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.

Equity Capital Markets

HK Inno.N's offering price got fixed at ₩59,000, the upper end of the indicative price band, implying a market cap of ₩1.7T. There is no change in the offering volume.







Indicative price band
Low
High (final)


Price
₩50,000
₩59,000


Base deal size
₩505.9B
₩596.9B


- Institutional allotment
₩278.2B
₩328.3B


Implied market cap
₩1,445.2B
₩1,705.4B


- Discount
29.54%
16.85%


EV/EBITDA
15.77x
18.02x

Source: DART

The institutional subscription competition rate is 1,871 to 1, nearly hitting the record holder SKIET's 1,883 to 1. In this bookbuilding, it seems that local institutions have been overbetting quite aggressively. In particular, it seems that local publicly raised funds with long-term holding tendencies have been active in securing the stocks. This proves that many local institutional investors felt that this IPO was price attractive enough for long-term holding.









By investor type
Institution
%
Demand
%


Local publicly raised funds
713
43.82%
4,795,649,600
46.05%


Local brokerages/investment advisories
31
1.91%
202,086,750
1.94%


Local pensions, funds managing proprietary assets, banks, and insurance companies
220
13.52%
1,434,513,850
13.78%


Local others (mostly discretionary investment companies - local hedge funds))
392
24.09%
2,678,313,000
25.72%


Foreign (foreign IPO funds &amp; hedge funds)
74
4.55%
79,187,194
0.76%


Foreign others (mostly local hot money)
197
12.11%
1,223,144,000
11.75%


Total
1,627
100.00%
10,412,894,394
100.00%


Subscription rate
1,871.36

Source: DART

The "Unspecified" category usually indicates that they want the shares above the high end.With that in mind, about one-third have gone for the upper end or above. The remaining two-thirds selected 75-100% of the upper end. All of the orders are priced at 75-100% of the upper end or higher. So, yes, we can say the institutional pricing is quite aggressive.









