Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>In this insight, we discuss the five most aggressive corporate activist firms that have been moving the Korean equity market in the past year.</li>
<li>They include Align Partners Capital Management, KCGI, Flashlight Capital Partners, Truston, and LIFE Asset Management.</li>
<li>Share prices of 15 companies that the corporate activist firms have invested in Korea are up on average 9.7% YTD, outperforming KOSPI which is up 7.1% in the same period.</li>
</ul>


In this insight, we discuss the five most aggressive corporate activist firms that have been moving the Korean equity market in the past year.
They include Align Partners Capital Management, KCGI, Flashlight Capital Partners, Truston, and LIFE Asset Management.
Share prices of 15 companies that the corporate activist firms have invested in Korea are up on average 9.7% YTD, outperforming KOSPI which is up 7.1% in the same period.


Five Most Aggressive Corporate Activists Moving the Korean Market: Align, KCGI, FCP, Truston, & LIFE

<ul>
<li>On 20 January, SM Entertainment announced that Lee Chang-Hwan, the CEO of Align Partners Capital will join the company as a board member. </li>
<li>This will mark one of the first cases of an activist investor becoming a board member of a Korean company which already has a major shareholder.</li>
<li>We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully improve its corporate governance.</li>
</ul>


On 20 January, SM Entertainment announced that Lee Chang-Hwan, the CEO of Align Partners Capital will join the company as a board member. 
This will mark one of the first cases of an activist investor becoming a board member of a Korean company which already has a major shareholder.
We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully improve its corporate governance.


Align Partners' Lee Chang-Hwan Joins SM Entertainment as a Board Member

<ul>
<li>DearU's acquisition of NCSoft's Universe K-Pop fandom platform will expand DearU Bubble's number one position in the K-Pop fandom platform in Korea.</li>
<li>The sale of Universe by NCSoft is a win-win situation for both DearU and NCsoft.</li>
<li>Applying a 25x P/E to an estimated net profit of 50 billion won in 2024 would suggest an market cap of 1.25 trillion won for DearU, representing a 52% upside. </li>
</ul>


DearU's acquisition of NCSoft's Universe K-Pop fandom platform will expand DearU Bubble's number one position in the K-Pop fandom platform in Korea.
The sale of Universe by NCSoft is a win-win situation for both DearU and NCsoft.
Applying a 25x P/E to an estimated net profit of 50 billion won in 2024 would suggest an market cap of 1.25 trillion won for DearU, representing a 52% upside. 


DearU' Bubble + NCsoft's Universe = The Largest K-Pop Fandom Platform in Korea

<ul>
<li>On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia's Sovereign Fund (Public Investment Fund - PIF) and GIC (Singapore).</li>
<li>Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.</li>
<li>This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.</li>
</ul>


On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia's Sovereign Fund (Public Investment Fund - PIF) and GIC (Singapore).
Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.
This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.


PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

<ul>
<li>More than 20 trillion won (US$16 billion) worth of deals are up for M&amp;As in 2023.</li>
<li>However, due to high interest rates and differences on valuations among buyers and sellers, the M&amp;A market in Korea is likely to continue to be weak in 2023.</li>
<li>In this insight, we discuss 24 companies that are up for M&amp;As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.</li>
</ul>


More than 20 trillion won (US$16 billion) worth of deals are up for M&amp;As in 2023.
However, due to high interest rates and differences on valuations among buyers and sellers, the M&amp;A market in Korea is likely to continue to be weak in 2023.
In this insight, we discuss 24 companies that are up for M&amp;As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.


Korea M&A Outlook in 2023: What's for Sale?

South Korea

Cheil Worldwide Inc. provides a wide range of marketing services such as new product development and advertisement, brand management, advertising budget analysis, and advertising effectiveness evaluation.  The Company also creates, prints, publishes, and produces promotional and advertising materials.

JYP Entertainment Corp plans, produces, promotes, and markets Korean singers both in Korean and overseas market. The Company's also engages in licensing, merchandizing, and artist management business including the commercial flim contracts of the artists.

CJ CGV Co., Ltd. develops and operates multi-screen movie theaters in South Korea.  The Company's theater complex also conducts stores and restaurants in theaters, and offers advertisement through screens.

Innocean Worldwide Inc. provides marketing and communications services. As a media agency, the company is engaged in promotion, sports business consulting, space design, and advertisement production.

YG Entertainment Inc., produces and markets music recording, music publishing, record manufacturing/sales, artist management, concert production, and new artist discovering/training.

