months
464,723,000


3 months
391,101,000


1 months
1,035,585,543


15 days
204,450,464


Total
2,095,860,007


- %
43.85%

Source: DART



Big Hit IPO: Book-Building Results, Mood, & BeNX (WEVERSE) Ownership Issue

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<div class="content-highlight">
<p>In this insight, we go through the details of Tencent's numerous investments in Korea and try to estimate how much money it has made from them. Tencent started to invest in Korean companies about 14 years ago. Most of its big investments in Korea including Krafton Games, <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a>, and <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> were made in the past decade. </p>
<p>We also discuss the US government's increasingly hostile stance on Tencent and other major Chinese tech companies and discuss the probabilities of the US government potentially following India's hard-line policy of removing major Chinese apps. </p>
</div>


In this insight, we go through the details of Tencent's numerous investments in Korea and try to estimate how much money it has made from them. Tencent started to invest in Korean companies about 14 years ago. Most of its big investments in Korea including Krafton Games, Netmarble Corporation (251270 KS), and Kakao Corp (035720 KS) were made in the past decade. 
We also discuss the US government's increasingly hostile stance on Tencent and other major Chinese tech companies and discuss the probabilities of the US government potentially following India's hard-line policy of removing major Chinese apps. 


Tencent's Home-Run Investments in Korea & Will US Follow India's Move to Remove Tencent's Apps?

Cross Asset Strategy

<h2>Review of Top 10 Issues Related to Korean Stock Market, Economy, &amp; Politics in September 2020</h2><ul>
<li><div class="content-highlight"><strong>Value &amp; GARP outperforming Growth</strong></div></li>
<li><strong>Big Hit Entertainment IPO </strong></li>
<li><strong>Kakao Games IPO </strong></li>
<li><strong>IPOs of Kakao Pay, Kakao Bank, &amp; Kakao Page in 2021 </strong></li>
<li><strong>A merger of the three Celltrion companies </strong></li>
<li><strong>LG Chem's carve-out of its rechargeable battery business </strong></li>
<li><strong>Big rights offerings by Doosan Heavy Industries &amp; Doosan Fuel Cell </strong></li>
<li><strong>HDC Hyundai Development gives up on Asiana Airlines </strong></li>
<li><strong>Nikola's founder resigns - Impact on Hanwha Solutions</strong></li>
<li><strong>Samsung Electronics (Dividends) </strong></li>
</ul>

Review of Top 10 Issues Related to Korean Stock Market, Economy, &amp; Politics in September 2020
Value &amp; GARP outperforming Growth
Big Hit Entertainment IPO 
Kakao Games IPO 
IPOs of Kakao Pay, Kakao Bank, &amp; Kakao Page in 2021 
A merger of the three Celltrion companies 
LG Chem's carve-out of its rechargeable battery business 
Big rights offerings by Doosan Heavy Industries &amp; Doosan Fuel Cell 
HDC Hyundai Development gives up on Asiana Airlines 
Nikola's founder resigns - Impact on Hanwha Solutions
Samsung Electronics (Dividends) 


Korea Stock Market Monthly Recap #52 (September 2020)

<p><strong>Kakao Pay is getting ready to complete its IPO in 1H 2021</strong>. Kakao Pay is the leading mobile payment and digital wallet service provider in Korea. Kakao Pay's core service includes allowing users to request and send money to people in their KakaoTalk messenger contacts without using their bank account numbers. </p>
<p>Kakao Pay has recently hired KB Securities to be the lead underwriter of this IPO. Once Kakao Pay completes its IPO in 1H 2021, two other major Kakao affiliates including <strong>Kakao Bank</strong> and<strong> Kakao Page</strong> are expected to complete their IPOs in 2H 2021. </p>

Kakao Pay is getting ready to complete its IPO in 1H 2021. Kakao Pay is the leading mobile payment and digital wallet service provider in Korea. Kakao Pay's core service includes allowing users to request and send money to people in their KakaoTalk messenger contacts without using their bank account numbers. 
Kakao Pay has recently hired KB Securities to be the lead underwriter of this IPO. Once Kakao Pay completes its IPO in 1H 2021, two other major Kakao affiliates including Kakao Bank and Kakao Page are expected to complete their IPOs in 2H 2021. 

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<div><p><a href="https://www.smartkarma.com/entities/yalla-group-ltd" target="_blank" data-smartkarma-citation="entities:29286:1" rel="noopener">Yalla Group Ltd (YALA US)</a> is the largest voice-centric social networking and entertainment platform in MENA as measured by revenue in 2019, according to Frost &amp; Sullivan. Yalla has launched its IPO at a price range of $7.00-9.00 per ADS. Existing shareholder, Orchid Asia, has indicated an interest in purchasing up to $30 million of the ADSs in the offering. Yalla will raise net proceeds of $135.4 million at the mid-point of the IPO price range. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/yalla-group-ipo-initiation-eat-pray-chat" target="_blank" rel="noopener">our initiation note</a>, we stated that Yalla has appealing fundamentals as it offers breakneck revenue growth with high margins and strong cash generation. Overall, we would be inclined to participate in the IPO at the proposed price range.</p></div></div></div>

Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in MENA as measured by revenue in 2019, according to Frost &amp; Sullivan. Yalla has launched its IPO at a price range of $7.00-9.00 per ADS. Existing shareholder, Orchid Asia, has indicated an interest in purchasing up to $30 million of the ADSs in the offering. Yalla will raise net proceeds of $135.4 million at the mid-point of the IPO price range. In our initiation note, we stated that Yalla has appealing fundamentals as it offers breakneck revenue growth with high margins and strong cash generation. Overall, we would be inclined to participate in the IPO at the proposed price range.

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.

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Kakao Corp (035720 KS)

Big Hit IPO: Book-Building Results, Mood, & BeNX (WEVERSE) Ownership Issue

???

Sanghyun Park

Tencent's Home-Run Investments in Korea & Will US Follow India's Move to Remove Tencent's Apps?

We go through the details of Tencent's numerous investments in Korea and try to estimate how much money it has made from them. Tencent started to...

Douglas Kim

Korea Stock Market Monthly Recap #52 (September 2020)

Review of Top 10 Issues Related to Korean Stock Market, Economy, Politics in September 2020

Douglas Kim

Initial Thoughts on the Kakao Pay IPO

Kakao Pay is the leading mobile payment and digital wallet service provider in Korea. Kakao Pay's core service includes allowing users to request...

Douglas Kim

Yalla Group IPO: Valuation Insights

Chindata (CD US) is a data centre operator which is backed by Bain Capital (57.17% shareholder), APG Strategic Real Estate Pool/Dutch pension...

Arun George

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