Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The KRX has announced the list of inclusions and exclusions to the KOSDAQ150 Index today. The rebalance is effective after the close of trading on 10 December.</p><p>There are 17 inclusions and 17 exclusions in the December 2020 review with an estimated one-way turnover of 7.71%.</p><p>The inclusions and exclusions are:</p><table class="table table-striped">
<colgroup><col span="4"></colgroup>
<tbody>
<tr>
<td colspan="2" style="text-align: center; width: 96pt;"><h3>Additions</h3></td>
<td colspan="2" style="text-align: center; width: 96pt;"><h3>Deletions</h3></td>
</tr>
<tr>
<td style="text-align: center;"><strong>Code</strong></td>
<td style="text-align: center;"><strong>Name</strong></td>
<td style="text-align: center;"><strong>Code</strong></td>
<td style="text-align: center;"><strong>Name</strong></td>
</tr>
<tr>
<td>034950.KQ</td>
<td>Korea Ratings Corp</td>
<td>014620.KQ</td>
<td>Sung Kwang Bend Co Ltd</td>
</tr>
<tr>
<td>078600.KQ</td>
<td>Daejoo Electronic Materials Co Ltd</td>
<td>015750.KQ</td>
<td>Sungwoo Hitech Co Ltd</td>
</tr>
<tr>
<td>089980.KQ</td>
<td>Sang-A Frontec Co Ltd</td>
<td>023160.KQ</td>
<td>TK Corp</td>
</tr>
<tr>
<td>092190.KQ</td>
<td>Seoul Viosys Co Ltd</td>
<td>039840.KQ</td>
<td>Dio Corp</td>
</tr>
<tr>
<td>100130.KQ</td>
<td>Dongkuk Structures &amp; Construction Co Ltd</td>
<td>041190.KQ</td>
<td>Woori Technology Investment Co Ltd</td>
</tr>
<tr>
<td>101490.KQ</td>
<td>S&amp;S Tech Corp</td>
<td>041830.KQ</td>
<td>InBody Co Ltd</td>
</tr>
<tr>
<td>131370.KQ</td>
<td>Rsupport Co Ltd</td>
<td>043150.KQ</td>
<td>Value Added Technology Co Ltd</td>
</tr>
<tr>
<td>137400.KQ</td>
<td>People &amp; Technology Inc</td>
<td>047310.KQ</td>
<td>Power Logics</td>
</tr>
<tr>
<td>194700.KQ</td>
<td>Novarex Co Ltd</td>
<td>049950.KQ</td>
<td>MeereCompany Inc</td>
</tr>
<tr>
<td>204270.KQ</td>
<td>JNTC Co Ltd</td>
<td>051500.KQ</td>
<td>CJ Freshway Corp</td>
</tr>
<tr>
<td>222080.KQ</td>
<td>Creative &amp; Innovative System Corp</td>
<td>063570.KQ</td>
<td>Nice Total Cash Management Co Ltd</td>
</tr>
<tr>
<td>235980.KQ</td>
<td>MedPacto Inc</td>
<td>080160.KQ</td>
<td>Modetour Network Inc</td>
</tr>
<tr>
<td>290510.KQ</td>
<td>KoreaCenter Co Ltd</td>
<td>084110.KQ</td>
<td>Huons Global Co Ltd</td>
</tr>
<tr>
<td>290650.KQ</td>
<td>L&amp;C Bio Co Ltd</td>
<td>089600.KQ</td>
<td>Nasmedia Co Ltd</td>
</tr>
<tr>
<td>293490.KQ</td>
<td>Kakao Games Corp</td>
<td>115960.KQ</td>
<td>Yonwoo Co Ltd</td>
</tr>
<tr>
<td>294140.KQ</td>
<td>Lemon Co Ltd</td>
<td>228760.KQ</td>
<td>Genomictree Inc</td>
</tr>
<tr>
<td>357780.KQ</td>
<td>SoulBrain Co Ltd</td>
<td>282880.KQ</td>
<td>CowinTech Co Ltd</td>
</tr>
</tbody>
</table><p>There are 11 trading days to implementation. There are 2 additions that have more than 3 days of ADV to trade while there are 9 deletions that have more than 3 days of ADV to trade. Things could get interesting over the next couple of weeks.</p>

The KRX has announced the list of inclusions and exclusions to the KOSDAQ150 Index today. The rebalance is effective after the close of trading on 10 December.There are 17 inclusions and 17 exclusions in the December 2020 review with an estimated one-way turnover of 7.71%.The inclusions and exclusions are:



