Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.</li>
<li>These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.</li>
<li>These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.</li>
</ul>


In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.
These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.
These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.


Initial Thoughts on the KOSPI200 Rebalance in June 2022

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>KOSPI Size Index Series rebalances twice a year in March and September. The base date is February 28. It is a three-month review, so, from December 1 to February 28.</li>
<li>In the KOSPI size index rebalancing, an increase in the buying volume of local institutions for stocks moving from LargeCap to MidCap is generally detected. </li>
<li>14 new MidCap entrants are expected to have a sizable passive impact.</li>
</ul>


KOSPI Size Index Series rebalances twice a year in March and September. The base date is February 28. It is a three-month review, so, from December 1 to February 28.
In the KOSPI size index rebalancing, an increase in the buying volume of local institutions for stocks moving from LargeCap to MidCap is generally detected. 
14 new MidCap entrants are expected to have a sizable passive impact.


KOSPI Size Index Series Rebalancing Screening Results

<ul>
<li>In this insight, we discuss the end of the mandatory lock-up periods for 44 stocks in Korea in February 2022. 
</li>
<li>Among these 44 stocks, 8 stocks are in KOSPI and 36 stocks are in KOSDAQ.</li>
<li>These 44 stocks could be subject to further selling pressures in February and could on average underperform relative to the market. </li>
</ul>


In this insight, we discuss the end of the mandatory lock-up periods for 44 stocks in Korea in February 2022. 

Among these 44 stocks, 8 stocks are in KOSPI and 36 stocks are in KOSDAQ.
These 44 stocks could be subject to further selling pressures in February and could on average underperform relative to the market. 


End of Mandatory Lock-Up Periods for 44 Stocks in Korea in February 2022

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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.

Equity Capital Markets

Hyundai Engineering   / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:33008:1" rel="noopener">Hyundai Engineering Co Ltd (HEC KS)</a> is looking to raise up to US$1bn in its upcoming Korea IPO. </li>
<li>Hyundai Engineering is an engineering firm that covers the entire life-cycle, from procurement, development, maintenance post-completion of the building/project.</li>
<li>As per Korea Construction Association in 2021, it ranks 6th position, with a construction capacity of KRW8.5 tn.</li>
</ul>



Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its upcoming Korea IPO. 
Hyundai Engineering is an engineering firm that covers the entire life-cycle, from procurement, development, maintenance post-completion of the building/project.
As per Korea Construction Association in 2021, it ranks 6th position, with a construction capacity of KRW8.5 tn.


Hyundai Engineering Pre-IPO - Order Backlog Aids Visibility However, Margins Have Been Fluctuating

<h2>Bookbuilding Results of K Car IPO</h2><a href="https://www.smartkarma.com/entities/k-car" target="_blank" data-smartkarma-citation="entities:34118:1" rel="noopener">K Car (381970 KS)</a> announced today that the <a href="https://www.newsis.com/view/?id=NISX20210929_0001597864&amp;cID=15001&amp;pID=15000" target="_blank" rel="noopener">IPO price</a> has been determined at 25,000 won, which was below the IPO price range of 34,300 won and 43,200 won. There were mixed responses from the overseas and domestic institutional investors. Most of the global institutional investors, that have recorded high returns from IPOs of global used car trading online platform companies such as Carvana and Vroom in the US, applied at the upper end of the IPO offering price and showed solid demand. On the other hand, the domestic institutional investors were more conservative in their view of this IPO, especially after the recent sluggish performance of major IPOs in Korea including <a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (259960 KS)</a> and <a href="https://www.smartkarma.com/entities/lotte-rental-co-ltd" target="_blank" data-smartkarma-citation="entities:33445:1" rel="noopener">Lotte Rental (089860 KS)</a>. Plus, given the recent series of large scale IPOs in Korea, many local institutions have limited amount of funds for further investments in IPOs.  <div class="content-highlight">
We continue to have a positive view of the K Car IPO following the bookbuilding results. However, it appears that the market (especially local investors) have taken a much more pessimistic view of this IPO especially due to the recent poor IPO of Lotte Rental combined with the threat of Hyundai Motor Group becoming a major competitor.
We have lowered our fair value assessment to 38,809 per share, which still represents an upside of 55% versus the IPO price of 25,000 won. Our fair value assessment is based on 0.9x P/S using our estimated sales of 2.3 trillion won for the company in 2022. While we maintained our earnings estimates, we lowered to target multiple by 30% in 2022. The 0.9x P/S multiple now reflects a 30% discount to the comps' multiples (which are mainly US based companies). 
</div>

Bookbuilding Results of K Car IPOK Car (381970 KS) announced today that the IPO price has been determined at 25,000 won, which was below the IPO price range of 34,300 won and 43,200 won. There were mixed responses from the overseas and domestic institutional investors. Most of the global institutional investors, that have recorded high returns from IPOs of global used car trading online platform companies such as Carvana and Vroom in the US, applied at the upper end of the IPO offering price and showed solid demand. On the other hand, the domestic institutional investors were more conservative in their view of this IPO, especially after the recent sluggish performance of major IPOs in Korea including  Krafton Inc (259960 KS) and Lotte Rental (089860 KS). Plus, given the recent series of large scale IPOs in Korea, many local institutions have limited amount of funds for further investments in IPOs.  
We continue to have a positive view of the K Car IPO following the bookbuilding results. However, it appears that the market (especially local investors) have taken a much more pessimistic view of this IPO especially due to the recent poor IPO of Lotte Rental combined with the threat of Hyundai Motor Group becoming a major competitor.
We have lowered our fair value assessment to 38,809 per share, which still represents an upside of 55% versus the IPO price of 25,000 won. Our fair value assessment is based on 0.9x P/S using our estimated sales of 2.3 trillion won for the company in 2022. While we maintained our earnings estimates, we lowered to target multiple by 30% in 2022. The 0.9x P/S multiple now reflects a 30% discount to the comps' multiples (which are mainly US based companies). 