Hyundai Hy Communications & Network Co Ltd is cable television and Internet service company.  The Company also generates revenue from advertisement. Hyundai HCN provides service within South Korea.

Hyundai Hy Communications & Network (126560 KS)

Seoul Broadcasting System (SBS) is a commercial television and radio broadcasting company.  The Company produces and broadcasts programs, such as news, sports, weather, music, movies, and television drama series.

CJ Hellovision Company Ltd. operates as a multi-system operator that receives programs from program providers and airs them to subscribers. The Company offers cable TV services covering news, movie, music, entertainment, documentary, sports, education, go game, culture, homeshopping, and local broadcasting, as well as ground wave and satellite TV broadcasting channels.

Nasmedia Co., Ltd. is a Media Rep company that markets various advertising services based on the internet and mobile devices.  The Company's advertising service engages in digital signages, advertising solution, and web analysis.

YG PLUS provides a wide range of advertisement services through television, magazine, radio, and newspaper.  The Company also offers marketing and event planning related to sales promotion (SP) services.

Network 18 Media & Investments Ltd. is an entertainment holding company.  The Company, through its subsidiaries, operates a business news television channel; offers Internet access; operates real-time news terminals; operates general news television channels; produces motion pictures; and retails goods on television and over the Internet.

DAIICHIKOSHO CO., LTD. manufactures, sells, and, leases karaoke equipment and software.  The Company also operates karaoke booth chains called Big Echo, provides karaoke software via cable line called DAM, and participates in broadcasting via satellite.

TV Asahi Holdings Corporation produces and broadcasts a variety of television programs mainly in the Tokyo area. The Company sells commercial spots through a network system. TV Asahi also provides patent maintenance for music publication, entertainment planning, sales of broadcasting equipment, and TV shopping.

CITIC Guoan Information Industry Co., Ltd., through its subsidiary, installs, tests, and operates cable TV and satellite telecommunication networks. The Company also develops real estate properties .  In addition, CITIC designs network integrated systems and application software, and provides advertising services.

Sinclair Broadcast Group, Inc. is a diversified broadcasting company that owns or provides programming services to television stations across the United States.  The Company's television group includes FOX, WB, ABC, CBS, NBC, and UPN affiliates.

Visual China Group Co., Ltd. manufactures cultural and entertainment products and technologies. The Company's products include radio and television transmission technology, Internet transmission, Internet games and entertainment, mobile communications network gaming and entertainment technology, and computer software development.

Central China Land Media Co., Ltd. operates media businesses.  The company provides web services for news, publishing, movies and television related programs.

Hunan TV & Broadcast Intermediary Co. Ltd. designs, produces, and broadcasts TV advertisement and provide advertising agent services.  The Company also makes television programs, operates theme parks, and provides cable TV network program delivery services.

Beijing Gehua CATV Network Co., Ltd. builds, manages, and maintains cable TV networks. The Company also provides advertising and information services.

Beijing Gehua Catv Network Co, Ltd. (600037 CH)

Guangdong Advertising Group Co.,Ltd provides integrated market communication service.  The Company's services include brand management, media agency, costume design, private advertising media,photography,technology development and television planning.

S.M.Entertainment Co. plans, produces, promotes, and markets Korean rock and roll music in several formats, such as compact discs (CD), concert tours, television productions, and music videos.  The Company also operates artist management business as well as licensing and copyright business from the company's music records.

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S.M.Entertainment Co (041510 KS)

Five Most Aggressive Corporate Activists Moving the Korean Market: Align, KCGI, FCP, Truston, & LIFE

In this insight, we discuss the five most aggressive corporate activist firms that have been moving the Korean equity market in the past year.

Douglas Kim

Align Partners' Lee Chang-Hwan Joins SM Entertainment as a Board Member

We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully...

Douglas Kim

DearU' Bubble + NCsoft's Universe = The Largest K-Pop Fandom Platform in Korea

DearU's acquisition of NCSoft's Universe K-Pop fandom platform will expand DearU Bubble's number one position in the K-Pop fandom platform in Korea.

Douglas Kim

PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

Maekyung Business Daily reported on 11 January that PIF (Saudi Arabia) and GIC combined invested about 1.2 trillion won in Kakao Entertainment,...

Douglas Kim

Korea M&A Outlook in 2023: What's for Sale?

In this insight, we discuss 24 companies that are up for M&As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.

Douglas Kim

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