Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>On 21 February, it was announced that the long awaited amendment to the Export-Import Bank Act was passed by the Korean National Assembly. </li>
<li>As a result of this passage, the capital limit of the Export-Import Bank of Korea will be raised from the current 10 trillion won to 25 trillion won. </li>
<li>The revision of this law is expected to benefit major defense companies in Korea including Hyundai Rotem, Hanwha Aerospace, LIG Nex1, and Korea Aerospace Industries.</li>
</ul>


On 21 February, it was announced that the long awaited amendment to the Export-Import Bank Act was passed by the Korean National Assembly. 
As a result of this passage, the capital limit of the Export-Import Bank of Korea will be raised from the current 10 trillion won to 25 trillion won. 
The revision of this law is expected to benefit major defense companies in Korea including Hyundai Rotem, Hanwha Aerospace, LIG Nex1, and Korea Aerospace Industries.


Hyundai Rotem: Passage of Export-Import Bank Act To Support Korean Defense Companies

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in foreign holdings of KRX Stocks as of Feb 9th which has an aggregated holding worth USD509.9bn.</li>
<li>We estimate that foreign flows to be inflows of USD2,322mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign instistutions.</li>
<li>We highlight foreign changes in Hyundai Motor, Samsung Electronics, Kia, Sk Square, Samsung C&amp;T.</li>
</ul>


We analyzed the changes in foreign holdings of KRX Stocks as of Feb 9th which has an aggregated holding worth USD509.9bn.
We estimate that foreign flows to be inflows of USD2,322mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign instistutions.
We highlight foreign changes in Hyundai Motor, Samsung Electronics, Kia, Sk Square, Samsung C&amp;T.


KRX Foreign Holding Weekly (Feb 9th): Hyundai Motor, Samsung Electronics, Kia, Sk Square

Equity Capital Markets

<ul>
<li>This is our 9th "Annual Edition of the Major Korean IPOs Pipeline Preview" at Smartkarma.</li>
<li>This insight will feature 50 of the biggest potential IPOs in Korea in 2024.</li>
<li>These 50 IPOs in Korea are likely to represent more than 80% of all capital raised through IPOs in Korea next year.</li>
</ul>


This is our 9th "Annual Edition of the Major Korean IPOs Pipeline Preview" at Smartkarma.
This insight will feature 50 of the biggest potential IPOs in Korea in 2024.
These 50 IPOs in Korea are likely to represent more than 80% of all capital raised through IPOs in Korea next year.


<ul>
<li>In the past several days, there have been numerous local news about a substantial defense cooperation between Saudi Arabia and South Korea. </li>
<li>This could result in billions of dollars in new military/defense related systems new orders for numerous companies in Korea in the coming decade. </li>
<li>If there are major long-term arms deal between Saudi Arabia and South Korea, it could benefit the top defense companies in Korea including Hanwha Aerospace and Korea Aerospace Industries. </li>
</ul>


In the past several days, there have been numerous local news about a substantial defense cooperation between Saudi Arabia and South Korea. 
This could result in billions of dollars in new military/defense related systems new orders for numerous companies in Korea in the coming decade. 
If there are major long-term arms deal between Saudi Arabia and South Korea, it could benefit the top defense companies in Korea including Hanwha Aerospace and Korea Aerospace Industries. 


A Major Defense Cooperation Between Saudi Arabia and South Korea Likely

<ul>
<li>LIG Nex1 produces a wide range of advanced precision electronic systems, including missile, radars, electronic warfare, avionics, tactical communication systems, fire control systems, and naval combat systems.</li>
<li>LIG Nex1's operating profit has jumped by nearly 10x from 2019 to 2022. However, its share price has not adequately reflected this growth.</li>
<li>The company reached its highest ever order backlog of 12.2 trillion won at the end of 2022. The company is benefiting from increased demand for precision guided weapons worldwide.</li>
</ul>


LIG Nex1 produces a wide range of advanced precision electronic systems, including missile, radars, electronic warfare, avionics, tactical communication systems, fire control systems, and naval combat systems.
LIG Nex1's operating profit has jumped by nearly 10x from 2019 to 2022. However, its share price has not adequately reflected this growth.
The company reached its highest ever order backlog of 12.2 trillion won at the end of 2022. The company is benefiting from increased demand for precision guided weapons worldwide.


LIG Nex1: 10x Increase in Operating Profit from 2019 to 2022 Not Adequately Reflected in Share Price

South Korea

Korea Aerospace Industries Ltd. designs and produces aircraft parts including fixed wings for aircrafts and rotary wings for helicopters. The Company also engages in aircraft upgrade and modification business and satellite development business.

Hanwha Systems Co., Ltd. designs, develops, and distributes high-tech systems for the defense industry. The Company manufactures tactical communication systems, radar systems, naval combat systems, electro-optics, and fire control systems. Hanwha Systems markets its products throughout South Korea.

Satrec Initiative Co Ltd. manufactures and supplies satellite platforms and its components.  The Company products includes satellite systems, subsystems of satellite, optical payload, and image processing equipments.  Satrec also provides consulting and training for satellite system.