South Korea

CJ Logistics Corporation provides logistics services. The Company provides land transportation, maritime transportation, harbor unloading, cargo storage, international logistics processing, and other services. CJ Logistics also provides internet home shopping services. CJ Logistics serves customers worldwide.

SK Rent A Car Co., Ltd. provides cars rental and leasing services. The Company also offers passenger car leasing, and other motor vehicles leasing services. SK Rent A Car also offers used cars distribution services.

RedcapTour Co., Ltd. develops, produces, and sells a variety of software, especially for a line of Internet kiosks.  The Company's products include database construction, search engine tools, and multimedia software.  Media Solution also provides touch screens, which is a touch-sensitive pad that enable user to navigate on the surface of monitors.

Chunil Express Co., Ltd. provides intercity bus transportation, serving the major cities in South Korea.  The Company also operates real estate leasing and oil distribution businesses.

Yoosung T&S Co., Ltd. manufactures steel products.  The company's product includes cold rolled sheets, coils, and pipes used in the construction industry. Yoosung T&S also transports steel and chemical products throughout South Korea.

Sejoong Co Ltd. develops and produces computer software, such as  web design and web browser software.  The Company also produces web plug-in softwarethat enables users to create web-based bulletin board systems and to view Korean word-processed documents.

SH Holdings Co., Ltd. manufactures communication equipment such as network access multiplexers, optical modules, and channel service units.  The Company also produces transmitters, transponders, signal receiver, and dense wavelength division multiplexing systems.

Han Express Co., Ltd. provides land transportation services.  The Company specializes in transporting petroleum and frozen products.  Han Express also offers logistics services, warehousing services, and real estate rental services.  In addition, Han Express manufactures and sells specialty vehicles, such as concrete mixers.

Jeju Air Co., Ltd. operates as an airline carrier in the aviation industry.   The Company provides air transportation services for passengers, baggage, and cargo within South Korea, Japan, and Southeastern Asian countries.

Asiana Airlines, Inc. provides air cargo and passenger transportation services throughout South Korea and overseas.  The Company also offers airline catering and on-flight duty free shopping services and operates aircraft leasing business.

Maruzen Showa Unyu Co., Ltd. provides van truckload, international logistics, marine cargo transportation, cargo handling, air cargo transportation, and warehousing services.  The Company has consignors of NKK Corp. and Showa Denko and transports Fuji Photo Film exports.  The Company offers customs clearing services and leases real estate as well.

China High-Speed Railway Technology Co., Ltd. mainly focuses on the safe operation and maintenance of rail transport lines.

China High Speed Railway Techn (000008 CH)

SBS Transit Limited provides public bus services, advertisement on its bus fleet, and bus chartering.

Covenant Logistics Group, Inc. operates as a truckload carrier. The Company offers temperature-controlled transportation service for shippers primarily in the frozen food and consumer products industries. Covenant Logistics Group serves customers in the United States.

Evergreen International Storage & Transport Corporation provides motor freight transportation and warehousing, cargo handling operation, as well as automobile repairing services.

Evergreen Int'L Storage & Transport (2607 TT)

Transport International Holdings Ltd, through its subsidiaries, operates both franchised and non-franchised public buses in Hong Kong. The Company also provides media sales services.

Transport International Holdings Ltd (62 HK)

SENKO Group Holdings Co., Ltd. mainly provides van truckload, logistics, warehousing, freight rail and marine transportation, cargo handling, supply chain management, and moving services around the world.  The Company transports construction materials, housing unit, commodity, textile products, and food stuffs.  Senko's customers include Asahi Kasei, Sekisui Chemical, and Sekisui House.

HAMAKYOREX CO., LTD. provides trucking, warehousing, and other related services. The Company's trucking services include distribution for retail firms such as large supermarkets.  Hamakyorex develops integrated distribution system.

Sakai Moving Service Co., Ltd. mainly provides moving services of household goods based in Osaka prefecture.  The Company offers trucking, storage, and other related services.  The Company leases real estate as well.

Heartland Express, Inc. is a short-to-medium haul truckload carrier.  The Company transports a variety of goods, including appliances, automotive parts, paper products, retail goods, and packaged foodstuffs.  Heartland operates in the United States.

Lotte Rental Co.,Ltd. provides car rental services. The Company offers passenger car rental, commercial car rental, used vehicle rental, and other related services. Lotte Rental offers services worldwide.

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Lotte Rental (089860 KS)

Initial Thoughts on the KOSPI200 Rebalance in June 2022

We discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance. Top 10 potential inclusions are down on average 4.4%...

Douglas Kim

KOSPI Size Index Series Rebalancing Screening Results

This post has the screening results of the KOSPI Size Index Series rebalancing: 14 new MidCap entrants are expected to have a sizable passive impact.

Sanghyun Park

End of Mandatory Lock-Up Periods for 44 Stocks in Korea in February 2022

In this insight, we discuss the end of the mandatory lock-up periods for 44 stocks in Korea in February 2022. These 44 stocks could be subject to...

Douglas Kim

Hyundai Engineering Pre-IPO - Order Backlog Aids Visibility However, Margins Have Been Fluctuating

Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its upcoming Korea IPO. As per Korea Construction Association in 2021, it...

Clarence Chu

K-Car IPO Bookbuilding Results Analysis

K Car (381970 KS) announced today that the IPO price has been determined at 25,000 won, which was below the IPO price range of 34,300 won and...

Douglas Kim

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