Category

South Korea

May 22
0

Daily Brief South Korea: Kia Corp, Ls Industrial Systems and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Plausible Explanation for Korea NPS’s Unusually Large Outflow on Local Stocks in May
  • KOSPI Size Indices: Potential Migrations in September Are Moving

A Plausible Explanation for Korea NPS’s Unusually Large Outflow on Local Stocks in May

By Sanghyun Park

  • NPS’s May net selling of ₩700B likely stems from retrieving outsourced management funds to allocate to the newly selected three value-up outsider managers.
  • These value-up managers will start investing in Q3. NPS’s May net selling matches their allocations. We should design a setup targeting the likely inflow into value-up targets starting early July.
  • In particular, we should watch non-financial value-up stocks like Kia Corp and Hyundai Motor, which had more significant May price impacts likely due to NPS outflow.

KOSPI Size Indices: Potential Migrations in September Are Moving

By Brian Freitas

  • The review period for the September rebalance of the KOSPI Size Indices will run from 1 June to 31 August.
  • We see 6 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 6 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
  • Stocks migrating upward have outperformed stocks migrating lower. But there are still stocks trading at a Price to Book of less than 1.

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May 21
0

Daily Brief South Korea: EcoPro Materials, Shift Up, KB Financial, Hansol Logistics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Block Deal Sales of 200 Billion Won Worth of Ecopro Materials by BRV Capital
  • Shift Up IPO Preview
  • FnGuide Top10 Index Rebalance Preview: Two Changes Possible in June
  • Hansol Holdings Announces a Tender Offer of 18.53% Stake in Hansol Logistics

Block Deal Sales of 200 Billion Won Worth of Ecopro Materials by BRV Capital

By Douglas Kim

  • After the market close on 20 May, it was reported that Blue Run Ventures (BRV) sold 204.1 billion won (US$150 million) worth of EcoPro Materials in a block deal sale. 
  • The block deal sale price was 93,000 won, a 9.7% discount to the closing price on 20 May (103,000 won).
  • This block deal sale at a big discount is likely to raise overhang concerns about further block deal sales by BRV Capital in the coming years. 

Shift Up IPO Preview

By Douglas Kim

  • Shift Up (462870 KS) is getting ready to complete its IPO in KOSPI in June 2024. Established in 2013, Shift Up is one of the leading game developers in Korea.
  • The IPO price range is 47,000 won to 60,000 won. The IPO offering amount is 340.8 billion won to 435 billion won.
  • According to the bankers’ valuation, the market capitalization range of the company ranges from 2.73 trillion won to 3.4 trillion won. This is the second largest IPO in Korea YTD.

FnGuide Top10 Index Rebalance Preview: Two Changes Possible in June

By Brian Freitas

  • The Mirae Asset Tiger Top 10 ETF (292150 KS) tracks the FnGuide Top 10 Index and has an AUM of around US$1.2bn.
  • We currently forecast two potential changes at the next rebalance in June – one change is high probability while one could change depending on price moves over the next week.
  • The trade has performed well historically with positive performance till implementation followed by reversion post implementation.

Hansol Holdings Announces a Tender Offer of 18.53% Stake in Hansol Logistics

By Douglas Kim

  • After the market close on 20 May, Hansol Holdings announced that it is pursuing a tender offer for an additional 18.53% stake in its affiliate Hansol Logistics.
  • The tender offer price is 3,000 won, which is 22% higher than the close price on 20 May. The tender offer period is from 21 May to 10 June.
  • We have a positive view of this tender offer. Hansol Logistics trades at EV/EBITDA of 1.8x, P/E of 3.7x, and P/B of 0.6x based on 2023 figures.

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May 20
0

Daily Brief South Korea: Korea Stock Exchange KOSPI 200, HD Hyundai Heavy Industries and more

By | Daily Briefs, South Korea

In today’s briefing:

  • FSS Head’s Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June
  • ECM Weekly (20th May 2024) -Lalatech, Go Digit, Aadhar, TBO Tek, Ecopro, Nexus, Modec, Hyundai Heavy

FSS Head’s Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June

By Sanghyun Park

  • Lee Bok-hyun hopes for short selling to resume by late June. Given his influence on the Value-up policy, it’s likely to happen.
  • Lee expects key tax incentives for the value-up program to be included in the July tax reform bill, showing a market-friendly stance.
  • Yesterday’s New York event had a very positive atmosphere with more attendees than expected, showing genuine investor interest, likely ensuring sustained interest in Korea’s Value-up program.

