Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

Deep value plays sometimes work very well in the Korean stock market, especially when a listed company has an attractive IPO. <a href="https://www.smartkarma.com/entities/16747" target="_blank" data-smartkarma-citation="entities:16747:1">T'way Holdings Inc (004870 KS)</a> is a good example of this and its share price has performed really well in recent months. We first wrote about this company in our report, <a href="https://www.smartkarma.com/insights/t-way-airlines-ipo-preview-part-1-a-deep-value-play-on-t-way-holdings-stake-of-t-way-airlines" target="_blank" data-smartkarma-citation="insights:14141">T'way Airlines IPO Preview (Part 1) - A Deep Value Play on T'way Holdings' Stake of T'way Airlines</a> in early October 2017. Since then, <a href="https://www.smartkarma.com/entities/16747" target="_blank" data-smartkarma-citation="entities:16747:1">T'way Holdings Inc (004870 KS)</a> shares are up 70%. T'way Airlines, one…

Deep value plays sometimes work very well in the Korean stock market, especially when a listed company has an attractive IPO. T'way Holdings Inc (004870 KS) is a good example of this and its share price has performed really well in recent months. We first wrote about this company in our report, T'way Airlines IPO Preview (Part 1) - A Deep Value Play on T'way Holdings' Stake of T'way Airlines in early October 2017. Since then, T'way Holdings Inc (004870 KS) shares are up 70%. T'way Airlines, one…

An Update on T'Way Holdings - Less Attractive After a Steep Increase in Price

Equity Capital Markets

<ul><li><a href="https://www.smartkarma.com/entities/16747" target="_blank" data-smartkarma-citation="entities:16747:1">T'way Holdings Inc (004870 KS)</a> is a deep value play. T'way Holdings' 81% stake in T'way Airlines is bigger than T'way Holdings' market cap. T'way Airlines is the third largest LCC (low cost carrier) in Korea and it is planning for an IPO in 2018. </li><li>T'way Airlines generated strong sales growth of 31.9% CAGR from 2013 to 2016. Its operating and EBITDA margins averaged 2.6% and 4.9%, respectively from 2013 to 2016. Its operating profit jumped 296% YoY to 12.6 billion won in 2016. </li><li>T'way Airlines generated sales of 261.4 billion won and operating profit of 20.5 billion won in 1H17. According to the company, it is one pace to generate sales of 550 billion won and operating profit of 45 billion won in 2017, which would be record breaking results. If we apply a P/S multiple of 0.9x on the estimated sales of 550 billion won in 2017, this would suggest an implied value of 495 billion won for the company. If we apply a P/E multiple of 12x on the estimated net profit of 31.5 billion won in 2017, this would suggest an implied value of 378 billion won for the company.</li><li>An average of these values suggests an implied market cap of 436 billion won. Taking an 81% stake held by T'way Holdings would result in 354 billion won. Post a holding company discount of 20%, this would suggest an implied value of 283 billion won, which would be 118% of T'way Holdings market cap. </li></ul>

T'way Holdings Inc (004870 KS) is a deep value play. T'way Holdings' 81% stake in T'way Airlines is bigger than T'way Holdings' market cap. T'way Airlines is the third largest LCC (low cost carrier) in Korea and it is planning for an IPO in 2018. T'way Airlines generated strong sales growth of 31.9% CAGR from 2013 to 2016. Its operating and EBITDA margins averaged 2.6% and 4.9%, respectively from 2013 to 2016. Its operating profit jumped 296% YoY to 12.6 billion won in 2016. T'way Airlines generated sales of 261.4 billion won and operating profit of 20.5 billion won in 1H17. According to the company, it is one pace to generate sales of 550 billion won and operating profit of 45 billion won in 2017, which would be record breaking results. If we apply a P/S multiple of 0.9x on the estimated sales of 550 billion won in 2017, this would suggest an implied value of 495 billion won for the company. If we apply a P/E multiple of 12x on the estimated net profit of 31.5 billion won in 2017, this would suggest an implied value of 378 billion won for the company.An average of these values suggests an implied market cap of 436 billion won. Taking an 81% stake held by T'way Holdings would result in 354 billion won. Post a holding company discount of 20%, this would suggest an implied value of 283 billion won, which would be 118% of T'way Holdings market cap. 

T'way Airlines IPO Preview (Part 1) - A Deep Value Play on T'way Holdings' Stake of T'way Airlines

South Korea

T'way Holdings Incorporation manufactures and supplies ready-mixed concrete and concrete  piles to construction sites.  The Company also operates a toy discount store, a theme park, and rental business.

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T'Way Holdings (004870 KS)

An Update on T'Way Holdings - Less Attractive After a Steep Increase in Price

Deep value plays sometimes work very well in the Korean stock market, especially when a listed company has an attractive IPO. T'way Holdings Inc...

Douglas Kim

T'way Airlines IPO Preview (Part 1) - A Deep Value Play on T'way Holdings' Stake of T'way Airlines

T'way Holdings Inc (004870 KS) is a deep value play. T'way Holdings' 81% stake in T'way Airlines is bigger than T'way Holdings' market cap. T'way...

Douglas Kim

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