Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>WCP starts trading on its IPO tomorrow (30 September) in Korea. Even at the lower share price of 60,000 won, we continue to have a Negative View of WCP. </li>
<li>We have updated our valuation on WCP taking into account the latest prices and valuation multiples of the comps as of 29 September. </li>
<li>Our base case valuation of WCP is market cap of 1.8 trillion won or target price of 51,973 won, which is 13% lower than the IPO price of 60,000 won.</li>
</ul>


WCP starts trading on its IPO tomorrow (30 September) in Korea. Even at the lower share price of 60,000 won, we continue to have a Negative View of WCP. 
We have updated our valuation on WCP taking into account the latest prices and valuation multiples of the comps as of 29 September. 
Our base case valuation of WCP is market cap of 1.8 trillion won or target price of 51,973 won, which is 13% lower than the IPO price of 60,000 won.


Trading Strategy for WCP Post Lowered IPO Price

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.

Event-Driven

Mirae Asset TIGER Secondary Cell ETF / Event-Driven

<ul>
<li>The rebalancing trading will be at the close on October 13. The AUM currently amounts to ₩1.32T with 28 constituents, implying that the passive impacts wouldn't be insignificant.</li>
<li>It will likely show a similar pattern to the last rebalancing. With no constituent change, weight adjustment by 10% cap of top stocks leads to weight adjustment of the rest.</li>
<li>An important variable here is the entry of newly listed stocks. SungEel Hitech and Sebitchem, the two larger cap stocks, appear to have a reasonably high inclusion probability.</li>
</ul>


The rebalancing trading will be at the close on October 13. The AUM currently amounts to ₩1.32T with 28 constituents, implying that the passive impacts wouldn't be insignificant.
It will likely show a similar pattern to the last rebalancing. With no constituent change, weight adjustment by 10% cap of top stocks leads to weight adjustment of the rest.
An important variable here is the entry of newly listed stocks. SungEel Hitech and Sebitchem, the two larger cap stocks, appear to have a reasonably high inclusion probability.


TIGER Battery ETF (WISE) Rebalancing in October

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hpsp-co-ltd" target="_blank" data-smartkarma-citation="entities:36004:1" rel="noopener">HPSP (403870 KS)</a> and <a href="https://www.smartkarma.com/entities/sungeel-hitech-co-ltd" target="_blank" data-smartkarma-citation="entities:36028:1" rel="noopener">Sungeel Hitech (365340 KS)</a> are the candidates for Early Entry in the December rebalancing as they sit comfortably within the Early Entry zone.</li>
<li>
<a href="https://www.smartkarma.com/entities/rsupport-co-ltd" target="_blank" data-smartkarma-citation="entities:14783:1" rel="noopener">Rsupport (131370 KS)</a> and Kona I (052400 KS) are safe deletion bets. If they are not deleted through the rebalancing process, they will most likely be excluded by Early Entry.</li>
<li>
HPSP and SungEel should see an inflow equivalent to 0.9x and 0.8x ADTVs, respectively. Rsupport and Kona I will likely suffer an outflow of 3.4x and 3.8x ADTVs, respectively.</li>
</ul>



HPSP (403870 KS) and Sungeel Hitech (365340 KS) are the candidates for Early Entry in the December rebalancing as they sit comfortably within the Early Entry zone.

Rsupport (131370 KS) and Kona I (052400 KS) are safe deletion bets. If they are not deleted through the rebalancing process, they will most likely be excluded by Early Entry.

HPSP and SungEel should see an inflow equivalent to 0.9x and 0.8x ADTVs, respectively. Rsupport and Kona I will likely suffer an outflow of 3.4x and 3.8x ADTVs, respectively.


KOSDAQ 150 Early Entry Candidates for December Rebalancing

Cross Asset Strategy

<ul>
<li>We discuss end of the mandatory lock-up periods for 40 stocks in Korea in September 2022, among which 3 are in KOSPI and 37 are in KOSDAQ.</li>
<li>These 40 stocks on average could be subject to further selling pressures in September and could underperform relative to the market. </li>
<li>Among these 40 stocks, the top five market cap stocks include Iljin Hysolus, Sebit Chem, Eoflow, Bumhan Fuelcell, and Voronoi. They could be exposed to greater selling pressures in September. </li>
</ul>


We discuss end of the mandatory lock-up periods for 40 stocks in Korea in September 2022, among which 3 are in KOSPI and 37 are in KOSDAQ.
These 40 stocks on average could be subject to further selling pressures in September and could underperform relative to the market. 
Among these 40 stocks, the top five market cap stocks include Iljin Hysolus, Sebit Chem, Eoflow, Bumhan Fuelcell, and Voronoi. They could be exposed to greater selling pressures in September. 


End of Mandatory Lock-Up Periods for 40 Companies in Korea in September 2022

<ul>
<li>SOCAR announced its IPO book building results. The IPO price has been determined at 28,000 won (18% lower than the low end of the IPO range).</li>
<li>Our base case target price for SOCAR is 27,176 won, which is 3% lower than the IPO price of 28,000 won. </li>
<li>We remain Negative on this IPO due to lack of upside. There were 348 companies involved in the IPO survey with the final demand ratio of 56 to 1.</li>
</ul>


SOCAR announced its IPO book building results. The IPO price has been determined at 28,000 won (18% lower than the low end of the IPO range).
Our base case target price for SOCAR is 27,176 won, which is 3% lower than the IPO price of 28,000 won. 
We remain Negative on this IPO due to lack of upside. There were 348 companies involved in the IPO survey with the final demand ratio of 56 to 1.


