Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>There is a high likelihood of the Indian authorities fully approving the BGMI game after three months of trial. Plus, it has a solid pipeline of new games under development. </li>
<li>Krafton is improving its shareholder return policy. In addition, the consensus is likely to raise the company's earnings estimates post its excellent results in 1Q 2023. </li>
<li>We maintain our Positive view of Krafton and its shares are likely to continue to outperform the market this year. </li>
</ul>


There is a high likelihood of the Indian authorities fully approving the BGMI game after three months of trial. Plus, it has a solid pipeline of new games under development. 
Krafton is improving its shareholder return policy. In addition, the consensus is likely to raise the company's earnings estimates post its excellent results in 1Q 2023. 
We maintain our Positive view of Krafton and its shares are likely to continue to outperform the market this year. 


Krafton: India & Improving Shareholder Return Policy Likely to Lead to Further Outperformance

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

We previously discussed our thoughts on Krafton’s valuation in <a href="https://www.smartkarma.com/insights/krafton-ipo-valuation" target="_blank" rel="noopener">Krafton IPO - Valuation | Smartkarma</a>. Since then, Krafton has lowered its asking range from KRW458,00-557,000 to KRW400,000-498,000 while reducing the number of new share offered from 7,030,000 to 5,624,000. They didn’t reduce the number of existing shares offered though, no. Somewhat fitting perhaps for a company that is over-reliant on a game whose battlefield you enter by parachute. They should colour the parachutes golden if they manage to pull this off.

We previously discussed our thoughts on Krafton’s valuation in Krafton IPO - Valuation | Smartkarma. Since then, Krafton has lowered its asking range from KRW458,00-557,000 to KRW400,000-498,000 while reducing the number of new share offered from 7,030,000 to 5,624,000. They didn’t reduce the number of existing shares offered though, no. Somewhat fitting perhaps for a company that is over-reliant on a game whose battlefield you enter by parachute. They should colour the parachutes golden if they manage to pull this off.

Krafton’s IPO looks extremely richly priced. The peer group selection by bankers is in our opinion highly dubious neglecting to account for Krafton’s current one trick pony status. We are happy to correct this error for them by including mobile gaming one tricks such as Mixi and Gungho below. You’re welcome bankers!

Krafton’s IPO looks extremely richly priced. The peer group selection by bankers is in our opinion highly dubious neglecting to account for Krafton’s current one trick pony status. We are happy to correct this error for them by including mobile gaming one tricks such as Mixi and Gungho below. You’re welcome bankers!

Douglas Research Advisory

<ul>
<li>On 5 June, Shift Up announced that it will be postponing its IPO to July. The original book building period for the institutional investors was from 3 to 13 June.  </li>
<li>The final book building date has been postponed to 27 June. The subsequent public offering subscription for general investors was also postponed to 2 to 3 July.</li>
<li>A major investment positive of Shift Up is enormous initial success of Stellar Blade which was the best selling game in the U.S. and numerous other countries in April 2024. </li>
</ul>


On 5 June, Shift Up announced that it will be postponing its IPO to July. The original book building period for the institutional investors was from 3 to 13 June.  
The final book building date has been postponed to 27 June. The subsequent public offering subscription for general investors was also postponed to 2 to 3 July.
A major investment positive of Shift Up is enormous initial success of Stellar Blade which was the best selling game in the U.S. and numerous other countries in April 2024. 


Shift Up Delays the IPO and Stellar Blade Tops Number One Game in the US in April

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The founder and former chairman and CEO of <a href="https://www.smartkarma.com/entities/nexon-co-ltd" target="_blank" data-smartkarma-citation="entities:16032:1" rel="noopener">Nexon (3659 JP)</a> passed away according to both Nexon and his holding company NXC. Both announced it late afternoon 1 March.</li>
<li>NXC - the near-parent  (47+% stake) of Nexon tried to sell Nexon/NXC in H1 2019 to no avail. Since then, profits have rebounded somewhat, and investments have multiplied. </li>
<li>The estate may wish to sell Nexon shares, or its entire stake, at some point near-term.</li>
</ul>


The founder and former chairman and CEO of Nexon (3659 JP) passed away according to both Nexon and his holding company NXC. Both announced it late afternoon 1 March.
NXC - the near-parent  (47+% stake) of Nexon tried to sell Nexon/NXC in H1 2019 to no avail. Since then, profits have rebounded somewhat, and investments have multiplied. 
The estate may wish to sell Nexon shares, or its entire stake, at some point near-term.


Nexon - Founder Kim Jung-Ju Passes, Raises Question if Nexon Deal Is Back In Play

South Korea

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

Netmarble Corporation develops and publishes mobile games. The Company develops and publishes casual games, action, sports games, strategy, simulation games, and social casino games. Netmarble offers services worldwide.

Pearl Abyss Corp. operates as a computer games making company. The Company offers games development, games exporting, and other services. Pearl Abyss serves customers worldwide.

