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.

Event-Driven

<p>Kakao merges with Kakao Commerce again. Kakao Commerce was spun off from Kakao three years ago. Kakao internally notified its employees of the merger with Kakao Commerce yesterday. Both companies plan to hold a board meeting next week (likely June 22) to approve the merger. They are reportedly discussing a plan to merge in the third quarter at the earliest.</p><p>Kakao Commerce has been in charge of operating Kakao's shopping-related services, such as Kakao Talk Gift. However, Kakao Commerce recently boosted its operating operation by merging Kakao Makers, the next-generation ordering platform. Through this merger, Kakao plans to shift its main business from advertising to online commerce. In particular, this merger is intended to prevent a situation in which the local online commerce market leads to an oligopoly between Coupang and Naver.</p><hr><h2>Regulatory filing</h2><p>Kakao Corp said in a regulatory filing that nothing had been finalized yet. Therefore, it now has to provide a follow-up filing within a month or at the time of finalization. The local market generally considers this type of not-denying response in a regulatory filing an acknowledgment. So, it'd be safe to assume that this merger will proceed.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/011/original/Screen+Shot+2021-06-14+at+2.51.47+PM.png?1623696739" class="editor-image img-responsive" data-smartkarma-image-id="213011"></figure></section>

Kakao merges with Kakao Commerce again. Kakao Commerce was spun off from Kakao three years ago. Kakao internally notified its employees of the merger with Kakao Commerce yesterday. Both companies plan to hold a board meeting next week (likely June 22) to approve the merger. They are reportedly discussing a plan to merge in the third quarter at the earliest.Kakao Commerce has been in charge of operating Kakao's shopping-related services, such as Kakao Talk Gift. However, Kakao Commerce recently boosted its operating operation by merging Kakao Makers, the next-generation ordering platform. Through this merger, Kakao plans to shift its main business from advertising to online commerce. In particular, this merger is intended to prevent a situation in which the local online commerce market leads to an oligopoly between Coupang and Naver.Regulatory filingKakao Corp said in a regulatory filing that nothing had been finalized yet. Therefore, it now has to provide a follow-up filing within a month or at the time of finalization. The local market generally considers this type of not-denying response in a regulatory filing an acknowledgment. So, it'd be safe to assume that this merger will proceed.

Kakao's Timely Trick to Defend Its Inflated Share Price: Merger with Kakao Commerce

Equity Capital Markets

<p>Kakao Japan, a subsidiary of <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, appears to be accelerating its IPO process.</p><p>The local news outlet, Seoul Economic Daily, exclusively reports that Kakao Japan has sent a request for a proposal (RFP) to the local brokerages in Japan to recruit additional bankers for an IPO. So far, it has chosen Nomura as a lead underwriter.</p><p>An unnamed Kakao official said that Kakao Japan is seeking additional underwriters as it now anticipates a larger offering size amid the rapid growth of Piccoma (ピッコマ).</p><div class="content-highlight"><p><em>Piccoma (ピッコマ) is a Japanese manga subscription service that is available on smartphones, tablets, and personal computers developed and released by Kakao Japan.</em></p></div><p>But as for the timing of an IPO, this Kakao official didn't give any specific detail.</p><div class="content-highlight"><p><a href="https://signalm.sedaily.com/NewsView/22NHS3OKO9/GX1102" target="_blank" rel="noopener">Here is the link to the news report by Seoul Economic Daily</a></p></div>

Kakao Japan, a subsidiary of Kakao Corp (035720 KS), appears to be accelerating its IPO process.The local news outlet, Seoul Economic Daily, exclusively reports that Kakao Japan has sent a request for a proposal (RFP) to the local brokerages in Japan to recruit additional bankers for an IPO. So far, it has chosen Nomura as a lead underwriter.An unnamed Kakao official said that Kakao Japan is seeking additional underwriters as it now anticipates a larger offering size amid the rapid growth of Piccoma (ピッコマ).Piccoma (ピッコマ) is a Japanese manga subscription service that is available on smartphones, tablets, and personal computers developed and released by Kakao Japan.But as for the timing of an IPO, this Kakao official didn't give any specific detail.Here is the link to the news report by Seoul Economic Daily

Kakao Japan ¥1T IPO: Latest Update on Progress

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p>It was announced on 25 January that Kakao Page and Kakao M held a board meeting to decide on a merger and launch a newco called Kakao Entertainment. The two companies plan to complete the merger on 1 March after the final approval at the shareholders' meeting on 26 January. The merger ratio is calculated as 1 (Kakao Page) to 1.31 (Kakao M).</p></div>

It was announced on 25 January that Kakao Page and Kakao M held a board meeting to decide on a merger and launch a newco called Kakao Entertainment. The two companies plan to complete the merger on 1 March after the final approval at the shareholders' meeting on 26 January. The merger ratio is calculated as 1 (Kakao Page) to 1.31 (Kakao M).