By price
Institution
%
Demand
%


Above high end
536
32.94%
3,597,972,500
34.55%


75-100% of high end
1,061
65.21%
6,630,326,894
63.67%


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
30
1.84%
184,595,000
1.77%


Total
1,627
100.00%
10,412,894,394
100.00%

Source: DART



HK Inno.N Bookbuilding Results: Subscription/Lockup Orders in Detail

<div><div><h2>Offering size</h2></div></div><div>
<p>HK inno.N offers 10.1M shares, which account for 43.75% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSDAQ.</p>
<div class="content-highlight">
<p><strong>Who is HK inno.N?</strong></p>
<p>HK inno.N was a subsidiary of CJ Group, established in April 2014 through a physical spin-off of CJ CheilJedang's pharmaceutical business.</p>
<p>However, HK inno.N was acquired by Kolmar Korea on April 18, 2018, and <strong>the corporate name was changed from CJ Healthcare Co., Ltd. to HK Innoen Co., Ltd. in February 2020</strong>.</p>
</div>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</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"}' data-sheets-formula="=R[-44]C[0]">Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"195940"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-44]C[0]">195940</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}' data-sheets-formula="=R[-44]C[0]">Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSDAQ"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-44]C[0]">KOSDAQ</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":10117000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-41]C[0]"><strong>10,117,000</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":0.43752029050620755}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-39]C[0]"><strong>43.75%</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 IPO is a split offering with a primary of 57.14% and a secondary of 42.86%. As a result, this offering will see a capital increase rate of 25% with a shareholding dilution of 20%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" 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":0.571414450924187}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-41]C[0]"><strong>57.14%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'><strong>Secondary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.428585549075813}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-40]C[0]"><strong>42.86%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'>Capital increase rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2500054165677954}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-38]C[0]">25.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.20000346658836743}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-38]C[0]">20.00%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><div><h2>Schedule</h2></div></div>
<div>
<p>The book opens on July 13 (for overseas investors) and runs until July 26. The allotment will be on July 28 as the offering price is finalized. The subscription falls on July 29.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</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":44390}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 13</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":44403}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'><strong>Allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44405}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 28</strong></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":44406}' 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":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44411}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 3</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"}'>TBA</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><h2>Pricing</h2></div>
<div>
<p>HK inno.N used EV/EBITDA. The corporate value was determined after selecting three local pharmaceutical companies: 1. Yuhan, 2. Chong Kun Dang Pharmaceutical, and 3. Daewoong Pharmaceutical. The respective EV/EBITDA multiples are 25.93x for Yuhan, 10.30x for Chong Kun Dang, and 26.8x for Daewoong Pharm.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Valuation peers: EV/EBITDA"}'>Valuation peers: EV/EBITDA</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yuhan Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Yuhan Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Chong Kun Dang Pharmaceutical Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Chong Kun Dang Pharmaceutical Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Daewoong Pharmaceutical Co., Ltd."}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Daewoong Pharmaceutical Co., Ltd.</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"000100"}' data-sheets-formula='="000100"'>000100</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"185750"}' data-sheets-formula='="185750"'>185750</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"069620"}' data-sheets-formula='="069620"'>069620</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":69972959}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>69,972,959</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11426099}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>11,426,099</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11586575}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>11,586,575</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference share price: MIN[1W Avg, 1M Avg, 1D Close] at June 22, 2021"}'>Reference share price: MIN[1W Avg, 1M Avg, 1D Close] on June 22, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":63300}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩63,300</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":130841}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩130,841</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":154000}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩154,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference market cap"}'>Reference market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4429.2883047}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$4,429.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1495.002219259}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$1,495.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1784.33255}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$1,784.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preferred share market cap"}'>Preferred share market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":71.683}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$71.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$0.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$0.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-440.398}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>-$440.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-7.554}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>-$7.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":225.79}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$225.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4060.5733046999994}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$4,060.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1487.4482192589999}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$1,487.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2010.12255}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$2,010.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EBITDA: 2Q20~1Q21"}'>EBITDA: 2Q20~1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":156.583}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$156.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":144.368}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$144.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":75.002}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$75.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EV/EBITDA"}'><strong>EV/EBITDA</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":25.93240201490583}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>25.93x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10.303171196241548}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>10.30x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":26.800919308818433}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>26.80x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average EV/EBITDA"}'><strong>Average EV/EBITDA</strong></td>
<td colspan="3" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":21.012164173321935}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=average(R[-1]C[0]:R[-1]C[2])"><strong>21.01x</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><div>The combined EV/EBITDA multiple of 21.01 times was applied to the EBITDA of ₩115.5B from the second quarter of last year to the first quarter of this year.</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":"HK inno.N: EV/EBITDA"}'>HK inno.N: EV/EBITDA</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EBITDA: 2Q20~1Q21"}'>EBITDA: 2Q20~1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":115.526}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩115.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EV/EBITDA"}'>EV/EBITDA</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":21.012164173321935}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-5]C[0]">21.01x</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2427.194}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩2,427.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"C = A X B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>C = A X B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":376.158}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩376.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>D</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":2051.036}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]"><strong>₩2,051.0B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"E = C - D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>E = C - D</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Post-IPO total shares"}'>Post-IPO total shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":28904499}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=Terms!R[-2]C[0]">28,904,499</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>F</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":70959.05727340232}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]"><strong>₩70,959</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"G = E / F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>G = E / F</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><p>The indicative price band is between ₩50,000 and ₩59,000. This is obtained by applying a discount rate of 16.85% to 29.54% to the market cap of ₩2,051.0B calculated through EV/EBITDA.</p></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":50000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩50,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":59000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩59,000</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":505.85}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩505.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":596.903}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩596.9B</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":278.21750000000003}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩278.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":328.29665000000006}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩328.3B</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":1445.22495}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*Terms!R18C2/1000000000"><strong>₩1,445.2B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1705.365441}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*Terms!R18C2/1000000000"><strong>₩1,705.4B</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":0.2953683163045407}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R21C2-R[-4]C[0])/R21C2"><strong>29.54%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.16853461323935803}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R21C2-R[-4]C[0])/R21C2"><strong>16.85%</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>

Offering size
HK inno.N offers 10.1M shares, which account for 43.75% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSDAQ.