S&T Dynamics Co., Ltd. manufactures automotive components, such as transmissions, axles, propeller shafts, and steering gear boxes.  The Company also produces machine tools, casting products, and military products.

Aero Space Technology of Korea Inc. manufactures structural parts of airplane.  The company's products include frame & panel assembly, door, stringer, and Jig & fixture.

Victek Co., Ltd. develops and manufactures electronic warfare products, such as sonata precision direction finding systems, and spiral antennas.  The Company also produces power supplies for electronic warfare systems and military defense communication systems, such as sonata high voltage power supplies (HVPS).

Firstec Co., Ltd. develops and manufactures military weapons and maneuverable vehicles, such as vulcan fire-controllers, self-propelled guns, and armored cars.  The Company supplies its products to South Korean Ministry of National Defense.  Firstec also produces and sells office supplies, including printers and security assurance products.

Samsung Engineering Co., Ltd. provides engineering construction and project management services in the domestic and international markets. The Company constructs refinery plants, petrochemical plants, gas plants, hydrocarbon upstream, power plants, metallurgy plant, industrial plants, and water treatment facilities.

Hyundai Rotem Company Ltd. manufactures railroad equipment and defense vehicles. The Company produces high-speed trains, light rail vehicles, locomotives, and passenger coaches, main battle tanks, armored recovery vehicles, and related defense equipment. Hyundai Rotem operates worldwide.

Hyundai Mipo Dockyard Co., Ltd. is shipbuilders in the sectors of medium-sized conventional ships and specialized vessels. The Company constructs and delivers medium-ranged product carriers, chemical tankers, containerships, LPG carriers, pure car truck carriers and others.

Kratos Defense & Security Solutions, Inc. operates as a defense contractor and security systems integrator for the federal government and for state and local agencies. The Company offers services in weapon systems lifecycle support, military weapon range, security and surveillance systems, IT engineering, etc.

China Aerospace Times Electronics Technology Co Ltd designs, manufactures, and markets avariety of commercial air planes and space-related products, as well as providesrelated services.  The Company's products include launch vehicles, satellite reception equipment, measurement devices, and automation control systems.

China Aerospace Times Electronics (600879 CH)

China Spacesat Co., Ltd. develops and manufactures satellites and related products. The Company also operates retail stores, hotels, and travel properties .

AeroVironment, Inc. designs, develops, and produces small unmanned aircraft and fast charge systems for electric industrial vehicle batteries. The Company offers long range tracking antenna, sensors, and missile systems. AeroVironment markets its products in the United States.

AVIC Helicopter Co., Ltd. designs, develops, manufactures, and sells helicopters, airplane parts, and aviation-related products.  The Company also manufactures auto parts.

AviChina Industry & Technology Co Ltd manufactures and sells aviation tools and aero-parts. The Company's main products include helicopters, regional aircrafts, trainers, general aircrafts, aero-parts and components and aero-electrical products.

AviChina Industry & Technology H (2357 HK)

Guizhou Space Appliance Company Limited develops, manufactures and sells a variety of relays, connectors and other electronic components, which are widely used in aviation, aerospace, electronics, ships, nuclear power, transportation, communications, automatic controls, high-speed locomotives, appliances and other industrial units and subsystem units.

Aerojet Rocketdyne Holdings, Inc. operates as an aerospace and defense company. The Company provides propulsion and energetics to space, missile defense, strategic, tactical missile, and armaments areas, as well as designs, develops, and produces specialty metal components for munitions, commercial products, and sporting goods.

Spirit AeroSystems Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, designs and manufactures aerostructures including fuselages, propulsion systems, and wing systems for commercial and military aircrafts.

Spirit Aerosystems Holdings, Inc (SPR US)

AECC Aero-Engine Control Co. Ltd.. designs and manufactures Limited a variety of motorcycles, engines, and related parts. The Company also  provides aircraft parts and repair services.

AECC Aero-Engine Control Co. Ltd. A (000738 CH)

LIG Nex1 Co., Ltd. manufactures military and defense weapon systems.  The Company develops missiles, radio equipment, torpedoes, radar equipment, and other defense products.  LIG Nex1 produces weapons for the global defense industry and operates throughout South Korea.

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LIG Nex1 Co (079550 KS)

Hyundai Rotem: Passage of Export-Import Bank Act To Support Korean Defense Companies

It was announced today that the long awaited amendment to the Export-Import Bank Act was passed by the Korean National Assembly. This is likely to...

Douglas Kim

KRX Foreign Holding Weekly (Feb 9th): Hyundai Motor, Samsung Electronics, Kia, Sk Square

We analyzed KRX foreign holding data for the past week and highlighted foreign holding changes in Hyundai Motor, Samsung Electronics, Kia, Sk...

Ke Yan, CFA, FRM

2024 Major IPOs Pipeline in Korea

This insight will feature 50 of the biggest potential IPOs in Korea in 2024. This is our 9th "Annual Edition of the Major Korean IPOs Pipeline...

Douglas Kim

A Major Defense Cooperation Between Saudi Arabia and South Korea Likely

There is likely to be a major arms deal between Saudi Arabia and South Korea, which could benefit the top defense companies in Korea including...

Douglas Kim

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