Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

SK IE Technology   / Equity Capital Markets

<div class="content-highlight"><ul>
<li>SK IET plans to complete its IPO in May.  The IPO price range is from 78,000 won to 105,000 won. The IPO base deal size is from $1.5 billion to $2.0 billion. According to the bankers' valuation, the expected market cap of SK IET is from 5.6 trillion won to 7.5 trillion won. SK IET IPO will be the biggest IPO in Korea so far this year, beating <a href="https://www.smartkarma.com/entities/sk-bioscience-co-ltd" target="_blank" data-smartkarma-citation="entities:31484:1" rel="noopener">SK Bioscience (302440 KS)</a> which recently raised $1.3 billion in its IPO in March. </li>
<li>The company will offer 21.39 million shares in the IPO (8.56 million new shares and 12.83 million old shares). The offered shares of 21.39 million represents nearly 30% of the outstanding shares (post IPO), which is large relative to its total outstanding shares. SK Innovation, which has a 90% stake in SK IET, plans to sell a 22.7% stake in the company in this IPO. In September 2020, SK Innovation sold a 10% stake in <a href="https://www.kedglobal.com/newsView/ked202009220004" target="_blank" rel="noopener">SK IET</a> for 300 billion won to Premier Partners, a local fund management company. </li>
<li>SK IET generated 197 billion won in EBITDA in 2020. Applying a 48.1x EV/EBITDA multiple (average valuation multiple of the company's comps), this results in an EV of 9,458 billion won and implied market cap of 9,309 billion won (130,572 won per share). After applying IPO discount 19.6% - 40.3%, this results in an IPO price range of 78,000 - 105,000 won. </li>
</ul></div>


SK IET plans to complete its IPO in May.  The IPO price range is from 78,000 won to 105,000 won. The IPO base deal size is from $1.5 billion to $2.0 billion. According to the bankers' valuation, the expected market cap of SK IET is from 5.6 trillion won to 7.5 trillion won. SK IET IPO will be the biggest IPO in Korea so far this year, beating SK Bioscience (302440 KS) which recently raised $1.3 billion in its IPO in March. 
The company will offer 21.39 million shares in the IPO (8.56 million new shares and 12.83 million old shares). The offered shares of 21.39 million represents nearly 30% of the outstanding shares (post IPO), which is large relative to its total outstanding shares. SK Innovation, which has a 90% stake in SK IET, plans to sell a 22.7% stake in the company in this IPO. In September 2020, SK Innovation sold a 10% stake in SK IET for 300 billion won to Premier Partners, a local fund management company. 
SK IET generated 197 billion won in EBITDA in 2020. Applying a 48.1x EV/EBITDA multiple (average valuation multiple of the company's comps), this results in an EV of 9,458 billion won and implied market cap of 9,309 billion won (130,572 won per share). After applying IPO discount 19.6% - 40.3%, this results in an IPO price range of 78,000 - 105,000 won. 


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> and <a href="https://www.smartkarma.com/entities/gcl-poly-energy-holdings-limited" target="_blank" data-smartkarma-citation="entities:3708:1" rel="noopener">Gcl Poly Energy Holdings Limited (3800 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/china-pacific-insurance-group" target="_blank" data-smartkarma-citation="entities:6177:1" rel="noopener">China Pacific Insurance (2601 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/bank-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:656:1" rel="noopener">Bank Of China Ltd (H) (3988 HK)</a> and <a href="https://www.smartkarma.com/entities/kingdee-international-sftwr" target="_blank" data-smartkarma-citation="entities:37:1" rel="noopener">Kingdee International Software (268 HK)</a>. Shorts increased in almost all sectors, led by Financials, Communication Services, Consumer Discretionary, Health Care and Information Technology.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a>, <a href="https://www.smartkarma.com/entities/showa-denko-k-k" target="_blank" data-smartkarma-citation="entities:1496:1" rel="noopener">Showa Denko K.K. (4004 JP)</a>, <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a> and <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a>, <a href="https://www.smartkarma.com/entities/ricoh-company-ltd" target="_blank" data-smartkarma-citation="entities:15359:1" rel="noopener">Ricoh Company Ltd (7752 JP)</a>, <a href="https://www.smartkarma.com/entities/japan-retail-fund-investment" target="_blank" data-smartkarma-citation="entities:735:1" rel="noopener">Japan Retail Fund Investment (8953 JP)</a> and <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>. Shorts increased in almost all sectors led by Industrials, Materials, Information Technology, Financials, and Communication Services, while decreasing only in Real Estate.</p></div><div><p>In Korea, short increased on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/iljin-materials-co-ltd" target="_blank" data-smartkarma-citation="entities:7709:1" rel="noopener">Iljin Materials (020150 KS)</a> and <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a>.</p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a>, <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a> and <a href="https://www.smartkarma.com/entities/macronix-international" target="_blank" data-smartkarma-citation="entities:3247:1" rel="noopener">Macronix International (2337 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a> and <a href="https://www.smartkarma.com/entities/fitipower-integrated-tech" target="_blank" data-smartkarma-citation="entities:8712:1" rel="noopener">Fitipower Integrated Tech (4961 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Tencent Holdings (700 HK), Kuaishou Technology (1024 HK), China Merchants Bank H (3968 HK), JD.com Inc. (9618 HK) and Gcl Poly Energy Holdings Limited (3800 HK) while there was short covering on Alibaba Group (9988 HK), China Pacific Insurance (2601 HK), Xiaomi Corp (1810 HK), Bank Of China Ltd (H) (3988 HK) and Kingdee International Software (268 HK). Shorts increased in almost all sectors, led by Financials, Communication Services, Consumer Discretionary, Health Care and Information Technology.In Japan, stocks that saw the most shorts were CyberAgent Inc (4751 JP), Showa Denko K.K. (4004 JP), Monex Group Inc (8698 JP) and Canon Inc (7751 JP) while shorts decreased on Ryohin Keikaku (7453 JP), Ricoh Company Ltd (7752 JP), Japan Retail Fund Investment (8953 JP) and Toshiba Corp (6502 JP). Shorts increased in almost all sectors led by Industrials, Materials, Information Technology, Financials, and Communication Services, while decreasing only in Real Estate.In Korea, short increased on Samsung Electronics (005930 KS), Samsung SDI (006400 KS), Naver Corp (035420 KS) and Celltrion Inc (068270 KS) while shorts decreased on Iljin Materials (020150 KS) and Doosan Infracore (042670 KS).Stocks in Taiwan that saw the highest increase in shorts were United Microelectronics Corp (2303 TT), Pegatron Corp (4938 TT), TSMC (2330 TT) and Macronix International (2337 TT) while shorts were covered on AU Optronics (2409 TT), Evergreen Marine Corp (2603 TT), Largan Precision (3008 TT) and Fitipower Integrated Tech (4961 TT). 