ECM Weekly (20th May 2024) -Lalatech, Go Digit, Aadhar, TBO Tek, Ecopro, Nexus, Modec, Hyundai Heavy

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, Indian IPOs continued to do well, we also looked at two upcoming deals in Hong Kong.
  • On the placement front, last week ended up being one of the busiest ones so far this year with five deals live just on Thursday night alone. 

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May 19
0

Daily Brief South Korea: KakaoBank and more

By | Daily Briefs, South Korea

In today’s briefing:

  • EM Digital Banks – We Turn Positive on KakaoBank and Inter, Cautious on Nubank and Neutral on PAN

EM Digital Banks – We Turn Positive on KakaoBank and Inter, Cautious on Nubank and Neutral on PAN

By Victor Galliano

  • We turn positive on KakaoBank, for its increasingly secure competitive positioning in Korea, its attractive digital efficiency ratio, its low customer acquisition cost and for its high activity rate
  • We switch our buy rating from PAN to Inter as the latter has improved operationally, it is sound on capital and attractive on valuations
  • Nubank is executing well, but we remain cautious on Nubank shares as we continue to see potential capital constraints as a key risk, along with its stretched valuations

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May 18
0

Daily Brief South Korea: Eoflow, SK Biopharmaceuticals and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Eoflow: Financing Requirements, Changing Shareholding Structure, and the Next Steps
  • SK Biopharmaceuticals (326030 KS): Resumption of US Sales Growth Raises Hope for Annual Profit

Eoflow: Financing Requirements, Changing Shareholding Structure, and the Next Steps

By Douglas Kim

  • In this insight, we discuss the additional financing requirements, changed shareholding structure, and the next steps for Eoflow. 
  • Eoflow is one of the best performing stocks in the Korean stock market in the past one month as its shares have soared 249% in this period.
  • The details of the oral argument (Insulet vs Eoflow) at the U.S. Appellate Court suggest that the U.S. Appellate Court may rule in favor of Eoflow.

SK Biopharmaceuticals (326030 KS): Resumption of US Sales Growth Raises Hope for Annual Profit

By Tina Banerjee

  • In 1Q24, SK Biopharmaceuticals (326030 KS) posted Xcopri U.S. sales of KRW90.9B, up 69% YoY and 17% QoQ. The company remains confident to meet annual sales guidance of KRW390–416B.
  • 1Q24 operating profit reached KRW10B from an operating loss of KRW23B in 1Q23. The company aims to achieve profitability throughout 2024.
  • The company is seeking a second product to strengthen its U.S. and global business. Xcopri also has potential for indication expansion in near future.

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May 17
0

Daily Brief South Korea: HD Hyundai Heavy Industries , DGB Financial Group, Samsung Life Insurance and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyundai Heavy Industries Block – Not Well Flagged and Recent Korean Deals Haven’t Done Well
  • Block Deal Sale of 3% Stake in HD Hyundai Heavy Industries
  • Asian Dividend Gems: DGB Financial Group
  • Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart

Hyundai Heavy Industries Block – Not Well Flagged and Recent Korean Deals Haven’t Done Well

By Ethan Aw

Block Deal Sale of 3% Stake in HD Hyundai Heavy Industries

By Douglas Kim

  • HD Korea Shipbuilding & Offshore Engineering (009540 KS) plans to sell 2.66 million shares (3% of outstanding shares) of HD Hyundai Heavy Industries (329180 KS) in a block deal sale.
  • We would avoid participating in this block deal sale and we have a Negative view of HD Hyundai Heavy Industries (329180 KS) over the next one year.
  • After this block deal sale, we believe there could be concerns about HD Korea Shipbuilding & Offshore Engineering potentially selling additional shares of HD HHI in the next 2-3 years.

Asian Dividend Gems: DGB Financial Group

By Douglas Kim

  • On 16 May, it was reported that the Korean financial regulators have approved DGB Daegu Bank to become the 7th commercial bank in Korea. 
  • DGB Daegu Bank is the core entity of DGB Financial Group (139130 KS) which currently has a market cap of 1.4 trillion won (US$1.0 billion).
  • This change will allow the company to expand in the more lucrative metropolitan Seoul and other regions in Korea. We have a positive view of DGB Financial Group (139130 KS).

Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart

By Sanghyun Park

  • Talks circulate that E-Mart may sell its 5% stake in Samsung Life Insurance, valued around ₩1T, due to fundraising needs linked to SSG.com investors’ put options.
  • Initially, Starbucks Korea was a potential sale, but U.S. HQ approval makes it unfeasible. Shinsegae L&B and Food weren’t enough to raise funds, leading E-Mart to focus on Samsung Life.
  • E-Mart’s block deal timing is uncertain due to potential legal disputes over unmet put option conditions, yet recent local market discussions suggest E-Mart may avoid legal battles.