Who is HK inno.N?
HK inno.N was a subsidiary of CJ Group, established in April 2014 through a physical spin-off of CJ CheilJedang's pharmaceutical business.
However, HK inno.N was acquired by Kolmar Korea on April 18, 2018, and the corporate name was changed from CJ Healthcare Co., Ltd. to HK Innoen Co., Ltd. in February 2020.







Offering size

Ticker
195940


Bourse
KOSDAQ


Offering
10,117,000


- % of pre-IPO SO
43.75%


Institutional allotment
55.00~75.00%

Source: DART


Split

This IPO is a split offering with a primary of 57.14% and a secondary of 42.86%. As a result, this offering will see a capital increase rate of 25% with a shareholding dilution of 20%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.






Split

Primary %
57.14%


Secondary %
42.86%


Capital increase rate
25.00%


Dilution
20.00%

Source: DART



Schedule

The book opens on July 13 (for overseas investors) and runs until July 26. The allotment will be on July 28 as the offering price is finalized. The subscription falls on July 29.






Schedule

Book open
2021. 7. 13


Book close
2021. 7. 26


Allotment
2021. 7. 28


Subscription
2021. 7. 29


Payment
2021. 8. 3


Listing
TBA

Source: DART



Pricing

HK inno.N used EV/EBITDA. The corporate value was determined after selecting three local pharmaceutical companies: 1. Yuhan, 2. Chong Kun Dang Pharmaceutical, and 3. Daewoong Pharmaceutical. The respective EV/EBITDA multiples are 25.93x for Yuhan, 10.30x for Chong Kun Dang, and 26.8x for Daewoong Pharm.









Valuation peers: EV/EBITDA
Yuhan Corp
Chong Kun Dang Pharmaceutical Corp
Daewoong Pharmaceutical Co., Ltd.


Ticker
000100
185750
069620


Shares outstanding
69,972,959
11,426,099
11,586,575


Reference share price: MIN[1W Avg, 1M Avg, 1D Close] on June 22, 2021
₩63,300
₩130,841
₩154,000


Reference market cap
$4,429.3B
$1,495.0B
$1,784.3B


Preferred share market cap
$71.7B
$0.0B
$0.0B


Net debt
-$440.4B
-$7.6B
$225.8B


Enterprise value (EV)
$4,060.6B
$1,487.4B
$2,010.1B


EBITDA: 2Q20~1Q21
$156.6B
$144.4B
$75.0B


EV/EBITDA
25.93x
10.30x
26.80x


Average EV/EBITDA
21.01x

Source: DART



The combined EV/EBITDA multiple of 21.01 times was applied to the EBITDA of ₩115.5B from the second quarter of last year to the first quarter of this year.







HK inno.N: EV/EBITDA

EBITDA: 2Q20~1Q21
₩115.5B
A


EV/EBITDA
21.01x
B


Enterprise value (EV)
₩2,427.2B
C = A X B


Net debt
₩376.2B
D


Market cap
₩2,051.0B
E = C - D


Post-IPO total shares
28,904,499
F


Price per share
₩70,959
G = E / F

Source: DART


The indicative price band is between ₩50,000 and ₩59,000. This is obtained by applying a discount rate of 16.85% to 29.54% to the market cap of ₩2,051.0B calculated through EV/EBITDA.








