Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we lay out the thesis that LG H&amp;H is likely to be one of the biggest beneficiaries of the return of Chinese group tours to Korea. </li>
<li>LG H&amp;H consistently generated more than 1 trillion won in operating profit from 2018 to 2021.</li>
<li>We expect LG H&amp;H to generate 1 trillion won or more in operating profit in 2024 and 2025, which would be 20-25%+ higher than current consensus estimates in this period. </li>
</ul>


In this insight, we lay out the thesis that LG H&amp;H is likely to be one of the biggest beneficiaries of the return of Chinese group tours to Korea. 
LG H&amp;H consistently generated more than 1 trillion won in operating profit from 2018 to 2021.
We expect LG H&amp;H to generate 1 trillion won or more in operating profit in 2024 and 2025, which would be 20-25%+ higher than current consensus estimates in this period. 


LG H&H - A Key Beneficiary of the Return of Chinese Group Tours to Korea

<ul>
<li>In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days. </li>
<li>The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.</li>
<li>Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.</li>
</ul>


In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days. 
The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.
Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.


China to Finally Allow Group Tours to Korea and Japan?

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>
<a href="https://www.bloomberg.com/news/articles/2023-08-09/l-occitane-boss-is-said-in-advanced-talks-on-6-5-billion-buyout?in_source=embedded-checkout-banner" target="_blank" rel="noopener">According to Bloomberg</a>, <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> is set to receive a HK$35 per share privatisation offer from Reinold Geiger, the Chairman and the largest shareholder.</li>
<li>The rumoured price is attractive and represents an all-time high share price. Therefore, Acatis KVG, the shareholder with a blocking stake, would be supportive.</li>
<li>The rumoured price implies multiples at a discount to peer multiples, which explains Mr Geiger’s ambitions for a possible European listing to secure higher valuation multiples. </li>
</ul>



According to Bloomberg, L'Occitane (973 HK) is set to receive a HK$35 per share privatisation offer from Reinold Geiger, the Chairman and the largest shareholder.
The rumoured price is attractive and represents an all-time high share price. Therefore, Acatis KVG, the shareholder with a blocking stake, would be supportive.
The rumoured price implies multiples at a discount to peer multiples, which explains Mr Geiger’s ambitions for a possible European listing to secure higher valuation multiples. 


L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?

<ul>
<li>
<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> is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, <a href="https://www.bloomberg.com/news/articles/2023-07-25/l-occitane-owner-said-to-mull-buyout-of-4-billion-beauty-firm" target="_blank" rel="noopener">according to Bloomberg</a>. Mr Geiger has been exploring financing options for the potential deal.</li>
<li>The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.</li>
<li>L’Occitane released a solid <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0725/2023072500263.pdf" target="_blank" rel="noopener">1QFY2024 update</a> today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples. </li>
</ul>



L'Occitane (973 HK) is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, according to Bloomberg. Mr Geiger has been exploring financing options for the potential deal.
The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.
L’Occitane released a solid 1QFY2024 update today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples. 


L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?

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.

<ul>
<li>Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.</li>
<li>Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.</li>
<li>ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.</li>
</ul>


Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.


Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context

South Korea

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

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.

Amorepacific Corporation develops, manufactures, and exports skin care, make-up, and fragrance products. The Company also produces and markets personal care and health-related products, such as shampoos, soaps, toothpastes, and health teas.

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

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.

POLA ORBIS HOLDINGS INC. develops, manufactures and markets cosmetic products, centering in skincare  products. Under its multi-brand strategy, the Company holds nine cosmetic brands including POLA, prestige skincare brand, ORBIS, oil-free skincare brand, H2O PLUS and Jurlique.

Shanghai Jahwa United Co., Ltd. develops, manufactures and wholesales skin care and hair care products, cosmetics, perfumes, detergents, and other household chemical products.  The Company also provides technical and food services.

FANCL CORPORATION produces and sells additive-free skin care cosmetics for both women and men.  The Company's products include cleansing creams, hair care goods such as shampoos and conditioners, and facial make up products.  Fancl also makes and distributes dietary supplements including royal jelly and various tablets with extracted essence from mushrooms, garlic, ginseng, and soy beans.

Edgewell Personal Care Co., manufactures and markets a diversified range of personal care  products in the wet shave, skin care, feminine care and infant care categories.  The Companies products include shaving systems and disposable razors, feminine care products, sun care products, infant feeding, gloves and moist wipes.

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.

PT Industri Jamu Dan Farmasi Sido Muncul Tbk manufactures and produces herbal products. The Company's products consist of medicinal herbs, energy drinks, sweets and other beverages.

Rizap Group Inc provides low calorie foods including soy milk cookies, diet drinks, and supplements.  The Company sells its products through mail order.

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.

Shanghai Flyco Electrical Appliance Co., Ltd. develops, manufactures and sells personal care appliances. Main products include electric shavers and hairdryers.

Shanghai Flyco Electrical Appl (603868 CH)

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.

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.

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LG H&H (Pref) (051905 KS)

LG H&H - A Key Beneficiary of the Return of Chinese Group Tours to Korea

We expect LG H&H to generate 1 trillion won or more in operating profit in 2024 and 2025, which would be 20-25%+ higher than current consensus...

Douglas Kim

China to Finally Allow Group Tours to Korea and Japan?

The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean...

Douglas Kim

L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?

Shares are currently in a trading halt. The rumoured offer price of HK$35 per share is attractive and represents an all-time high price. Therefore,...

Arun George

L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?

The presence of a significant disinterested shareholder necessitates an attractive takeover premium. Irrespective of a bid materialising, the...

Arun George

Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context

This post explores the expansion of ISA tax benefits and its impact on dividend trades focused on preferred stocks within the value-up trading...

Sanghyun Park

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