Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we provide the major changes in NPS' stakes in 25 Korean companies in 3Q 2023.</li>
<li>In 3Q 2023, NPS reduced its stakes in the IT, construction, and contents related stocks. On the other hand, NPS increased its stakes in China's re-opening and cosmetics related stocks.</li>
<li>Five Korean cosmetics stocks that NPS net purchased in 3Q 2023 are up on average 12.8% from end of June 2023 to as of 6 October 2023. </li>
</ul>


In this insight, we provide the major changes in NPS' stakes in 25 Korean companies in 3Q 2023.
In 3Q 2023, NPS reduced its stakes in the IT, construction, and contents related stocks. On the other hand, NPS increased its stakes in China's re-opening and cosmetics related stocks.
Five Korean cosmetics stocks that NPS net purchased in 3Q 2023 are up on average 12.8% from end of June 2023 to as of 6 October 2023. 


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.

Event-Driven

<ul>
<li>In response to media speculation, <a href="https://www.smartkarma.com/entities/l-occitane-international-sa" target="_blank" data-smartkarma-citation="entities:6772:1" rel="noopener">L'Occitane (973 HK)</a> has clarified that Reinold Geiger, the Chairman and the largest shareholder, is contemplating a possible transaction through a voluntary general offer.</li>
<li>However, the rumoured offer of HK$35 per share is false. Mr Geiger has confirmed that the potential offer price would be no less than HK$26.00 per share.</li>
<li>The floor price of HK$26 is light and needs a bump (towards HK$30), particularly if Mr Geiger wants 95% of voting rights to exercise the right of compulsory acquisition (squeeze-out).</li>
</ul>


In response to media speculation, L'Occitane (973 HK) has clarified that Reinold Geiger, the Chairman and the largest shareholder, is contemplating a possible transaction through a voluntary general offer.
However, the rumoured offer of HK$35 per share is false. Mr Geiger has confirmed that the potential offer price would be no less than HK$26.00 per share.
The floor price of HK$26 is light and needs a bump (towards HK$30), particularly if Mr Geiger wants 95% of voting rights to exercise the right of compulsory acquisition (squeeze-out).


L’Occitane (973 HK): Board Updates on the Potential Offer Structure and Price

<ul>
<li>The Korean government removed mask mandates for public transportation in Korea as of Monday, 20 March including in buses, taxis, and subways.</li>
<li>There are four major reasons why it will take much longer time for most people in Korea to stop wearing masks. </li>
<li>As millions of people stop wearing masks in the coming year, there will be clear, visible higher demand for cosmetics, which should benefit companies such as Korea Kolmar. </li>
</ul>


The Korean government removed mask mandates for public transportation in Korea as of Monday, 20 March including in buses, taxis, and subways.
There are four major reasons why it will take much longer time for most people in Korea to stop wearing masks. 
As millions of people stop wearing masks in the coming year, there will be clear, visible higher demand for cosmetics, which should benefit companies such as Korea Kolmar. 


Korea Kolmar: When Will People in Korea Stop Wearing Masks?

<ul>
<li>On 10 January, Korea Kolmar Holdings (024720 KS) announced that it plans to cancel 1.1 million shares to be acquired through redemption of redeemable convertible preferred shares.</li>
<li>Korea Kolmar Holdings currently has a market cap of 314 billion won so this share cancellation represents nearly 17% of its market cap.</li>
<li>This large shares cancellation should have a positive impact on Korea Kolmar Holdings' share price. It is also trading at 40% discount to its NAV. </li>
</ul>


On 10 January, Korea Kolmar Holdings (024720 KS) announced that it plans to cancel 1.1 million shares to be acquired through redemption of redeemable convertible preferred shares.
Korea Kolmar Holdings currently has a market cap of 314 billion won so this share cancellation represents nearly 17% of its market cap.
This large shares cancellation should have a positive impact on Korea Kolmar Holdings' share price. It is also trading at 40% discount to its NAV. 


Korea Kolmar Holdings: Shares Cancellation of 17% of Market Cap + Deep Discount to NAV

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene Holding (GBH HK)</a> has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:81963" rel="noopener">Giant Biogene IPO: The Bull Case</a>, <a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:82037" rel="noopener">Giant Biogene IPO: The Bear Case</a> and<a href="https://www.smartkarma.com/insights/giant-biogene-ipo-valuation-first-look" target="_blank" data-smartkarma-citation="insights:82648" rel="noopener">Giant Biogene IPO: Valuation First Look</a>.</li>
<li>The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate. </li>
</ul>



Giant Biogene Holding (GBH HK) has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.
We previously discussed the IPO in Giant Biogene IPO: The Bull Case, Giant Biogene IPO: The Bear Case andGiant Biogene IPO: Valuation First Look.
The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate. 


South Korea

Cosmax, Inc. is a cosmetics manufacturer. The Company develops and produces a variety of cosmetics for men and women, such as basic and special skin care, makeup, hair care, and other beauty products. Cosmax manufactures its products on original equipment manufacturing (OEM) basis.

