South Korea Daily Briefs | Page 20 of 128

Mar 13

Daily Brief South Korea: Kcc Corp, Jusung Engineering and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

KCC Corp: Taking a Closer Step to Separating the Ownership Structures of the KCC Group
KRX’s Official SSF/SSO Reshuffle Results: Trading Considerations

KCC Corp: Taking a Closer Step to Separating the Ownership Structures of the KCC Group

By Douglas Kim

There is an increasing probability that KCC Corp is closer to separating the ownership structures of the three Chung brothers regarding the various KCC Group related companies.
KCC’s 9.17% stake in Samsung C&T is worth 2.8 trillion won. KCC’s stake in Samsung C&T is worth 117% of KCC’s own market cap.
According to our valuation analysis, it suggests NAV of 355,925 won per share, representing a 30% upside from current levels.

KRX’s Official SSF/SSO Reshuffle Results: Trading Considerations

By Sanghyun Park

The reshuffle results align with expectations, but the decision to list 11 KOSDAQ Global stocks in April is surprising. Local authorities seem to prioritize boosting the derivatives market for liquidity.
Ecopro Materials’ SSF listing, earlier than expected, attracts attention, potentially leading to an unusual basis pattern, coinciding with a major lockup release on May 17th.
We should also be wary of a pattern akin to last July’s in KOSDAQ stocks. Spot prices of recent SSFs showed a pronounced short-term uptrend, especially in KOSDAQ, versus KOSPI.

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Mar 12

Daily Brief South Korea: Hanon Systems, Samhyun and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

On A Charge: Hanon Systems & Renewed Interest In Hahn/Hankook’s Stake
Samhyun IPO Bookbuilding Results Analysis

On A Charge: Hanon Systems & Renewed Interest In Hahn/Hankook’s Stake

By David Blennerhassett

Back in 2004, Hahn & Co and Hankook Tire (161390 KS) acquired a 70% stake in Hanon Systems (018880 KS) from Visteon (VC US), an automotive electronics supplier, for ₩3.8tn.
Three years ago, Hahn/Hankook explored the sale of this 70% stake, which was expected to fetch ~₩8tn (US$7bn). Reportedly, Carlyle, TPG, Bain and auto supplier Mahle submitted preliminary bids.
That 70% stake is now worth ₩2.3tn. And reportedly, Carlyle has returned to the trough.

Samhyun IPO Bookbuilding Results Analysis

By Douglas Kim

Samhyun reported excellent IPO bookbuilding results. Samhyun’s IPO price has been determined at 30,000 won per share, which is 20% higher than the high end of the IPO price range.
A total of 2,168 institutional investors participated in this IPO book building. The demand ratio was 649 to 1. Samhyun will start trading on 21 March 2024.
Our base case valuation of Samhyun is implied market cap of 396 billion won or target price of 37,402 won, which is 25% higher than the IPO price.

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Mar 09

Daily Brief South Korea: Hanon Systems, Classys and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Local Observations on Carlyle’s Possible Buyout of Hanon Systems
Classys: One of Korea’s Top Beauty Medical Device Makers + Higher Shares Cancellation and Dividends

Local Observations on Carlyle’s Possible Buyout of Hanon Systems

By Sanghyun Park

Carlyle’s renewed interest in acquiring Hanon Systems is evident from recent local market news, indicating outreach to bankers for a potential buyout, as confirmed by a local brokerage.
Carlyle eyes majority control of Hanon Systems, targeting 50.5% from Hahn & Co and 19.5% from Hankook Tire. Carlyle may extend a tender offer for the remaining 30%.
Still early stages; no solid info on deal certainty or specifics. Limited immediate trading opportunities, but worth monitoring as it progresses.

Classys: One of Korea’s Top Beauty Medical Device Makers + Higher Shares Cancellation and Dividends

By Douglas Kim

Classys is one of the top beauty medical device companies in Korea. Classys’ main products include Shurink Universe and Volnewmer.
We have a positive view of Classys (214150 KS). Classys is trading at relatively reasonable valuations, considering the company’s strong growth in sales and profits.
On 28 February, Classys announced a shareholder return amount of 38 billion won (including share cancellation of about 25 billion won and dividend payout of 13 billion won).

