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.

Equity Capital Markets

<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

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 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

<p>In the end, the Financial Supervisory Service requested Krafton to submit a correction report.</p><p>The Financial Supervisory Service concluded that Krafton's securities declaration (IPO prospectus) submitted on June 16 through public disclosure could hinder investors' rational investment judgment or cause serious misunderstandings due to unclear material content.</p><p><strong>As a result, Krafton's current securities declaration is suspended.</strong></p><p><strong>In addition, Krafton must submit a correction report within three months from the receipt of the request for correction.</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/215/365/original/Screen+Shot+2021-06-25+at+12.22.18+PM.png?1624638338" class="editor-image img-responsive" data-smartkarma-image-id="215365"></figure><p>Krafton also confirmed through a regulatory filing that it had received a request for correction from the Financial Supervisory Service and said that <strong>the reason was the insufficient description of important matters</strong>.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/215/366/original/Screen+Shot+2021-06-25+at+12.27.56+PM.png?1624638510" class="editor-image img-responsive" data-smartkarma-image-id="215366"></figure></section></section>

In the end, the Financial Supervisory Service requested Krafton to submit a correction report.The Financial Supervisory Service concluded that Krafton's securities declaration (IPO prospectus) submitted on June 16 through public disclosure could hinder investors' rational investment judgment or cause serious misunderstandings due to unclear material content.As a result, Krafton's current securities declaration is suspended.In addition, Krafton must submit a correction report within three months from the receipt of the request for correction.Krafton also confirmed through a regulatory filing that it had received a request for correction from the Financial Supervisory Service and said that the reason was the insufficient description of important matters.


FSS Requested Krafton to Revise the Offering Price: Background & Impact

<p>The Financial Supervisory Service (FSS) revised the securities declaration form (the IPO prospectus) and the securities issuance performance report so that institutional investors' voluntary lockup commitments can be made known to the market in more detail.</p><h2>As-Is</h2><p>To induce long-term investment in IPO stocks, the FSS operates a system that preferentially allocates IPO stocks to institutional investors who have pledged to hold them for a certain period of time after listing.</p><p>However, only the total voluntary lockup of all institutional investors is disclosed in the securities declaration form and the issuance performance report. <span>As a result, it is impossible to check the status of institutional lockup obligations by institutional type.</span></p><h2>To-Be</h2><p>The details of participation in the bookbuilding for each lockup commitment period should be classified by the following 6 institutional investor types in the securities declaration form (including the correction report). Also, i<span>n the securities issuance report, the allocation details of institutional investors shall be described in detail in the same way.</span></p><ol>
<li><strong>Public offering fund (publicly raised funds)</strong></li>
<li><strong>Brokerages</strong></li>
<li><strong>Pensions, funds managing proprietary assets, banks, and insurance companies</strong></li>
<li><strong>Local other: discretionary investment companies, savings banks, real estate trust companies, capital companies, and leasing companies</strong></li>
<li><p><strong>Foreign institutional investors (with transaction record): foreign institutional investors who have a business relationship with the underwriter or of whom the underwriter acquirer is aware of the identity</strong></p></li>
<li><p><strong>Foreign institutional investors (without transaction record)</strong></p></li>
</ol>

The Financial Supervisory Service (FSS) revised the securities declaration form (the IPO prospectus) and the securities issuance performance report so that institutional investors' voluntary lockup commitments can be made known to the market in more detail.As-IsTo induce long-term investment in IPO stocks, the FSS operates a system that preferentially allocates IPO stocks to institutional investors who have pledged to hold them for a certain period of time after listing.However, only the total voluntary lockup of all institutional investors is disclosed in the securities declaration form and the issuance performance report. As a result, it is impossible to check the status of institutional lockup obligations by institutional type.To-BeThe details of participation in the bookbuilding for each lockup commitment period should be classified by the following 6 institutional investor types in the securities declaration form (including the correction report). Also, in the securities issuance report, the allocation details of institutional investors shall be described in detail in the same way.
Public offering fund (publicly raised funds)
Brokerages
Pensions, funds managing proprietary assets, banks, and insurance companies
Local other: discretionary investment companies, savings banks, real estate trust companies, capital companies, and leasing companies
Foreign institutional investors (with transaction record): foreign institutional investors who have a business relationship with the underwriter or of whom the underwriter acquirer is aware of the identity
Foreign institutional investors (without transaction record)


Korea IPO Lockup Allocation Disclosure Rule Change: Starting with SD Biosensor & Krafton

<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

South Korea

Kakao Pay Corp. operates financial businesses. The Company provides online payment, currency encryption, and other services. Kakao Pay conducts businesses in South Korea.

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Kakaopay (377300 KS)

Hybe Block/Placement - Big Block for Big Hit

STIC aims to raise around US$750m via selling all of its remaining stake in HYBE (352820 KS). In this note, we will run the deal through our ECM...

Sumeet Singh

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

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...

Sanghyun Park

FSS Requested Krafton to Revise the Offering Price: Background & Impact

The Financial Supervisory Service did not clearly state the specific reason. However, many in the market believe that the controversy over the...

Sanghyun Park

Korea IPO Lockup Allocation Disclosure Rule Change: Starting with SD Biosensor & Krafton

The Financial Supervisory Service revised the IPO prospectus form and the securities issuance performance report so that institutional lockup data...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hybe Block/Placement - Big Block for Big Hit

STIC aims to raise around US$750m via selling all of its remaining stake in HYBE (352820 KS). In this note, we will run the deal through our ECM...

Sumeet Singh

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

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...

Sanghyun Park

FSS Requested Krafton to Revise the Offering Price: Background & Impact

The Financial Supervisory Service did not clearly state the specific reason. However, many in the market believe that the controversy over the...

Sanghyun Park

Korea IPO Lockup Allocation Disclosure Rule Change: Starting with SD Biosensor & Krafton

The Financial Supervisory Service revised the IPO prospectus form and the securities issuance performance report so that institutional lockup data...

Sanghyun Park

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