Indicative price band
Low
High


Price
₩50,000
₩59,000


Base deal size
₩505.9B
₩596.9B


- Institutional allotment
₩278.2B
₩328.3B


Implied market cap
₩1,445.2B
₩1,705.4B


- Discount
29.54%
16.85%

Source: DART




HK Inno.N (Formerly CJ Healthcare) IPO: Offering Detail & Valuation Issues

Event-Driven

<p>I added Kolmar Korea Holdings to my synthetic subsidiary holding company list. As a result, I now track a total of 7 synthetic subsidiary holding companies, of which 3 names are currently at -1.0σ (or close) on a 20-day moving average.  </p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Holdco"}'>Holdco</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Subsidiaries in a synthetic"}'>Subsidiaries in a synthetic</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Sigma (σ) on a 20-day moving average"}'>Sigma (σ) on a 20-day moving average</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"LG Corp"}' data-sheets-formula="=Data!R[-1]C[1]">LG Corp</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"LG Chem Ltd &amp; 3 others"}' data-sheets-formula='=googlefinance(R[0]C[3], "name")&amp;" &amp; "&amp;R[0]C[4]-1&amp;" others" '>LG Chem Ltd &amp; 3 others</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.9455012913617945}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[10]C[-1]">0.95</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samsung C&amp;T Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=Data!R[-2]C[6]">Samsung C&amp;T Corp</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Samsung Electronics Co Ltd &amp; 1 other"}' data-sheets-formula='=googlefinance(R[0]C[3], "name")&amp;" &amp; "&amp;R[0]C[4]-1&amp;" other" '>Samsung Electronics Co Ltd &amp; 1 other</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.34377918950498587}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[10]C[-1]">-0.34</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Inc"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=Data!R[-3]C[9]"><strong>SK Inc</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"SK Innovation Co Ltd &amp; 2 others"}' data-sheets-formula='=googlefinance(R[0]C[3], "name")&amp;" &amp; "&amp;R[0]C[4]-1&amp;" others" '><strong>SK Innovation Co Ltd &amp; 2 others</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-1.5358952902702356}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[10]C[-1]"><strong>-1.54</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Lotte Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=Data!R[-4]C[13]">Lotte Corp</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Lotte Chemical Corp &amp; 1 other"}' data-sheets-formula='=googlefinance(R[0]C[3], "name")&amp;" &amp; "&amp;R[0]C[4]-1&amp;" other" '>Lotte Chemical Corp &amp; 1 other</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.48761167037793357}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[10]C[-1]">0.49</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hanwha Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=Data!R[-5]C[16]"><strong>Hanwha Corp</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Hanwha Solutions Corp &amp; 2 others"}' data-sheets-formula='=googlefinance(R[0]C[3], "name")&amp;" &amp; "&amp;R[0]C[4]-1&amp;" others" '><strong>Hanwha Solutions Corp &amp; 2 others</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.9140754552511184}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[10]C[-1]"><strong>-0.91</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"CJ Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=Data!R[-6]C[20]">CJ Corp</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"CJ Cheiljedang Corp &amp; 1 other"}' data-sheets-formula='=googlefinance(R[0]C[3], "name")&amp;" &amp; "&amp;R[0]C[4]-1&amp;" other" '>CJ Cheiljedang Corp &amp; 1 other</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.29546809089979403}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[10]C[-1]">-0.30</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kolmar Korea Holdings Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=Data!R[-7]C[23]"><strong>* Kolmar Korea Holdings Co Ltd</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"KolmarBNH Co Ltd &amp; 1 other"}' data-sheets-formula='=googlefinance(R[0]C[3], "name")&amp;" &amp; "&amp;R[0]C[4]-1&amp;" other" '><strong>KolmarBNH Co Ltd &amp; 1 other</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-1.2339571192225773}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[10]C[-1]"><strong>-1.23</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><div class="content-highlight"><p>Starting with this insight, I made some changes in my calculation of NAV. I estimated each holding company's operating operation based on their latest de-consolidated operating profit. It is mostly brand royalty and office rental income. I used operating profit to exclude dividend income.</p></div><p>The revised NAV discount calculations show that they are trading mostly within a <strong>50~60%</strong> discount to the NAV. The largest discount goes to Samsung C&amp;T, while CJ Corp enjoys the lowest discount to its NAV. <strong>Kolmar Korea Holdings features a 53.41% discount to the NAV. It is a two-subsidiary holding company as they account for 89.85% of the NAV</strong>.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"Discount &amp; weight"}'>Discount &amp; weight</td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":2,"2":"NAV discount"}'>NAV discount</td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":2,"2":"Synthetic subsidiary weight in NAV"}'>Synthetic subsidiary weight in NAV</td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":2,"2":"Synthetic subsidiary weight in GAV"}'>Synthetic subsidiary weight in GAV</td>
</tr>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"LG Corp"}' data-sheets-formula="=R[-20]C[0]">LG Corp</td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":3,"3":0.5892560369567199}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[8]C[0]">58.93%</td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":3,"3":0.7469661842230064}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[12]C[-1]:R[15]C[-1])">74.70%</td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":3,"3":0.7703324033104589}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[12]C[-1]:R[15]C[-1])">77.03%</td>
</tr>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"Samsung C&amp;T Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-20]C[0]"><strong>Samsung C&amp;T Corp</strong></td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":3,"3":0.6059911856682164}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[7]C[18]"><strong>60.60%</strong></td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":3,"3":0.8026397073991763}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[11]C[17]:R[12]C[17])"><strong>80.26%</strong></td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":3,"3":0.8033397666310156}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[11]C[17]:R[12]C[17])"><strong>80.33%</strong></td>
</tr>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"SK Inc"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-20]C[0]"><strong>SK Inc</strong></td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":3,"3":0.5173210462000755}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[6]C[24]"><strong>51.73%</strong></td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":3,"3":0.689824350306107}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[10]C[23]:R[12]C[23])"><strong>68.98%</strong></td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":3,"3":0.5561346382258038}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[10]C[23]:R[12]C[23])"><strong>55.61%</strong></td>