Additions
Deletions


Code
Name
Code
Name


034950.KQ
Korea Ratings Corp
014620.KQ
Sung Kwang Bend Co Ltd


078600.KQ
Daejoo Electronic Materials Co Ltd
015750.KQ
Sungwoo Hitech Co Ltd


089980.KQ
Sang-A Frontec Co Ltd
023160.KQ
TK Corp


092190.KQ
Seoul Viosys Co Ltd
039840.KQ
Dio Corp


100130.KQ
Dongkuk Structures &amp; Construction Co Ltd
041190.KQ
Woori Technology Investment Co Ltd


101490.KQ
S&amp;S Tech Corp
041830.KQ
InBody Co Ltd


131370.KQ
Rsupport Co Ltd
043150.KQ
Value Added Technology Co Ltd


137400.KQ
People &amp; Technology Inc
047310.KQ
Power Logics


194700.KQ
Novarex Co Ltd
049950.KQ
MeereCompany Inc


204270.KQ
JNTC Co Ltd
051500.KQ
CJ Freshway Corp


222080.KQ
Creative &amp; Innovative System Corp
063570.KQ
Nice Total Cash Management Co Ltd


235980.KQ
MedPacto Inc
080160.KQ
Modetour Network Inc


290510.KQ
KoreaCenter Co Ltd
084110.KQ
Huons Global Co Ltd


290650.KQ
L&amp;C Bio Co Ltd
089600.KQ
Nasmedia Co Ltd


293490.KQ
Kakao Games Corp
115960.KQ
Yonwoo Co Ltd


294140.KQ
Lemon Co Ltd
228760.KQ
Genomictree Inc


357780.KQ
SoulBrain Co Ltd
282880.KQ
CowinTech Co Ltd


There are 11 trading days to implementation. There are 2 additions that have more than 3 days of ADV to trade while there are 9 deletions that have more than 3 days of ADV to trade. Things could get interesting over the next couple of weeks.

KOSDAQ150 Index Rebalance: Lots of Changes, Big Turnover, High Impact

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

<div>While the details are scarce, local press is reporting that SKT and AMZN has been in talks for more than a year and would allow really an export/import biz on both of their channels (ie Korean products to be bought by US consumers and US products to be bought thru 11th St (SK's ecommerce portal) for Koreans. </div><div></div><div>This can't be good for the ecommerce players in Korea.  In the US, if you hear that AMZN is coming in whatever business, the whole sector falls.   Is Naver next? </div>

While the details are scarce, local press is reporting that SKT and AMZN has been in talks for more than a year and would allow really an export/import biz on both of their channels (ie Korean products to be bought by US consumers and US products to be bought thru 11th St (SK's ecommerce portal) for Koreans. This can't be good for the ecommerce players in Korea.  In the US, if you hear that AMZN is coming in whatever business, the whole sector falls.   Is Naver next? 

AMZN into Korea - "We Are Not Here to Take Part, We're Here to Take Over!"

<p>The Korea Exchange (KRX) will announce the results of the December 2020 review of the KOSDAQ150 Index in the second half of November. The constituent changes will be effective from the open on 11 December 2020 and the rebalancing trades will need to be done at the closing auction on 10 December 2020.</p><p>The review covers the period from 1 May to 31 October. We have gone through 120 trading days and there are only 3 days remaining in the review period. Since the data is averaged, there is a very small possibility of the names changing over the next few days.</p><p>At the current time, we see 16 potential inclusions and exclusions with a one-way turnover of 6.94%. This includes the fast entry inclusion of <a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games (293490 KS)</a>.</p><p>The expected inclusions have outperformed the expected deletions since the start of the review period but have given up a significant part of the gains over the last couple of months. With short selling still banned, there could be another period of outperformance prior to the announcement with continuation leading up to implementation date.</p>

The Korea Exchange (KRX) will announce the results of the December 2020 review of the KOSDAQ150 Index in the second half of November. The constituent changes will be effective from the open on 11 December 2020 and the rebalancing trades will need to be done at the closing auction on 10 December 2020.The review covers the period from 1 May to 31 October. We have gone through 120 trading days and there are only 3 days remaining in the review period. Since the data is averaged, there is a very small possibility of the names changing over the next few days.At the current time, we see 16 potential inclusions and exclusions with a one-way turnover of 6.94%. This includes the fast entry inclusion of Kakao Games (293490 KS).The expected inclusions have outperformed the expected deletions since the start of the review period but have given up a significant part of the gains over the last couple of months. With short selling still banned, there could be another period of outperformance prior to the announcement with continuation leading up to implementation date.