The Merger of Kakao Page & Kakao M to Create Kakao Entertainment

Equity Bottom-Up

<p>We believe now is the time to go Underweight on Kakao Corp, which has been one of the best-performing stocks in KOSPI this year.</p><p>There are two major reasons why we believe investors should Underweight Kakao Corp now. <strong>First,</strong> our SoTP valuation analysis suggests Kakao Corp shares are overvalued. <strong>Second</strong>, the fact that there are now two credible vaccines against COVID-19 including those developed by Moderna and Pfizer which suggests that COVID-19 could become more manageable and less deadly around the world in 2021. One of the key reasons why Kakao Corp's shares soared this year has been due to the continued concerns about COVID-19 and the company's strengths in digital, "non-contact" business areas including online games, fintech, and other digital services. COVID-19 has actually accelerated the numerous businesses of Kakao Corp and its affiliates and pushed up its share price this year. </p><p><strong>Our base case valuation of Kakao Corp suggests an implied value of 296,066 won per share, representing an 18.2% downside risk from current levels.</strong> The SoTP valuation is broken down into the company's investments in a) public companies, b) private companies, c) Kakao Corp's core business, d) net cash and e) holdco discount. </p>

We believe now is the time to go Underweight on Kakao Corp, which has been one of the best-performing stocks in KOSPI this year.There are two major reasons why we believe investors should Underweight Kakao Corp now. First, our SoTP valuation analysis suggests Kakao Corp shares are overvalued. Second, the fact that there are now two credible vaccines against COVID-19 including those developed by Moderna and Pfizer which suggests that COVID-19 could become more manageable and less deadly around the world in 2021. One of the key reasons why Kakao Corp's shares soared this year has been due to the continued concerns about COVID-19 and the company's strengths in digital, "non-contact" business areas including online games, fintech, and other digital services. COVID-19 has actually accelerated the numerous businesses of Kakao Corp and its affiliates and pushed up its share price this year. Our base case valuation of Kakao Corp suggests an implied value of 296,066 won per share, representing an 18.2% downside risk from current levels. The SoTP valuation is broken down into the company's investments in a) public companies, b) private companies, c) Kakao Corp's core business, d) net cash and e) holdco discount. 

Kakao Corp SoTP Valuation - Time To Go Underweight

<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. 

South Korea

Kakao Entertainment Corp. operates as an application software development company. The Company provides online cartoons, online novels, music, and more. Kakao Entertainment conducts businesses in South Korea.

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Kakao Entertainment (103260 KS)

Kakao Japan ¥1T IPO: Latest Update on Progress

This post provides an update on Kakao Japan's IPO progress, which reportedly aims at a target IPO valuation of 1 trillion yen.

Sanghyun Park

The Merger of Kakao Page & Kakao M to Create Kakao Entertainment

On 25 January, Kakao Page and Kakao M announced that they held a board meeting to decide on a merger and launch Kakao Entertainment, which would be...

Douglas Kim

Kakao Corp SoTP Valuation - Time To Go Underweight

We believe now is the time to go Underweight on Kakao Corp. Our base case valuation suggests an implied value of 296,066 won per share,...

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

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52-week Range

Market Cap (USDm)

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Kakao's Timely Trick to Defend Its Inflated Share Price: Merger with Kakao Commerce

This post looks at Kakao's timely attempt to support its inflate share price by merging with Kakao Commerce to get an even higher valuation premium.

Sanghyun Park

Kakao Japan ¥1T IPO: Latest Update on Progress

This post provides an update on Kakao Japan's IPO progress, which reportedly aims at a target IPO valuation of 1 trillion yen.

Sanghyun Park

The Merger of Kakao Page & Kakao M to Create Kakao Entertainment

On 25 January, Kakao Page and Kakao M announced that they held a board meeting to decide on a merger and launch Kakao Entertainment, which would be...

Douglas Kim

Kakao Corp SoTP Valuation - Time To Go Underweight

We believe now is the time to go Underweight on Kakao Corp. Our base case valuation suggests an implied value of 296,066 won per share,...

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