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Mar 08

Daily Brief South Korea: Angel Robotics , Paradise Co Ltd, Coupang and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Angel Robotics: IPO Valuation Analysis
Paradise Announces A Switch in Listing from KOSDAQ to KOSPI
Coupang Inc: Amplifying Luxury Retail Reach With The Farfetch Acquisition! – Major Drivers

Angel Robotics: IPO Valuation Analysis

By Douglas Kim

Our base case valuation of Angel Robotics is target price of 20,277 won per share, which represents a 35% upside from the high end of the IPO price range.
We estimate sales of 9 billion won in 2024 (up 75.2% YoY) and 14.9 billion won in 2025 (up 65.3% YoY). Our estimates are more conservative than the company’s estimates.
We like the strong sales growth of Angel Robotics. Many investors are likely to view this positively in this IPO. LG Electronics and Samsung Electronics are customers of Angel Robotics.

Paradise Announces A Switch in Listing from KOSDAQ to KOSPI

By Douglas Kim

On 7 March, Paradise Co Ltd (034230 KS) announced that it plans to switch its listing from KOSDAQ to KOSPI.
Paradise will be excluded from KOSDAQ150 when it makes the switch to KOSPI. However, it is not certain if and when the company will be included in KOSPI200.
All in all, we would argue that the valuations are not especially appealing for Paradise, despite the sharp pick-up in business in 2023.

Coupang Inc: Amplifying Luxury Retail Reach With The Farfetch Acquisition! – Major Drivers

By Baptista Research

Coupang Inc., an e-commerce giant based in South Korea, has reportedly shown significant advancements and growth in their latest fourth quarter earnings.
They boasted a year of accelerating growth, record profits and notably expanded free cash flows in business, with the creation of the ‘wow’ moments for customers deemed as the foundation to their long-term growth, profitability and in turn, shareholder value.
Customer growth and revenues notably accelerated every quarter in 2023, with active customers growing 16% year-over-year.

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Mar 07

Daily Brief South Korea: Kumho Petro Chemical, Shinhan Financial, Angel Robotics and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Interpreting Kumho Petro Chemical’s Unexpected Move to Cancel Treasury Shares
Shinhan Financial Group Placement – Recent Selldowns Have Held up Since, Momentum Is Strong as Well
Kumho Petrochemical – A Significant Shares Cancellation Announcement
Block Deal Sale of About 400 Billion Won of Shinhan Financial by EQT Partners
Angel Robotics: IPO Preview

Interpreting Kumho Petro Chemical’s Unexpected Move to Cancel Treasury Shares

By Sanghyun Park

Kumho Petro Chemical (011780 KS) intends to retire 50% of its common shares, totaling 2,624,417 shares, starting from the 2024 fiscal year until the 2026 fiscal year.
With the annual general meeting nearing, NPS hasn’t revealed its support, causing unease for Park Chan-gu. Considering NPS’s obligation to the Value-Up policy, cancellation seems inevitable for Park Chan-gu.
Whether the battle persists hinges on NPS’s stance. If NPS backs Park Chan-gu, their stake surpassing 25% could deter the opposition’s financial strength. Conversely, NPS’s neutrality could escalate the battle.

Shinhan Financial Group Placement – Recent Selldowns Have Held up Since, Momentum Is Strong as Well

By Clarence Chu

EQT (EQT SS) , via Supreme, is looking to raise US$311m from selling its stake in Shinhan Financial (055550 KS).
Momentum on the stock has been strong over the past few months, and the recent selldowns in the stock have held up by the end of the week.
The share sale here will be a cleanup one, and a small one to digest at just 5.3 days of ADV.

Kumho Petrochemical – A Significant Shares Cancellation Announcement

By Douglas Kim

After the market close on 6 May, Kumho Petrochem announced a significant shares cancellation program which is likely to have a positive impact on its share price.
The company announced that it will cancel 430 billion won worth of its common shares in the next three years, representing nearly 10.5% of its market cap.
Park Chul Wan, nephew of Kumho Petrochem Chairman Park Chan Koo, has been very vocal about the need for Kumho Petrochem to improve its corporate governance in past several years.