Asia Short Interest: Kuaishou, CMB, JD, Kingdee, Xiaomi, Monex, Toshiba, Samsung, Naver, UMC, Largan

Cross Asset Strategy

<div class="content-highlight"><p>In this insight, we discuss about the winners and losers among the top 100 stocks in KOSPI, especially in the most recent <strong>"KOSPI Box trading range"</strong> lasting from 8 January to 10 February 2021 (see chart below). Sometimes, finding out what stocks and sectors outperform in a box trading range could lead to some<strong> clues</strong> in helping to understand what stocks and sectors could outperform in the coming weeks. From 8 January to 10 February, KOSPI has been trading in a box range and its is down slightly (1.6%) in this period. </p></div>

In this insight, we discuss about the winners and losers among the top 100 stocks in KOSPI, especially in the most recent "KOSPI Box trading range" lasting from 8 January to 10 February 2021 (see chart below). Sometimes, finding out what stocks and sectors outperform in a box trading range could lead to some clues in helping to understand what stocks and sectors could outperform in the coming weeks. From 8 January to 10 February, KOSPI has been trading in a box range and its is down slightly (1.6%) in this period. 

Winners & Losers in the KOSPI Box Trading Range & Return of Money Velocity Post End of Lock Down?

Lotte Energy Materials / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/iljin-materials-co-ltd" target="_blank" data-smartkarma-citation="entities:7709:1" rel="noopener">Iljin Materials (020150 KS)</a> announced after the market close 9 November that it plans to IPO its 100% owned Malaysian subsidiary <a href="https://finance.naver.com/item/news_read.nhn?article_id=0004446565&amp;office_id=015&amp;code=020150&amp;sm=title_entity_id.basic" target="_blank" rel="noopener">IMM Technology</a>, which generated sales of 43.7 billion won in 2019. IMM Technology is a Malaysian company that produces elecfoil for rechargeable batteries. Elecfoil is a thin copper foil used for cathode collectors in rechargeable batteries. It is widely used in electric vehicles (EV) and energy storage systems (ESS). </p><p>IMM Technology recently hired Korea Investment &amp; Securities and Shinhan Investment &amp; Securities as the lead bankers on this IPO deal. IMM Technology was established as a 100% subsidiary of Iljin Materials in 2017. IMM Technology produces nearly 20,000 tons of elecfoil for rechargeable batteries per year. IMM Technology plans to expand capacity to 30,000 tons by the end of 2021. This elecfoil production facility in Malaysia is even bigger than the company's copper foil production facility in Iksan (Jeonbuk), South Korea which has an annual production capacity of 16,000 copper foil. </p><p><strong>2021 - The Year of Rechargeable Batteries IPOs in Korea - </strong>Next year will be the year of the rechargeable batteries IPOs in Korea. The biggest rechargeable battery IPO will be LG Energy Solutions (LG Chem), followed by SK IE Technology (SK Innovation). Iljin Materials' IMM Technology will follow these two IPOs as well. Overall, we believe the IPO listing of the IMM Technology Malaysian elecfoil business is likely to be a key positive catalyst for Iljin Materials over the next 6-12 months. </p>

