Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

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.

Private Capital Markets

Lionheart Studio  / Private Capital Markets

<ul>
<li>Founded in 2018, <a href="https://www.smartkarma.com/entities/lionheart-studio-corp" target="_blank" data-smartkarma-citation="entities:36417:1" rel="noopener">Lionheart Studio (426630 KS)</a> is a South Korean multiplayer online role-playing games developer for mobiles and PCs.</li>
<li>The company’s game Odin: Valhalla Rising was based on Nordic mythology and was a huge success. Lionheart is planning to add more expansions to Odin.</li>
<li>The company tried to go public in October 2022 on KOSDAQ however, it cancelled its listing plans due to negative market sentiments at the time.   </li>
</ul>


Founded in 2018, Lionheart Studio (426630 KS) is a South Korean multiplayer online role-playing games developer for mobiles and PCs.
The company’s game Odin: Valhalla Rising was based on Nordic mythology and was a huge success. Lionheart is planning to add more expansions to Odin.
The company tried to go public in October 2022 on KOSDAQ however, it cancelled its listing plans due to negative market sentiments at the time.   


Lionheart: Over Dependence on One-Single Game

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

<ul>
<li>Extending bookbuilding period to seven days (and test-the-waters) is unlikely to make any real difference. Leaving the financial capacity check to underwriters will likely cause sharp confusion in the market.</li>
<li>The purpose of penalizing so-called hot money, like flippers and non-pricing institutions, is understandable. However, whether FSC has fully considered the side effects caused by uniformly applying this is questionable.</li>
<li>Expanding the allowable price range on a listing day is the most crucial point we should pay attention to, and we must design a post-IPO trading strategy accordingly.</li>
</ul>


Extending bookbuilding period to seven days (and test-the-waters) is unlikely to make any real difference. Leaving the financial capacity check to underwriters will likely cause sharp confusion in the market.
The purpose of penalizing so-called hot money, like flippers and non-pricing institutions, is understandable. However, whether FSC has fully considered the side effects caused by uniformly applying this is questionable.
Expanding the allowable price range on a listing day is the most crucial point we should pay attention to, and we must design a post-IPO trading strategy accordingly.


Korea FSC's Official Rule Changes for Local IPOs & Key Takeaways

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>Although Lionheart Studio announced that it will cancel its IPO this year, it is highly likely that the company will complete its IPO by 1H 2023.</li>
<li>If Lionheart Studio does not proceed with an IPO, Kakao Games has to pay to Lionheart CEO Kim Jae-Young and other major shareholders as much as 1.2 trillion won.</li>
<li>We would argue that Kakao Games' earnings estimates are overly aggressive and there is a strong likelihood of 30%+ earnings downgrade for Kakao Games by the consensus in 2023.</li>
</ul>


Although Lionheart Studio announced that it will cancel its IPO this year, it is highly likely that the company will complete its IPO by 1H 2023.
If Lionheart Studio does not proceed with an IPO, Kakao Games has to pay to Lionheart CEO Kim Jae-Young and other major shareholders as much as 1.2 trillion won.
We would argue that Kakao Games' earnings estimates are overly aggressive and there is a strong likelihood of 30%+ earnings downgrade for Kakao Games by the consensus in 2023.


Kakao Games: Further Downside Risk as IPO of Lionheart Studio Likely in 1H 2023

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>On the IPO front, <a href="https://www.smartkarma.com/entities/socionext-inc" target="_blank" data-smartkarma-citation="entities:36351:1" rel="noopener">Socionext (6526 JP)</a> provided a welcome respite with a positive listing, while South Korean IPOs continued to struggle.</li>
<li>There was only one large placement this week, with <a href="https://www.smartkarma.com/entities/glp-j-reit" target="_blank" data-smartkarma-citation="entities:11009:1" rel="noopener">GLP J-REIT (3281 JP)</a> deciding to brave the markets.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Socionext (6526 JP) provided a welcome respite with a positive listing, while South Korean IPOs continued to struggle.
There was only one large placement this week, with GLP J-REIT (3281 JP) deciding to brave the markets.


ECM Weekly (16th Oct 2022) - Socionext, Betagro, Lionheart, Five-Star, Giant Biogene, GLP J-REIT

Lionheart Studio  / Equity Capital Markets

<ul>
<li>Lionheart used the net profit from 3Q last year to 2Q this year. The Odin sales peaked in the third quarter of last year and are on a downward trend.</li>
<li>The indicative price band reaches a P/E multiple of 22~32x reasonably projected earnings of ₩140B. NCsoft's 12M forward PER stands at 14-15x. Krafton is only 12x.</li>
<li>It is unclear whether the market will accept this price deception under current conditions. We should refrain from aggressively approaching it without a clear answer to the decline in sales.</li>
</ul>


Lionheart used the net profit from 3Q last year to 2Q this year. The Odin sales peaked in the third quarter of last year and are on a downward trend.
The indicative price band reaches a P/E multiple of 22~32x reasonably projected earnings of ₩140B. NCsoft's 12M forward PER stands at 14-15x. Krafton is only 12x.
It is unclear whether the market will accept this price deception under current conditions. We should refrain from aggressively approaching it without a clear answer to the decline in sales.


Lionheart Studio IPO: Still Same Inflated Valuation

South Korea

Lionheart Studio Corp. operates game development businesses. The Company develops mobile games and other products. Lionheart Studio conducts businesses in South Korea.

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Lionheart Studio (426630 KS)

Lionheart: Over Dependence on One-Single Game

Lionheart studios is a South Korean multiplayer online role-playing games developer. The company's IPO was cancelled last year and one key risk is...

Shifara Samsudeen, ACMA, CGMA

Korea FSC's Official Rule Changes for Local IPOs & Key Takeaways

This post details the rule changes for Korea's local IPOs, officially unveiled by Korea FSC, and provides key takeaways.

Sanghyun Park

Kakao Games: Further Downside Risk as IPO of Lionheart Studio Likely in 1H 2023

We would argue that Kakao Games' earnings estimates are overly aggressive and there is a strong likelihood of 30%+ earnings downgrade for Kakao...

Douglas Kim

ECM Weekly (16th Oct 2022) - Socionext, Betagro, Lionheart, Five-Star, Giant Biogene, GLP J-REIT

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Lionheart Studio IPO: Still Same Inflated Valuation

This post details the terms of Lionheart Studio IPO and investigates the critical valuation issues, which resemble the inflated valuation...

Sanghyun Park

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