Block Deal Sale of About 400 Billion Won of Shinhan Financial by EQT Partners

By Douglas Kim

EQT Partners announced that it is selling all of its remaining shares in Shinhan Financial for about 400 billion won in a block deal sale.
The block deal sale price range is expected to be 43,776 won to 44,688 won, representing 2% to 4% discount to the closing price on 6 March (45,600 won).
We would take the deal. The block deal discount is reasonable and Shinhan Financial continues to have attractive valuations and dividend yield despite recent share price appreciation.

Angel Robotics: IPO Preview

By Douglas Kim

Angel Robotics is getting ready to complete its IPO in KOSDAQ in March. The IPO price range is from 11,000 won to 15,000 won.
The IPO offering amount is from 17.6 billion won to 24 billion won. At the IPO price range, the company’s valuation ranges from 154 billion won to 210 billion won.
Angel Robotics is likely to be compared to Doosan Robotics and Rainbow Robotics.

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Mar 06

Daily Brief South Korea: Kakaopay , Celltrion Inc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Block Deal Sale of 2.2% of Kakao Pay by Alipay
Locals Driving Corporate Reforms and 10 Korean Companies Recently Announcing Share Cancellations

Block Deal Sale of 2.2% of Kakao Pay by Alipay

By Douglas Kim

After the market close on 5 March, it was reported that Alipay will sell a 2.2% stake (2.95 million shares) in Kakaopay (377300 KS) in a block deal sale.
A key component of this block deal sale is that there will be a lock up period of 90 days post the sale date.
We would avoid this block deal sale. There is a high probability of Kakao Pay’s share price falling below the block deal price of 38,380 won after 90 days.

Locals Driving Corporate Reforms and 10 Korean Companies Recently Announcing Share Cancellations

By Douglas Kim

In a recent discussion with a client, one of the questions that was raised was regarding the impact the local investors are having on the corporate governance reforms in Korea.
The number of local investors in the Korean stock market has jumped in the past few years from 5.3 million in 2017 to 14.4 million in 2022.
All in all, I think Korea is about 3-5 years behind Japan in various corporate governance reforms. So it has a lot of catching up to do.

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Mar 05

Daily Brief South Korea: SK Hynix, EcoPro Materials and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Why HBM is the Hottest Thing in Memory
May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials
Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May

Why HBM is the Hottest Thing in Memory

By Douglas O’Laughlin

Investing in semiconductors can be pretty simple if you let it be.
At a high level, I believe you want to invest in the secular at a decent price or invest in places where there are unwarranted dislocations.
Sometimes the entire ecosystem says one thing and the stocks say another. Usually, the ecosystem is right.

May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials

By Sanghyun Park

May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they’re free to sell off without constraints.
Apparently, they’re eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they’ll sell out once the lockup’s over.
We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.

Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May

By Douglas Kim

We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro Materials with a 24.7% stake) in May 2024.
BRV Capital Management’s stake in Ecopro Materials is currently worth 3.1 trillion won. In the past seven years, BRV Capital Management has invested about 93 billion won in Ecopro Materials.
On 4 March, Ecopro Materials announced it has entered into a contract to supply precursor to a U.S. auto company. There is some local speculation that this could be Tesla.

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Mar 04

Daily Brief South Korea: Korea Stock Exchange Kospi Index, KOSDAQ 150 Index and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation
What We Need to Know About Speeding Up Delisting in Korea

Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation

By Brian Freitas

Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.

What We Need to Know About Speeding Up Delisting in Korea

By Sanghyun Park

Korea’s authorities aim to streamline delisting and tighten rules for smooth market funds. 71 companies (17 in KOSPI, 54 in KOSDAQ) under review, about 8 trillion won tied up.
It’s unclear if this ties directly to the FSS chief’s mention of kicking non-compliant firms of the Value-up Program. Rumors hint at FSS-FSC differences. Impact on Value-up trading seems minimal.
Nonetheless, we must explore stocks that may gain from expediting delisting for the 71 companies under review.