Iljin Materials (020150 KS) announced after the market close 9 November that it plans to IPO its 100% owned Malaysian subsidiary IMM Technology, which generated sales of 43.7 billion won in 2019. IMM Technology is a Malaysian company that produces elecfoil for rechargeable batteries. Elecfoil is a thin copper foil used for cathode collectors in rechargeable batteries. It is widely used in electric vehicles (EV) and energy storage systems (ESS). IMM Technology recently hired Korea Investment &amp; Securities and Shinhan Investment &amp; Securities as the lead bankers on this IPO deal. IMM Technology was established as a 100% subsidiary of Iljin Materials in 2017. IMM Technology produces nearly 20,000 tons of elecfoil for rechargeable batteries per year. IMM Technology plans to expand capacity to 30,000 tons by the end of 2021. This elecfoil production facility in Malaysia is even bigger than the company's copper foil production facility in Iksan (Jeonbuk), South Korea which has an annual production capacity of 16,000 copper foil. 2021 - The Year of Rechargeable Batteries IPOs in Korea - Next year will be the year of the rechargeable batteries IPOs in Korea. The biggest rechargeable battery IPO will be LG Energy Solutions (LG Chem), followed by SK IE Technology (SK Innovation). Iljin Materials' IMM Technology will follow these two IPOs as well. Overall, we believe the IPO listing of the IMM Technology Malaysian elecfoil business is likely to be a key positive catalyst for Iljin Materials over the next 6-12 months. 

Iljin Materials - IPO of Its 100% Owned Malaysian Subsidiary IMM Technology in 2021

<div class="content-highlight"><p><strong>It has been reported in the past few days that <a href="http://www.koreaninvestors.com/?p=12175" target="_blank" rel="noopener">NPS</a> is likely to put a greater emphasis on ESG (environmental, social, &amp; governance) based investing for Korean stocks and bonds starting 2021. </strong>NPS has currently given a mandate to a company to help NPS to apply ESG based investment system. The ESG evaluations are expected to aid NPS to actively exercise shareholder rights and also to carry out negative screening of stocks.</p></div><h3>Implications of NPS Incorporating More ESG Criteria on Domestic Investments (Bonds &amp; Stocks)</h3><ul>
<li>Negative Impact on VICE industries </li>
<li>Positive Impact on Renewable Energy Industries</li>
<li>Negative Impact on Coal &amp; Oil Industries</li>
<li>Greater Representation of Women in Senior Management Team/BOD</li>
</ul>

It has been reported in the past few days that NPS is likely to put a greater emphasis on ESG (environmental, social, &amp; governance) based investing for Korean stocks and bonds starting 2021. NPS has currently given a mandate to a company to help NPS to apply ESG based investment system. The ESG evaluations are expected to aid NPS to actively exercise shareholder rights and also to carry out negative screening of stocks.Implications of NPS Incorporating More ESG Criteria on Domestic Investments (Bonds &amp; Stocks)
Negative Impact on VICE industries 
Positive Impact on Renewable Energy Industries
Negative Impact on Coal &amp; Oil Industries
Greater Representation of Women in Senior Management Team/BOD


NPS - Greater Emphasis of ESG Based Investing for Korean Stocks & Bonds Starting 2021

South Korea

Lotte Energy Materials Corporation manufactures and distributes electric foils. The Company produces printed circuit board and lithium ion secondary batteries elecfoil, electrolytic and epoxy copper foil, electrolytic capacitor aluminum foil, and other related products. Lotte Energy Materials also offers energy and glass and window construction services.

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Lotte Energy Materials (020150 KS)

SK IET IPO Preview

SK IET plans to complete its IPO in May. The IPO price range is from 78,000 won to 105,000 won. The IPO base deal size is from $1.5 billion to...

Douglas Kim

Asia Short Interest: Kuaishou, CMB, JD, Kingdee, Xiaomi, Monex, Toshiba, Samsung, Naver, UMC, Largan

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

Winners & Losers in the KOSPI Box Trading Range & Return of Money Velocity Post End of Lock Down?

In this insight, we discuss about the winners and losers among the top 100 stocks in KOSPI, especially in the most recent "KOSPI Box trading range"...

Douglas Kim

Iljin Materials - IPO of Its 100% Owned Malaysian Subsidiary IMM Technology in 2021

The IPO listing of the IMM Technology Malaysian elecfoil business is likely to be a key positive catalyst for Iljin Materials over the next 6-12...

Douglas Kim

NPS - Greater Emphasis of ESG Based Investing for Korean Stocks & Bonds Starting 2021

It has been reported in the past few days that NPS is likely to put a greater emphasis on ESG (environmental, social, & governance) based...

Douglas Kim

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