</tr>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"Lotte Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-20]C[0]">Lotte Corp</td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":3,"3":0.5968470100117429}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[5]C[30]">59.68%</td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":3,"3":0.5945490346234877}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[9]C[29]:R[10]C[29])">59.45%</td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":3,"3":0.4605223220736323}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[9]C[29]:R[10]C[29])">46.05%</td>
</tr>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"Hanwha Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-20]C[0]"><strong>Hanwha Corp</strong></td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":3,"3":0.5852680864437579}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[4]C[36]"><strong>58.53%</strong></td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":3,"3":0.877152435515112}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[8]C[35]:R[10]C[35])"><strong>87.72%</strong></td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":3,"3":0.5736380974953866}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[8]C[35]:R[10]C[35])"><strong>57.36%</strong></td>
</tr>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"CJ Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-20]C[0]"><strong>CJ Corp</strong></td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":3,"3":0.47009805549763056}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[3]C[42]"><strong>47.01%</strong></td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":3,"3":0.8302884441278204}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[7]C[41]:R[8]C[41])"><strong>83.03%</strong></td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":3,"3":0.7147074125488337}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[7]C[41]:R[8]C[41])"><strong>71.47%</strong></td>
</tr>
<tr>
<td style="width: 170.909px;" data-sheets-value='{"1":2,"2":"Kolmar Korea Holdings Co Ltd"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-20]C[0]"><strong>* Kolmar Korea Holdings Co Ltd</strong></td>
<td style="text-align: right; width: 144.545px;" data-sheets-value='{"1":3,"3":0.5340958452553032}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[2]C[48]"><strong>53.41%</strong></td>
<td style="text-align: right; width: 171.818px;" data-sheets-value='{"1":3,"3":0.8984875914324668}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[6]C[47]:R[7]C[47])"><strong>89.85%</strong></td>
<td style="text-align: right; width: 173.636px;" data-sheets-value='{"1":3,"3":0.8395502332299523}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(NAV!R[6]C[47]:R[7]C[47])"><strong>83.96%</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>SK Inc and Hanwha Corp are trading 6.53% and 3.30%, respectively, below the 180-day price ratio average relative to their synthetic subsidiaries. As for Kolmar Korea, it is 6.47% above the 180-day mean.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"Price ratio"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Price ratio</td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":2,"2":"%Δ to 180-day mean"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>%Δ to 180-day mean</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":2,"2":"%Δ to 180-day high"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>%Δ to 180-day high</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":2,"2":"%Δ to 180-day low"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>%Δ to 180-day low</td>
</tr>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"LG Corp"}' data-sheets-formula="=R[-30]C[0]">LG Corp</td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":3,"3":0.27272027473479676}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">27.27%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":-0.026235211045486387}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">-2.62%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":0.5671932907320105}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">56.72%</td>
</tr>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"Samsung C&amp;T Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-30]C[0]">Samsung C&amp;T Corp</td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":3,"3":-0.006511973440811065}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">-0.65%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":-0.14552204142483482}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">-14.55%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":0.0747273432141876}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">7.47%</td>
</tr>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"SK Inc"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-30]C[0]"><strong>SK Inc</strong></td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":3,"3":-0.06531341088823561}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>-6.53%</strong></td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":-0.21895641555030068}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>-21.90%</strong></td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":0.07921083141757403}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>7.92%</strong></td>
</tr>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"Lotte Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-30]C[0]">Lotte Corp</td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":3,"3":0.004316013360576035}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">0.43%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":-0.2435059662116036}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">-24.35%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":0.2347904810497161}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">23.48%</td>
</tr>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"Hanwha Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-30]C[0]"><strong>Hanwha Corp</strong></td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":3,"3":-0.03301422776748001}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>-3.30%</strong></td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":-0.20602404741618788}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>-20.60%</strong></td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":0.09499308319149713}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>9.50%</strong></td>
</tr>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"CJ Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-30]C[0]">CJ Corp</td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":3,"3":0.06798750716362237}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">6.80%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":-0.09780200889716528}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">-9.78%</td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":0.19502041976348705}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]">19.50%</td>
</tr>
<tr>
<td style="width: 180.909px;" data-sheets-value='{"1":2,"2":"Kolmar Korea Holdings Co Ltd"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-30]C[0]"><strong>* Kolmar Korea Holdings Co Ltd</strong></td>
<td style="text-align: right; width: 150.909px;" data-sheets-value='{"1":3,"3":0.06471060029942335}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>6.47%</strong></td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":-0.07838372679745396}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>-7.84%</strong></td>
<td style="text-align: right; width: 164.545px;" data-sheets-value='{"1":3,"3":0.20003594429551463}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C5-R[0]C[4])/R[0]C[4]"><strong>20.00%</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>