Cosmecca Korea Co., Ltd. develops and manufactures cosmetics. The Company specializes in research and development of cosmetics. Cosmecca Korea serves customers in Korea.

Kolmar Korea Holdings Co.,Ltd operates as a holding company. The Company through its subsidiaries, provide cosmetics manufacturing, health food manufacturing, pharmaceuticals development, and other services. Kolmar Korea Holdings offers services in Korea.

Hankook Cosmetics Manufacturing Co Ltd manufactures and sells a variety of cosmetics and toiletries, such as makeup, skin care, body care, and hair care products for menand women.  The Company markets its products under the brand names Calli, Idem, Elesis, Ossion, and Pamess.

Hankook Cosmetics Manufacturing (003350 KS)

NeoPharm Co., Ltd. develops and manufactures skin care goods for dried skin and atopic dermatitis.  The Company's main products include skin cleaning cream, body lotion, and skin care cosmetics.

Able C&C Co., Ltd. develops and manufactures cosmetic products. The Company's products include makeup, skin care, and hair care, and body care.

It's Hanbul Co., Ltd. manufactures and markets personal care items. The Company produces cosmetics, make-up tools, hair & body products, and skin care products.

Tonymoly Co., Ltd. manufactures, markets, and distributes beauty products.  The Company produces cosmetics, skin care, hair care, and body care products.

LG H&H Co., Ltd. manufactures and distributes cosmetics. The Company produces whoo, o hui, sum 37, basic cosmetics, color cosmetics, and other related products. LG H&H also produces toothpaste, soap, detergents, healthy, personal care, and refreshing products.

AMOREPACIFIC Group is an investment holding company. The Company, through its subsidiaries, produce cosmetics and toiletries.

Herbalife Ltd. is a global nutrition company that sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products as well as personal care products. The Company distributes and sells its products through a network of independent distributors, using the direct selling channel.

USANA Health Sciences, Inc. develops, manufactures, and markets nutritionals, personal care, and weight management products.  The Company's products are sold directly to preferred customers and distributors throughout the United States, Canada, Australia, New Zealand, the United Kingdom, and Hong Kong.

Jamieson Wellness Inc., doing business as Jamieson Vitamins, develops, manufactures, and markets natural health products. The Company offers vitamins, minerals, and supplement products, as well as over-the-counter remedies and sports nutrition products. Jamieson Vitamins serves customers worldwide.

Blackmores Limited manufactures and markets vitamin, herbal, mineral supplements and natural skin and hair treatment products in Australia and New Zealand. These products are supplied to the over the counter retail market and to health care professionals. The Company also has a line of natural beauty and aromatherapy products and its products are distributed in South East Asia.

Microbio Co., Ltd. applies symbiotic fermentation technology to develop botanical drug. The Company's products include clinically proven botanical drugs, pharmaceutically active ingredients, and nutrient supplements.

Best World International Limited sources, formulates, brands, and distributes a range of health and lifestyle products under the BWL, Avance, DORS, DR's Secret, and DRs Seager brand names.  The Company also distributes a range of third-party cosmetics and skin care products under the brand C'bon.

Milbon Co., Ltd. manufactures hair care products for beauty salons.  The Company produces chemicals for permanents, hair coloring, shampoos, rinses, and hair growth stimulant products.

Noevir Holdings Co., Ltd. manufactures and sells a variety of cosmetic products. The Company's products include skin care and make-up.  Noevir also manufactures and sells medicines, nutritional supplements and apparel.

Ontex Group NV. produces disposable personal hygiene solutions. The Company's products cater to babies, women and senior adults.

EIS Eczacibasi Ilac Sanayi ve Finansal Yatirimlar Sanayi ve Ticaret A.S. produces and markets pharmaceuticals, veterinary products, hospital equipment, and cosmetics. The Company's products include cephalosporin and penicillin. The Company exports its products to the Middle East, Russian Federation, Central Asia, Eastern Europe and EU countries.

Kolmar Korea Co., Ltd. manufactures and distributes personal care products. The Company produces cosmetics. Kolmar Korea also produces medicine and healthcare products.

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Kolmar Korea (161890 KS)

What Did NPS Buy and Sell in 3Q 2023?

In this insight, we provide the major changes in NPS' stakes in 25 Korean companies in 3Q 2023. In 3Q 2023, NPS reduced its stakes in the IT,...

Douglas Kim

L’Occitane (973 HK): Board Updates on the Potential Offer Structure and Price

Reinold Geiger is contemplating a possible transaction through a VGO at a floor offer price of HK$26. The floor price is light if Mr Geiger wants...

Arun George

Korea Kolmar: When Will People in Korea Stop Wearing Masks?

As millions of people stop wearing masks in the coming year, there will be clear, visible higher demand for cosmetics, which should benefit...

Douglas Kim

Korea Kolmar Holdings: Shares Cancellation of 17% of Market Cap + Deep Discount to NAV

Korea Kolmar Holdings announced that it plans to cancel 1.1 million shares to be acquired through redemption of redeemable convertible preferred...

Douglas Kim

Giant Biogene IPO: Valuation Insights

The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price...

Arun George

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