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Mar 03

Daily Brief South Korea: Celltrion Inc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Celltrion (068270 KS): Solid Performance in Core Business in 2023; Eyes 60% Sales Growth in 2024

Celltrion (068270 KS): Solid Performance in Core Business in 2023; Eyes 60% Sales Growth in 2024

By Tina Banerjee

Celltrion Inc (068270 KS) has reported 12% YoY growth in its core business of biosimilars in 2023. Growth was mainly driven by new portfolios including Remsima SC and Yuflyma.
Operating profit and operating margin improved slightly YoY, led by an increase in high-margin biosimilar sales. Biosimilar products contributed 67% of total revenue in 2023, up from 57% in 2022.
The company is targeting more than 60% global sales growth to KRW3.5 trillion in 2024. Celltrion is eyeing KRW1.6 trillion EBITDA and more than 40% EBITDA margin in 2024.

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Mar 01

Daily Brief South Korea: Woori Financial Group , Korea Stock Exchange KOSPI 200, Hyundai Mobis, WCP, Classys and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested
Clearing up Confusion About Bringing Back Short Selling in Korea
Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (Jan and Feb 2024)
Block Deal Sale of 1.7% Stake of Woori Financial by IMM Private Equity
End of Mandatory Lock-Up Periods for 51 Companies in Korea in March 2024
Classys (214150 KS): 2023 Sales Beat Guidance to Reach Record High; Stellar Performance to Continue

Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested

By Clarence Chu

IMM PE, via Obis1, is looking to raise US$136m from selling a portion of its stake in Woori Financial Group (316140 KS).
While the deal doesn’t look particularly well-flagged, the PE has been invested for quite some time now.
Despite the overhang, the deal is a small one to digest at just 1.7% of total shares outstanding, representing 5 days of the firm’s ADV.

Clearing up Confusion About Bringing Back Short Selling in Korea

By Sanghyun Park

Government sees foreign investors as key for Corporate Value-Up success, considering reinstating short selling.
Planning to expand short selling beyond 350 stocks, but anticipating pushback from retail investors, likely capping additional stocks around 100.
The head of the Financial Supervisory Service will formally disclose these plans during the upcoming short selling conference scheduled for March 13th.

Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (Jan and Feb 2024)

By Douglas Kim

In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in January and February 2024.
We provide a list of 22 stocks in the Korean stock market that have announced share buyback programs in the past two months.
Major companies that have announced share buybacks in Korea in the past two months include Shinhan Financial, Hyundai Mobis, and Samick Musical Instruments. All three have outperformed the market.

Block Deal Sale of 1.7% Stake of Woori Financial by IMM Private Equity

By Douglas Kim

IMM Private Equity announced that it is selling a 1.7% stake in Woori Financial Group (316140 KS) in a block deal sale.
The number of shares subject to sale is 12.56 million, or 177.7 billion won to 181.5 billion won.
Block deal sale discount range is reasonable, valuation multiples are low, and we expect continued positive capital inflow into stocks related to Corporate Value Up in the next 12 months.

End of Mandatory Lock-Up Periods for 51 Companies in Korea in March 2024

By Douglas Kim

We discuss the end of the mandatory lock-up periods for 51 stocks in Korea in March 2024, among which 5 are in KOSPI and 46 are in KOSDAQ.
These 51 stocks on average could be subject to further selling pressures in March and could underperform relative to the market.
The top five market cap stocks including those of which at least 1% of outstanding shares could be sold include APR, WCP, DS Dansuk, GI Innovation, and Geolit Energy.

Classys (214150 KS): 2023 Sales Beat Guidance to Reach Record High; Stellar Performance to Continue

By Tina Banerjee

Classys (214150 KS) achieved its highest performance ever in 2023. Revenue grew 27% YoY to KRW180 billion, 6% higher than the forecast of KRW170 billion announced early last year.
As demand for equipment increased rapidly in major countries, overseas sales last year exceeded KRW100 billion for the first time, and specially in Brazil, annual sales exceeded KRW40 billion.
With a positive outlook, Classys is expected to maintain growth trajectory. The company expects 2024 annual revenue of KRW225 billion, up 25% YoY.

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