KOSDAQ150 Index Rebalance Preview: Reversion Sets Up an Attractive Entry Point

Daejoo Electronic Materials / Event-Driven

<p>The Korea Exchange (KRX) will announce the results of the December 2020 review of the KOSDAQ150 Index in November. The constituent changes will be effective from 11 December 2020 and the rebalancing trades will need to be done at the closing auction on 10 December 2020.</p><p>The review period for the December rebalance runs from 1 May to 31 October. At the current time, we see 15 stocks being added to and deleted from the index. This is up from the 11 names we saw being included/ excluded at the end of June. With the index methodology using a 6 month average, the list should be a lot more stable going forward.</p><p>The expected inclusions have outperformed the expected exclusions, and the KOSDAQ150 index, by a wide margin over the last 4 months. With the short sell ban extended to 15 March 2021, the expected inclusions could continue to run up as investors chase momentum.</p>

The Korea Exchange (KRX) will announce the results of the December 2020 review of the KOSDAQ150 Index in November. The constituent changes will be effective from 11 December 2020 and the rebalancing trades will need to be done at the closing auction on 10 December 2020.The review period for the December rebalance runs from 1 May to 31 October. At the current time, we see 15 stocks being added to and deleted from the index. This is up from the 11 names we saw being included/ excluded at the end of June. With the index methodology using a 6 month average, the list should be a lot more stable going forward.The expected inclusions have outperformed the expected exclusions, and the KOSDAQ150 index, by a wide margin over the last 4 months. With the short sell ban extended to 15 March 2021, the expected inclusions could continue to run up as investors chase momentum.

KOSDAQ150 Index Rebalance Preview: Strong Momentum Driving Gains

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li><strong>Our valuation analysis of Koreacenter IPO suggests that this is a bad deal. As such, we would avoid participating in this IPO.</strong></li>
<li>The comps are trading at average EV/EBITDA valuation multiples of 20.1x (2018) and 18.2x (2019E). This latter valuation multiple (18.2x) was derived using the peers' annualized EBITDA in 1H19. We then took our estimated EBITDA estimate of 28.3 billion won for Koreacenter in 2020 and applied the average EV/EBITDA multiple in 2018 (18.2x) which resulted in an implied EV of 517 billion won. <strong>This results in an implied market cap of 492 billion won, adjusting for net cash and an implied price per share of 19,166 won per share. </strong><strong>The IPO valuation range for this deal is from 24,000 won to 27,200 won.</strong>
</li>
<li>In addition, it appears that the bankers are piling the Korean IPOs in 4Q19 with some other, potentially attractive IPOs such as Lotte REIT and Hanwha Systems and it appears that many institutional investors may opt to skip on the Koreacenter IPO and focus on other IPOs with more attractive valuations unless the bankers and the company lower the IPO price range of Koreacenter substantially. </li>
</ul>


Our valuation analysis of Koreacenter IPO suggests that this is a bad deal. As such, we would avoid participating in this IPO.
The comps are trading at average EV/EBITDA valuation multiples of 20.1x (2018) and 18.2x (2019E). This latter valuation multiple (18.2x) was derived using the peers' annualized EBITDA in 1H19. We then took our estimated EBITDA estimate of 28.3 billion won for Koreacenter in 2020 and applied the average EV/EBITDA multiple in 2018 (18.2x) which resulted in an implied EV of 517 billion won. This results in an implied market cap of 492 billion won, adjusting for net cash and an implied price per share of 19,166 won per share. The IPO valuation range for this deal is from 24,000 won to 27,200 won.

In addition, it appears that the bankers are piling the Korean IPOs in 4Q19 with some other, potentially attractive IPOs such as Lotte REIT and Hanwha Systems and it appears that many institutional investors may opt to skip on the Koreacenter IPO and focus on other IPOs with more attractive valuations unless the bankers and the company lower the IPO price range of Koreacenter substantially. 


South Korea

Koreacenter.Com Co., Ltd. was founded in 2000. The company's line of business includes providing computer programming services.

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Koreacenter.com (290510 KS)

KOSDAQ150 Index Rebalance: Lots of Changes, Big Turnover, High Impact

There are 17 changes to the KOSDAQ150 index and the turnover is estimated at 7.71%. There are a lot of stocks that have over 3 days of ADV to trade...

Brian Freitas

AMZN into Korea - "We Are Not Here to Take Part, We're Here to Take Over!"

I guess the Koreans aren't scared of Amazon's entry into the ecommerce space! I'm a seller of Naver here on the news that Amazon will come into...

Ken S. Kim

KOSDAQ150 Index Rebalance Preview: Reversion Sets Up an Attractive Entry Point

With 16 possible changes to the KOSDAQ150 in the Dec review with a one-way turnover of 7%, the recent underperformance of the inclusions vs the...

Brian Freitas

KOSDAQ150 Index Rebalance Preview: Strong Momentum Driving Gains

The Korea Exchange (KRX) will announce the results of the December 2020 review of the KOSDAQ150 Index in November. The constituent changes will be...

Brian Freitas

Koreacenter IPO Valuation Analysis

Our valuation analysis of Koreacenter IPO suggests that this is a bad deal. As such, we would avoid participating in this IPO. The comps are...

Douglas Kim

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