I added Kolmar Korea Holdings to my synthetic subsidiary holding company list. As a result, I now track a total of 7 synthetic subsidiary holding companies, of which 3 names are currently at -1.0σ (or close) on a 20-day moving average.  







Holdco
Subsidiaries in a synthetic
Sigma (σ) on a 20-day moving average


LG Corp
LG Chem Ltd &amp; 3 others
0.95


Samsung C&amp;T Corp
Samsung Electronics Co Ltd &amp; 1 other
-0.34


SK Inc
SK Innovation Co Ltd &amp; 2 others
-1.54


Lotte Corp
Lotte Chemical Corp &amp; 1 other
0.49


Hanwha Corp
Hanwha Solutions Corp &amp; 2 others
-0.91


CJ Corp
CJ Cheiljedang Corp &amp; 1 other
-0.30


* Kolmar Korea Holdings Co Ltd
KolmarBNH Co Ltd &amp; 1 other
-1.23

Source: KRX

Starting with this insight, I made some changes in my calculation of NAV. I estimated each holding company's operating operation based on their latest de-consolidated operating profit. It is mostly brand royalty and office rental income. I used operating profit to exclude dividend income.The revised NAV discount calculations show that they are trading mostly within a 50~60% discount to the NAV. The largest discount goes to Samsung C&amp;T, while CJ Corp enjoys the lowest discount to its NAV. Kolmar Korea Holdings features a 53.41% discount to the NAV. It is a two-subsidiary holding company as they account for 89.85% of the NAV.