South Korea

SaraminHR Co.,Ltd. operates a website that offers a wide range of services. The Company offers an online job search, consulting, IT outsourcing, office lease and online information providing services.

Orbitech Co., Ltd. provides a variety of testing services. The Company's products includenondestructive engineering testing services, water and soil quality testing services, and radiation monitoring services.

Heerim Architects & Planners designs and inspects buildings, residential houses and infrastructure such as highways, airports, and bridges.  The Company also provides geological surveys and environmental assessment.

Nice D&B Co., Ltd. provides global business information report services. The Compay's services also incudes supplier management solution, risk management solution, and credit risk management system.

DT&C.Co.,Ltd provides certifications from FCC, CE, TELEC, C-Tick through their testing sites.  The Company provides services various industries from automobile parts to medical devices.

MiraeING Co., Ltd. manufactures closed circuit television (CCTV) cameras and systems, radio transceivers and repeaters, radio communication systems, and other security systems.  The Company markets its products to the Korean Ministry of National Defense, the Korean National Police, the security industry, and the telecommunications industry.

Y-Entec Co., Ltd. provides hazardous waste disposal services.  The Company disposes hazardous waste by burning and reclamation.  Y-Entec also operates a construction business, and sells construction materials.

Koryo Credit Information Co., Ltd. provides a variety of financial solution services to individuals and corporations.  The Company's services include debt collection, credit research and analysis, and related documents issuing.  Koryo Credit Information also operates real estate leasing business.

NICE Total Cash Management Co., Ltd. is a full service provider for cash dispenser (CD) and automated teller machine (ATM) of financial institutions.

KTCS Corporation operates 114 phone directory assist service, phone Data Base management service, call center, and other telecommunication services.

Will Group Inc. provides employee placement and staffing services. The Company offers outsourcing services for sales, call center, and manufacturing positions.

ARTNER CO.,LTD provides technical outsourcing services through dispatching technical talents to contracted company. The company focused on machinery design, electricity and electronic design, software development.

ASIA AIR SURVEY CO., LTD. is an aerial survey contractor providing environmental assessments, mapping services, and power line inspections.  The Company also provides consultation in various types of construction work.  Asia Air Survey is affiliated with Mitsui & Co.

SHL-JAPAN Ltd. makes aptitude test products.  The Company also provides training and consulting services for aptitude test data.

The Brooker Group Public Company Limited provides business consulting, market research, policy research, sector reports and on-line publication services for companies in Thailand and ASEAN countries.

TANABE MANAGEMENT CONSULTING CO., LTD. is a management consulting firm. The Company provides seminars and training to its business clients.  Tanabe Management Consulting operates membership management clubs, the Eagle Club, holds study meetings, and issues publications to the club members.  The Company also sells notebooks for business use.

LUCKLAND Co., Ltd. designs, constructs, and maintains commercial building facilities.  The Company specializes in food store construction.  Luckland also builds supermarkets, discount stores, restaurants, and delicatessen. In addition, the Company manufactures and sells kitchen equipment including commercial refrigerators and garbage disposers.

IR Japan Holdings Ltd is a holding company of IR Japan, Inc. The Company manages operation for its subsidiary. IR Japan,Inc. provides consulting services in rega rd to relationships with shareholders and investors in general. IR Japan also assists with the releasing of company filings.

PASCO CORPORATION is a surveying company specializing in aerial photographs. The Company computerizes surveyed data and conducts information system engineering.

S-Pool, Inc. provides outsourcing services including providing temporary staffing and performing contract work.  The Company also conducts market research and plans sales promotion for mobile and consumer maker companies.

Sebitchem Co., Ltd. operates as a wastewater treatment chemicals recycling company. The Company provides waste acid recycling, phosphoric acid production, waste anode material and waste battery decomposition, active materials purification and separation, and precursor complex solutions sale services. Sebitchem markets its products worldwide.

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Sebitchem (107600 KS)

Trading Strategy for WCP Post Lowered IPO Price

Our base case valuation of WCP is market cap of 1.8 trillion won or target price of 51,973 won, which is 13% lower than the IPO price of 60,000 won.

Douglas Kim

TIGER Battery ETF (WISE) Rebalancing in October

This post investigates the upcoming rebalancing situation of the TIGER Secondary Cell ETF (WISE Index), with a focus on the entry possibility of...

Sanghyun Park

KOSDAQ 150 Early Entry Candidates for December Rebalancing

This post investigates the Early Entry candidates and the resulting exclusion names fo the KOSDA 150 rebalancing in December.

Sanghyun Park

End of Mandatory Lock-Up Periods for 40 Companies in Korea in September 2022

We discuss end of the mandatory lock-up periods for 40 stocks in Korea in September 2022. These 40 stocks on average could be subject to further...

Douglas Kim

SOCAR IPO Book Building Results

SOCAR announced its IPO book building results. The IPO price has been determined at 28,000 won (18% lower than the low end of the IPO range).

Douglas Kim

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