Kakao Games Corp. operates as a multiply platform gaming company. The Company provides mobile games, computer games, virtual reality games, and other related products. Kakao Games markets its products worldwide.

SK Telecom Co., Ltd. is a Korean mobile and telecommunications operator. The Company provides cellular voice, wireless data, and wireless internet services. SK Telecom also offers fixed line services and platform services.

KT Corporation provides telecommunication services including local, long distance, and international calling, satellite communication, data transmission, and wireless telephone services in South Korea.  The Company also offers network portal and high-speed Internet access services using asymmetric digital subscriber lines (ADSLs).

LG Uplus Corp., an affiliate of LG Group, provides a wide range of personal communications services (PCS) using code division multiple access (CDMA) technology.  The Company offers call forwarding, call and data transfer, call waiting, voice mail, Internet-phone, prepaid call, and authentication text-to-speech (TTS) services.

LS Cable & System Asia Ltd. provides and offers cable products.  The Company manufactures and markets electric and telecommunication cables, head transmission lines, voltage cables and industrial specialty cables for the energy, infrastructure, construction, automotive, railway, telecommunication and electronics industries.

KINX INC is the Internet linkage and line adapter service providing firm.  The Company provides IX and Internet Data Center service to the network service providers to reduce the traffic and to contruct Internet infrastructure.  KINX also provides VoIP service.

Sejong Telecom, Inc. develops and provides various telecom service.  The Company's main service include international phone call, Internet phone call, and long distance call.

Endeavor Group Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, offers entertainment content, as well as specializes in marketing and licensing, representation, and event management. Endeavor Group Holdings serves customers worldwide.

Roku, Inc. designs and manufactures consumer electronic products. The Company offers wireless enabled devices that stream audio and video content from the internet to home entertainment systems. Roku serves customers globally.

Kunlun Tech Co., Ltd. offers comprehensive Internet value-added services. The Company focuses on social network interactive and online game fields. Kunlun Tech also provides localized translation outsourcing and agency advertising services.

Bilibili Inc. provides online entertainment services. The Company offers a platform that covers a wide array of genres and media formats, including videos, live broadcasting, mobile games, animation, and comics. Bilibili serves customers in China.

China Ruyi Holdings Limited operates as a holding company. The Company, through its subsidiaries, focuses on online streaming video and internet community businesses. China Ruyi Holdings also manufactures and sells photographic, electronic, and multimedia accessories.

37 Interactive Entertainment Network Technology Group Co.,Ltd designs, develops, and operates mobile games and web games. The Company also provides game promotion, customer service, top-up payment, and other services. 37 Interactive Entertainment Network Technology Group conducts its businesses in China.

37 Interactive Entertainment N (002555 CH)

Lions Gate Entertainment Corporation develops and distributes film entertainment contents. The Company produces motion pictures, television programming, animation, and digital media. Lions Gate Entertainment serves customers worldwide.

World Wrestling Entertainment, Inc. operates as a media and entertainment company. The Company offers live wrestling events, television programming, music publishing, advertising, licensing, and home video streaming services. World Wrestling distributes its programs worldwide in various languages.

AMC Entertainment Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, provides theatrical exhibition, movie screening, food distribution, online ticket booking, and other related services. AMC Entertainment offers movie theaters worldwide.

Saregama India Limited manufactures, sells and deals in Audio Cassettes, CD's and DVDs, which they market in India, Europe, the USA, Canada, the Caribbean Islands and South Africa. The Group's range of music encompasses both new and old Hindi films, regional films, ghazals, classical, Indipop and International. Saregama also has a film business, which produces films and TV serials.

Krafton, Inc. operates as a game development company. The Company develops console games, mobile games, computer games, and other related products. Krafton markets its products throughout South Korea.

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Krafton (259960 KS)

Krafton: India & Improving Shareholder Return Policy Likely to Lead to Further Outperformance

Krafton's share price is up 11% today after better than expected results in 3Q 2023. It had sales of 450 billion won (up 3.8% YoY) and operating...

Douglas Kim

Krafton IPO – This Should Be Pulled

In case you are looking for ideas that are bearish China but perhaps not directly in the firing line if positioning gets too stretched to the...

Mio Kato

Krafton IPO - Valuation

Breaking new lows. Still structurally challenged. Still liked by the sell side. Do read the last three bullet points and note that sell side target...

Mio Kato

Shift Up Delays the IPO and Stellar Blade Tops Number One Game in the US in April

Shift Up announced that it will be postponing its IPO to July. A major investment positive is the enormous initial success of Stellar Blade which...

Douglas Kim

Nexon - Founder Kim Jung-Ju Passes, Raises Question if Nexon Deal Is Back In Play

Nexon's founder Kim Jung-ju has passed away. This raises the question of the disposition of the 47+% stake belonging to his holding company NXC. If...

Travis Lundy

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