Discount &amp; weight
NAV discount
Synthetic subsidiary weight in NAV
Synthetic subsidiary weight in GAV


LG Corp
58.93%
74.70%
77.03%


Samsung C&amp;T Corp
60.60%
80.26%
80.33%


SK Inc
51.73%
68.98%
55.61%


Lotte Corp
59.68%
59.45%
46.05%


Hanwha Corp
58.53%
87.72%
57.36%


CJ Corp
47.01%
83.03%
71.47%


* Kolmar Korea Holdings Co Ltd
53.41%
89.85%
83.96%

Source: KRX

SK Inc and Hanwha Corp are trading 6.53% and 3.30%, respectively, below the 180-day price ratio average relative to their synthetic subsidiaries. As for Kolmar Korea, it is 6.47% above the 180-day mean.








Price ratio
%Δ to 180-day mean
%Δ to 180-day high
%Δ to 180-day low


LG Corp
27.27%
-2.62%
56.72%


Samsung C&amp;T Corp
-0.65%
-14.55%
7.47%


SK Inc
-6.53%
-21.90%
7.92%


Lotte Corp
0.43%
-24.35%
23.48%


Hanwha Corp
-3.30%
-20.60%
9.50%


CJ Corp
6.80%
-9.78%
19.50%


* Kolmar Korea Holdings Co Ltd
6.47%
-7.84%
20.00%

Source: KRX



Korea Synthetic Subsidiary Stub Trade: 7 in Total with 1 New One

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/korea-kolmar-co-ltd" target="_blank" data-smartkarma-citation="entities:7985:1" rel="noopener">Korea Kolmar (161890 KS)</a> is the seventh company we introduce in our 'Korea Small Cap Gem' series. We define small cap as companies with market cap of less than US$1 billion. Korea Kolmar has a market cap of $0.9 billion (1 trillion won). Korea Kolmar is one of the leading cosmetics ODM companies in Korea. It was the first company in Korea to introduce the ODM business for the cosmetics industry in 1993. Korea Kolmar currently owns a 50.7% stake in a private company called <strong>HK inno.N.</strong> This company was previously called CJ HealthCare which Korea Kolmar purchased in April 2018 for 1.3 trillion won ($1.2 billion) (100% stake) from CJ Cheiljedang.</p>
<p>The local media have mentioned that the estimated value of HK inno.N has risen to nearly 2 trillion won. A 50.7% stake of this would be worth nearly 1 trillion won, which would represent nearly the entire market cap of Korea Kolmar.</p>
<p><strong>In other words, if the assessment of the value of HK inno.N is indeed about 2 trillion won, then investors would be getting the remaining Korea Komar's core businesses for free. </strong><strong>Over the next one year, Korea Kolmar could be a major turnaround play with improving cosmetics operations along with an increasing focus on the IPO of HK inno.N in 2021.</strong></p>
</div>


Korea Kolmar (161890 KS) is the seventh company we introduce in our 'Korea Small Cap Gem' series. We define small cap as companies with market cap of less than US$1 billion. Korea Kolmar has a market cap of $0.9 billion (1 trillion won). Korea Kolmar is one of the leading cosmetics ODM companies in Korea. It was the first company in Korea to introduce the ODM business for the cosmetics industry in 1993. Korea Kolmar currently owns a 50.7% stake in a private company called HK inno.N. This company was previously called CJ HealthCare which Korea Kolmar purchased in April 2018 for 1.3 trillion won ($1.2 billion) (100% stake) from CJ Cheiljedang.
The local media have mentioned that the estimated value of HK inno.N has risen to nearly 2 trillion won. A 50.7% stake of this would be worth nearly 1 trillion won, which would represent nearly the entire market cap of Korea Kolmar.
In other words, if the assessment of the value of HK inno.N is indeed about 2 trillion won, then investors would be getting the remaining Korea Komar's core businesses for free. Over the next one year, Korea Kolmar could be a major turnaround play with improving cosmetics operations along with an increasing focus on the IPO of HK inno.N in 2021.