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May 16
0

Daily Brief South Korea: Lock&Lock, SK IE Technology , EcoPro Materials and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Lock & Lock: Second Tender Offer by Affinity Equity Partners
  • SK Group’s Restructuring Plans for SK IET and an Earnings Shock for SK IET in 1Q 2024
  • Ecopro Materials Lockup Expiry – US$1.5bn Lock-Up Expiry, Can Expect Selling Pressure

Lock & Lock: Second Tender Offer by Affinity Equity Partners

By Douglas Kim

  • On 15 May, it was reported in the local media that Affinity Equity Partners (AEP) is expected to launch a second tender offer for Lock & Lock (115390 KS).
  • The tender offer price in this second tender offer is 8,750 won (same as the first tender offer). The second tender offer will last from 16 May to 5 June.
  • In the first tender offer, only about half of the target was reached. There was a strong backlash from investors due to low tender offer price.

SK Group’s Restructuring Plans for SK IET and an Earnings Shock for SK IET in 1Q 2024

By Douglas Kim

  • According to Maekyung Business Daily, SK Innovation maybe planning to sell its controlling interest in SK IE Technology (SK IET) which produces separators for rechargeable batteries.
  • SK On is experiencing financial difficulties due to the sluggish demand for EVs. SK Innovation’s 61.2% stake in SK IET is worth 2.5 trillion won. 
  • SK IE Technology had an earnings shock in 1Q 2024. It had sales of 46.2 billion won (67.8% lower than consensus) and operating loss of 67.4 billion won 1Q 2024.

Ecopro Materials Lockup Expiry – US$1.5bn Lock-Up Expiry, Can Expect Selling Pressure

By Ethan Aw

  • EcoPro Materials (450080 KS) raised around US$320m in its Korean IPO, after pricing the deal at KRW36,200/share. Its six-month IPO lockup will expire on 17th May 2024.
  • Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

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May 15
0

Daily Brief South Korea: SK IE Technology and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Key Timing Window for a Surge in Block Deals Before Pre-Disclosure Takes Effect in July

Key Timing Window for a Surge in Block Deals Before Pre-Disclosure Takes Effect in July

By Sanghyun Park

  • Anticipation grows for increased block deals before July 24th’s pre-announcement rule takes effect, emerging as a key investment focus in the local market.
  • The local market expects heightened activity in the three weeks post-May 15th, following first-quarter earnings announcements, a strategic move to mitigate insider trading controversies.
  • Local traders eagerly await which companies will capitalize on the post-first-quarter earnings window, with a highly anticipated block deal involving SK Innovation selling a portion of its stake in SKIET.

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May 14
0

Daily Brief South Korea: Innospace, EcoPro Materials and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Innospace IPO Valuation Analysis
  • A Comparison Between Ecopro Materials & HD Hyundai Marine Solution Post IPO

Innospace IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Innospace is target price of 51,481 won per share (12 month view), which is 28% higher than the midpoint of the IPO valuation range.
  • We estimate Innospace to generate sales of 1.8 billion won in 2024, 28.7 billion won in 2025, and 58.3 billion won in 2026.
  • Innospace is involved in the satellite launch vehicle production and launch service business.

A Comparison Between Ecopro Materials & HD Hyundai Marine Solution Post IPO

By Douglas Kim

  • In this insight, we make comparisons between EcoPro Materials (450080 KS) and HD Hyundai Marine Solution (443060 KS) post their IPOs
  • Ecopro Materials’ share price is likely to face continued weakness, especially with the potential for a major block deal sale by BRV Capital and end of the lock up period.
  • We believe that HD Hyundai Marine Solution’s share price has surged above its intrinsic value. More insiders are likely to start selling HD Hyundai Marine Solution in the coming months.

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May 13
0

Daily Brief South Korea: Naver Corp, HD Hyundai Marine Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Local Reports in Korea Regarding A Holdings Stake Sale Between Naver & Softbank
  • ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia

Local Reports in Korea Regarding A Holdings Stake Sale Between Naver & Softbank

By Sanghyun Park

  • Naver doesn’t view the sale of its A Holdings stake unfavorably; insiders suggest it’s been planning this move since last year.
  • Market speculation suggests Naver was disappointed by Softbank’s rejection of CLOVA X in LINE, prompting plans to sell A Holdings stake for AI development. A sale agreement is expected soon.
  • The method through which Softbank secures funds for this acquisition is worth the attention from a short-term trading perspective.

ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, after a stellar showing by HD Hyundai Marine Solution (443060 KS), the coming week will be a busy one for India listings.
  • On the placement front, there were no major deals during the week. We did look at Asmedia Technology (5269 TT) planned GDR, and Wuxi XDC’s upcoming lockup expiry.

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