Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<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

Equity Bottom-Up

<ul>
<li>In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. </li>
<li>CJ ENM's valuations are much more attractive and offer higher value as compared to HYBE. CJ ENM shares are trading at EV/EBITDA of 2.7x versus 10.9x for HYBE in 2023. </li>
<li>The Korean government is likely to require BTS members to conscript for military service which is likely to lead to sharp decline in earnings estimates for HYBE.</li>
</ul>


In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. 
CJ ENM's valuations are much more attractive and offer higher value as compared to HYBE. CJ ENM shares are trading at EV/EBITDA of 2.7x versus 10.9x for HYBE in 2023. 
The Korean government is likely to require BTS members to conscript for military service which is likely to lead to sharp decline in earnings estimates for HYBE.


Korea Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)

Equity Capital Markets

SAMG Entertainment / Equity Capital Markets

<ul>
<li>SAMG Entertainment is getting ready for an IPO on the KOSDAQ market. SAMG Entertainment is a leading children animation and digital contents focused entertainment company targeting young children.</li>
<li>The IPO offering amount is from 37.8 billion won to 46.7 billion won. The book building for the institutional investors starts on 1 November.</li>
<li>The company operates 42 Youtube channels including 15 domestic channels and 27 overseas channels. The total number of subscribers for these 42 Youtube channels exceeds 39 million.</li>
</ul>


SAMG Entertainment is getting ready for an IPO on the KOSDAQ market. SAMG Entertainment is a leading children animation and digital contents focused entertainment company targeting young children.
The IPO offering amount is from 37.8 billion won to 46.7 billion won. The book building for the institutional investors starts on 1 November.
The company operates 42 Youtube channels including 15 domestic channels and 27 overseas channels. The total number of subscribers for these 42 Youtube channels exceeds 39 million.


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>The ETF operator (TIGER)'s index tracking conformity was high enough to create trading opportunities aimed at the rebalancing flow.</li>
<li>Flow/Price directions were mostly synched with only a few exceptions. Of particular importance is that the price impact was substantial compared to the passive flow size. </li>
<li>The yield of the tradable names suitable for a basket based on the projected passive impact size was 4.51%.</li>
</ul>


The ETF operator (TIGER)'s index tracking conformity was high enough to create trading opportunities aimed at the rebalancing flow.
Flow/Price directions were mostly synched with only a few exceptions. Of particular importance is that the price impact was substantial compared to the passive flow size. 
The yield of the tradable names suitable for a basket based on the projected passive impact size was 4.51%.


WISE Theme Indexes Rebalancing: Conformity of Passive Flow to Price Return

<ul>
<li>Among the local theme indexes in Korea, we have three noteworthy ones for July. They are the WISE theme indexes. They will all rebalance on July 15.</li>
<li>Due to some constituents' recent significant price movements, we can now expect some notable passive flows.</li>
<li>These names are worthy of our attention: SKIET, Solus Advanced, Kangwon Land, Hanatour, T'way Air, Yong Pyong Resort, HYBE, CJ ENM, and Studio Dragon.</li>
</ul>


Among the local theme indexes in Korea, we have three noteworthy ones for July. They are the WISE theme indexes. They will all rebalance on July 15.
Due to some constituents' recent significant price movements, we can now expect some notable passive flows.
These names are worthy of our attention: SKIET, Solus Advanced, Kangwon Land, Hanatour, T'way Air, Yong Pyong Resort, HYBE, CJ ENM, and Studio Dragon.


WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations

South Korea

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.

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.

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

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.

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)

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.

SHINHOO Co., Ltd. produces animated films on an original equipment manufacturing (OEM)basis.  The Company also licenses and merchandises characters and distributes animated films to broadcasting companies. SHINHOO's customers include Walt Disney Co., Warner Brothers, Dream Works, and Sony Pictures Entertainment. The Company also specializes in aluminium products.

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.

Borussia Dortmund GmbH & Co KGaA is a professional soccer club that plays in Germany's first division.  The Club receives revenue from TV and radio broadcasts, ticket sales, corporate sponsorship and advertising, as well as merchandising.  Borussia also manages an amateur and a youth soccer team as well as a female handball team.

Maoyan Entertainment operates as a leading platform providing innovative internet empowered entertainment services. The Company offers online entertainment ticketing services, entertainment content services, electronic commerce services, advertising services, and other services. Maoyan Entertainment operates its businesses in China.

Dinglong Culture Co.,Ltd. operates entertainment businesses. The Company produces and publishes television shows, films, serialized programs, and other contents. Dinglong Culture also operates cultural industry investment, software technology development, and other businesses.

Inox Leisure Ltd. provides motion picture entertainment. The Company owns and operates a chain of movie theaters throughout India.

Shochiku Co., Ltd. produces and distributes movies, videos and TV shows. The Company also operates Kabuki theaters and distributes foreign films.

IMAX Corporation offers end-to-end cinematic solution combining proprietary software, theater architecture and equipment. The Company designs and manufactures premium theater systems and digitally re-masters films into the IMAX format and the exhibition of those films in the IMAX theater network.

Clear Channel Outdoor Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, provides out-of-home display advertising such as digital billboards, posters, panels, wallscapes, and mobile advertising services. Clear Channel Outdoor Holdings serves customers in the United States.

D.B. Corporation Ltd. is a print media and publishing company.

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.

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.

Studio Dragon Corporation owns and operates drama studios. The Company produces television content, shows, and dramas. Studio Dragon serves customers in South Korea.

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Studio Dragon (253450 KS)

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 Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)

In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. CJ ENM's valuations are much more attractive and offer...

Douglas Kim

SAMG Entertainment IPO Preview

SAMG Entertainment is getting ready for an IPO on the KOSDAQ market. SAMG Entertainment is a leading children animation and digital contents...

Douglas Kim

WISE Theme Indexes Rebalancing: Conformity of Passive Flow to Price Return

This post provides the noteworthy points of the passive flow/price impact correlation from yesterday's rebalancing of WISE's three thematic indexes

Sanghyun Park

WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations

This post contains the estimations of the passive flows for the constituents of the three WISE theme indexes, which rebalance on July 14.

Sanghyun Park

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