Korea Small Cap Gem #7: Korea Kolmar - Get the Core Cosmetics Business for Free (Ex HK Inno.N)

<p>Below are the 13 Korean single-sub stubs that I am closely monitoring regularly.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/578/original/2.png?1591046815" class="editor-image img-responsive" data-smartkarma-image-id="137578"></figure><p>Which ones are at a severe divergence at this point? Kolma and Youngone are at around (or less) -2σ. BGF and Hankook Tech are also at a level that needs our attention.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/579/original/1.png?1591046836" class="editor-image img-responsive" data-smartkarma-image-id="137579"></figure><p>The two leaders (Kolma and Youngone)? Their respective subsidiary accounts for 66.44% and 73.28% of the subsidiary holdings. And they are at a 56.47% and 64.68% discount to their NAV, which reaffirms that the time is ripe for stub trade.</p><figure class="editor-figure mceNonEditable"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/585/original/8.png?1591048115" class="editor-image img-responsive" data-smartkarma-image-id="137585"></figure><p>Where are the two now, price ratio-wise? Both are pretty close to the 2-yr low. In particular, Kolma is down nearly 70% from the 2-yr low and 45% down even from the 120D high.</p></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/581/original/4.png?1591046856" class="editor-image img-responsive" data-smartkarma-image-id="137581"></figure><p>Again, Kolma leads the wildest falling from the 2-yr mean from a relative price perspective. Youngone has managed to calm down relative to Kolma.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/582/original/5.png?1591046863" class="editor-image img-responsive" data-smartkarma-image-id="137582"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/584/original/6.png?1591046899" class="editor-image img-responsive" data-smartkarma-image-id="137584"></figure>

Below are the 13 Korean single-sub stubs that I am closely monitoring regularly.Which ones are at a severe divergence at this point? Kolma and Youngone are at around (or less) -2σ. BGF and Hankook Tech are also at a level that needs our attention.The two leaders (Kolma and Youngone)? Their respective subsidiary accounts for 66.44% and 73.28% of the subsidiary holdings. And they are at a 56.47% and 64.68% discount to their NAV, which reaffirms that the time is ripe for stub trade.Where are the two now, price ratio-wise? Both are pretty close to the 2-yr low. In particular, Kolma is down nearly 70% from the 2-yr low and 45% down even from the 120D high.Again, Kolma leads the wildest falling from the 2-yr mean from a relative price perspective. Youngone has managed to calm down relative to Kolma.

Korean Stubs (13 in Total) Monitoring: Two Names (Kolma & Youngone) Stand Out for Trade

South 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.

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

Kolmar Korea Holdings (024720 KS)

HK Inno.N Bookbuilding Results: Subscription/Lockup Orders in Detail

HK Inno.N's bookbuilding results are out at DART. This post details the subscription and lockup orders by each investor type.

Sanghyun Park

HK Inno.N (Formerly CJ Healthcare) IPO: Offering Detail & Valuation Issues

This post contains information on HK inno.N's initial public offering and summarizes the local street's general view on the valuation.

Sanghyun Park

Korea Synthetic Subsidiary Stub Trade: 7 in Total with 1 New One

This post examines a total of 7 synthetic subsidiary holding companies for stub trade. Kolmar Korea Holdings is a new addition to the list. It is a...

Sanghyun Park

Korea Small Cap Gem #7: Korea Kolmar - Get the Core Cosmetics Business for Free (Ex HK Inno.N)

Over the next one year, Korea Kolmar could be a major turnaround play with improving cosmetics operations along with an increasing focus on the IPO...

Douglas Kim

Korean Stubs (13 in Total) Monitoring: Two Names (Kolma & Youngone) Stand Out for Trade

Below are the 13 Korean single-sub stubs that I am closely monitoring regularly.Which ones are at a severe divergence at this point? Kolma and...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)