Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<ul>
<li>There is an interesting long-short trade that is setting up nicely amidst the Osstem Implant (048260 KS) employee embezzlement disaster.</li>
<li>Osstem Implant is currently included in the KOSDAQ150. Going forward, there is a strong possibility that Osstem Implant is excluded in KOSDAQ150 index.</li>
<li>Osstem Implant is currently involved in an employee embezzlement case worth 221 billion won. This employee stole the company's money and traded more than $1 billion in stocks. </li>
</ul>


There is an interesting long-short trade that is setting up nicely amidst the Osstem Implant (048260 KS) employee embezzlement disaster.
Osstem Implant is currently included in the KOSDAQ150. Going forward, there is a strong possibility that Osstem Implant is excluded in KOSDAQ150 index.
Osstem Implant is currently involved in an employee embezzlement case worth 221 billion won. This employee stole the company's money and traded more than $1 billion in stocks. 


Long-Short Trade of KOSPI200 & KOSDAQ150 Amid Osstem Implant Employee Embezzlement Disaster

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

<ul>
<li>The family of the accused has said that the embezzlement was not an act of one man but due to orders taken from superiors.</li>
<li>The recovery shoudn't be an issue as the accused had bought in gold in Dec and Dongjin Chem has not had a substantial drop for the period in question.  </li>
<li>When did this start? According to the Capital Market Act, if an investor incurs loss due to false statements/omissions in the business/quarterly report, the company is responsible for damages.  </li>
</ul>


The family of the accused has said that the embezzlement was not an act of one man but due to orders taken from superiors.
The recovery shoudn't be an issue as the accused had bought in gold in Dec and Dongjin Chem has not had a substantial drop for the period in question.  
When did this start? According to the Capital Market Act, if an investor incurs loss due to false statements/omissions in the business/quarterly report, the company is responsible for damages.  


Thematic (Sector/Industry)

Does holding company ("holdco") discount in Korea apply to the likes of <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> , <a href="https://www.smartkarma.com/entities/sk-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:393:1" rel="noopener">SK Holdings (034730 KS)</a> (now Inc), <a href="https://www.smartkarma.com/entities/osstem-implant-co-ltd" target="_blank" data-smartkarma-citation="entities:1450:1" rel="noopener">Osstem Implant (048260 KS)</a> , <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> , <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> , <a href="https://www.smartkarma.com/entities/fila-holdings-corp" target="_blank" data-smartkarma-citation="entities:10699:1" rel="noopener">Fila Holdings (081660 KS)</a> and others? To answer that question I think we need to know the history of the holdco in Korea.

Does holding company ("holdco") discount in Korea apply to the likes of SK Telecom (017670 KS) , SK Holdings (034730 KS) (now Inc), Osstem Implant (048260 KS) , LG Chem Ltd (051910 KS) , Kakao Corp (035720 KS) , Fila Holdings (081660 KS) and others? To answer that question I think we need to know the history of the holdco in Korea.

The Holding Company Dilemma in Korea -  What's the Right Discount?

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.

Equity Capital Markets

Angelalign Technology  / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (AAT HK)</a> is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. At the proposed IPO price range of HK$147-173 per share, Angelalign will have a market cap of HK$24.4-28.7 million ($3.1-3.7 billion). At the mid-point of the IPO price range, the gross proceeds are $347 million.In <a href="https://www.smartkarma.com/insights/angelalign-ipo-initiation-if-tooth-be-told" target="_blank" data-smartkarma-citation="insights:51881" rel="noopener">Angelalign IPO Initiation: If Tooth Be Told</a>, we stated that Angelalign is ideally positioned to benefit from China's clear aligner market opportunity due to its high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look.<div class="content-highlight">On a relative valuation basis, Angelalign looks attractive to its peers on a PEG basis but expensive on a P/E basis. Our base-case DCF value is HK$171.83 per share which is a 7% upside to the mid-point of the IPO price range. Due to the limited upside to our DCF valuation, we think that the IPO price range is full. Overall, while we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on the sidelines for a more attractive entry point.   </div>

Angelalign Technology (AAT HK) is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. At the proposed IPO price range of HK$147-173 per share, Angelalign will have a market cap of HK$24.4-28.7 million ($3.1-3.7 billion). At the mid-point of the IPO price range, the gross proceeds are $347 million.In Angelalign IPO Initiation: If Tooth Be Told, we stated that Angelalign is ideally positioned to benefit from China's clear aligner market opportunity due to its high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look.On a relative valuation basis, Angelalign looks attractive to its peers on a PEG basis but expensive on a P/E basis. Our base-case DCF value is HK$171.83 per share which is a 7% upside to the mid-point of the IPO price range. Due to the limited upside to our DCF valuation, we think that the IPO price range is full. Overall, while we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on the sidelines for a more attractive entry point.   

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Our screen looks for high valuation multiples presented by companies with significant earnings growth forecasts, as well as financial indicators that suggest balance sheet stress. 34 stocks appear in our Q2 2021 screen, versus 25 in Q1 2021 and 15 in Q4 2020. Our Q2 2021 screen shows a reduction in average stock rank to 65.18 from 70.8 points compared to the Q1 2020 screen, placing the stocks lower into the second quartile of the market and showing a deterioration in fundamental and technical aspects. Whilst this is a 7.6% decline, we see this data as tainted by trailing fundamentals. As we highlighted in previous commentaries, we expect the market to see a defined separation of Quality, Value and Relative Momentum over the next few quarters. The erosion is not unexpected as we see a wave of updated forecasts.

Our screen looks for high valuation multiples presented by companies with significant earnings growth forecasts, as well as financial indicators that suggest balance sheet stress. 34 stocks appear in our Q2 2021 screen, versus 25 in Q1 2021 and 15 in Q4 2020. Our Q2 2021 screen shows a reduction in average stock rank to 65.18 from 70.8 points compared to the Q1 2020 screen, placing the stocks lower into the second quartile of the market and showing a deterioration in fundamental and technical aspects. Whilst this is a 7.6% decline, we see this data as tainted by trailing fundamentals. As we highlighted in previous commentaries, we expect the market to see a defined separation of Quality, Value and Relative Momentum over the next few quarters. The erosion is not unexpected as we see a wave of updated forecasts.

Screening the Silk Road: Q2 2021 High Risk Names to Avoid

South Korea

Osstem Implant Co., Ltd. manufactures dental implant system. The Company also markets dental management software. Osstem Implant provides products for dental surgery and exports abroad.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Osstem Implant (048260 KS)

Long-Short Trade of KOSPI200 & KOSDAQ150 Amid Osstem Implant Employee Embezzlement Disaster

There is a long-short trade that is setting up nicely amidst the Osstem Implant employee embezzlement disaster. Osstem Implant is involved in an...

Douglas Kim

Osstem Implant - Where to Next?

Osstem Implant - where are we headed from here and learning from precedent cases in Korea which seems to indicate this will be a long halt

Ken S. Kim

The Holding Company Dilemma in Korea - What's the Right Discount?

The discount rate to NAV that is rule of thumb in Korea is 30% but does not make sense across the board? We discuss if there is a better way to...

Ken S. Kim

Angelalign IPO: Valuation Insights

While we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on...

Arun George

Screening the Silk Road: Q2 2021 High Risk Names to Avoid

34 stocks in our Q2'21 HIGH-RISK screen, vs Q1 2021 's 25. Q2'21 shows a reduction in avg stock rank to 65.2 from 70.8 pts in Q1 2020....

David Lepper

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)