Category

South Korea

May 23
0

Daily Brief South Korea: PhilEnergy, Hana Financial, Sambu Construction and more

By | Daily Briefs, South Korea

In today’s briefing:

  • PhilEnergy IPO Valuation Analysis
  • South Korea Banks Screen; Focus on Hana Financial (086790 KS) & Industrial Bank of Korea (024110 KS)
  • Sambu Construction: Likely to Be Included in Ukraine Reconstruction Projects

PhilEnergy IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of PhilEnergy is target price of 41,545 won per share, which represents 38% higher than the high end of the IPO price range of 30,000 won. 
  • We believe a premium valuation multiple to the comps (20%) is appropriate due to PhilEnergy’s higher sales growth rate and higher ROE than the comps in 2021 to 2023.
  • We estimate the company to generate sales of 312.5 billion won in 2023 (up 64.7% YoY) and 361.5 billion won (up 15.7% YoY) in 2024.

South Korea Banks Screen; Focus on Hana Financial (086790 KS) & Industrial Bank of Korea (024110 KS)

By Victor Galliano

  • In our latest South Korean banks screener; we stick with quality play Hana Financial and deep value Industrial Bank of Korea, despite rising credit quality headwinds
  • We introduce delinquency ratio charts that show that NPLs and other poor quality credits are on a rising trend, yet most banks have healthy NPL provisions coverage
  • Hana has a low PBV ratio relative to its premium ROE and an undemanding PEG; Industrial Bank of Korea has attractive multiples, PEG ratio and near top returns versus peers

Sambu Construction: Likely to Be Included in Ukraine Reconstruction Projects

By Douglas Kim

  • On 22 May, it was announced that Sambu Construction was invited to the Ukraine Global Reconstruction Forum held in Warsaw and Krakow, Poland from 22 to 25 May. 
  • Sambu Construction is likely to be one of the Korean construction companies to be involved in the Ukraine reconstruction projects. 
  • The total cost of reconstruction of Ukraine has been estimated from about $0.4 trillion to $1.1 trillion.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 22
0

Daily Brief South Korea: Posco Future M, Meritz Financial Group and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea: What Are Foreign Investors Buying & Selling?
  • Meritz Financial: Main Target for Flow Trading in KS200 June Rebalancing

Korea: What Are Foreign Investors Buying & Selling?

By Brian Freitas

Meritz Financial: Main Target for Flow Trading in KS200 June Rebalancing

By Sanghyun Park

  • Meritz Financial confirmed the total number of treasury shares resulting from the mergers, amounting to 5.04% of SO. When combined with the largest shareholder’s stake, the float rate becomes 47.75%.
  • We should focus on direct rebalancing flow through KS200 ETFs on T-1 effective rather than setting it up preemptively. The estimated total AUM of ETFs directly mirroring KS200 is ₩17T.
  • Meritz Financial is expected to receive an inflow of around ₩43B, equivalent to 1.35x ADTV. This is a significant flow impact size as a single-day event.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 21
0

Daily Brief South Korea: Kakao Pay, Krafton Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Official Results of KOSPI 200 Sector Indices Rebalancing: Kakao Pay’s Sector Change Confirmed
  • Krafton: India & Improving Shareholder Return Policy Likely to Lead to Further Outperformance

Official Results of KOSPI 200 Sector Indices Rebalancing: Kakao Pay’s Sector Change Confirmed

By Sanghyun Park

  • The fact that KS200 IT has a significantly higher AUM provides a flow trading opportunity. This is due to the change in GICS for Kakao Pay from IT to Financials.
  • It has been observed that Kakao Pay’s DTV has recently decreased significantly. This may result in the flow size reaching up to 1.4 times DTV.
  • It is advisable to design an outright short position for day trading purposes. Additionally, a more aggressive approach can be considered by combining a long position on Samsung SDS.

Krafton: India & Improving Shareholder Return Policy Likely to Lead to Further Outperformance

By Douglas Kim

  • There is a high likelihood of the Indian authorities fully approving the BGMI game after three months of trial. Plus, it has a solid pipeline of new games under development. 
  • Krafton is improving its shareholder return policy. In addition, the consensus is likely to raise the company’s earnings estimates post its excellent results in 1Q 2023. 
  • We maintain our Positive view of Krafton and its shares are likely to continue to outperform the market this year. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 20
0

Daily Brief South Korea: Leeno Industrial, Krafton Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Preemptive Flow Trading Opportunities with the Fastest-Growing Sector ETFs in Korea
  • Krafton Inc (259960 KS)： PUBG’s Re-Approval in India Could Bring 5% Revenue/Profit Upside

Preemptive Flow Trading Opportunities with the Fastest-Growing Sector ETFs in Korea

By Sanghyun Park

  • Two SOL sector ETFs are unique in that they only include companies positioned upstream. This results in a group of smaller-sized constituents, which can have a greater flow impact.
  • Once the universe is established, constituent selection and weight adjustment are determined exclusively using full/float market capitalization. As a result, flow trading can be highly predictable.
  • Although they have lower AUM, the five Semiconductor constituents could still face a significant flow impact during this one-day flow event due to their much lower DTV.

Krafton Inc (259960 KS)： PUBG’s Re-Approval in India Could Bring 5% Revenue/Profit Upside

By Shawn Yang

  • We estimate that the re-approval of PUBG Mobile in the India will contribute to a 5% increase in Krafton’s annual revenue/profit.
  • Despite being banned in India for several times, PUBG Mobile is expected to receive a warm welcome from local players due to its high quality gameplay and good device compatibility.
  • We upgraded our rating to “Buy” in Feb.2023, citing reasons such as PUBG Mobile stabilizing in key markets and Bluehole’s new product schedule. Currently, we remain optimistic view about Krafton

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 19
0

Daily Brief South Korea: Kum Yang, Yunsung F&C, L&F Co Ltd, Cosmochemical, PhilEnergy and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI200 Index Rebalance: Two Sets of Changes
  • KOSDAQ150 Index Rebalance: 8 Changes with Some Surprises; Performance Deteriorating
  • How Should We Time the L&F Shorting Event for Another Share Dilution Risk?
  • Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150
  • PhilEnergy IPO Preview

KOSPI200 Index Rebalance: Two Sets of Changes

By Brian Freitas

KOSDAQ150 Index Rebalance: 8 Changes with Some Surprises; Performance Deteriorating

By Brian Freitas

  • There are 8 inclusions and 8 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance to be implemented at the close on 8 June.
  • There is one surprise on the deletions and there are a few surprise non-deletions. Smaller surprise on some non-inclusions.
  • Short interest is non-existent on the adds and is a lot larger on the deletes. Shorts on the deletes will be covered in the next few weeks.

How Should We Time the L&F Shorting Event for Another Share Dilution Risk?

By Sanghyun Park

  • The main challenge is the construction of new production facilities in the US. The investment amount is estimated to be around ₩1T, achieving an annual production capacity of 100,000 tons.
  • The government’s approval is the most significant factor to monitor. It will likely be granted between late June or early July, which is when we should start building positions.
  • Due to the local market’s expectation of L&F’s upcoming fundraising event, some traders may start building their positions early on. It’s important to consider this possibility and act preemptively.

Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150

By Douglas Kim

  • Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. 
  • Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.
  • We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on “buy on rumor, sell on news” strategy.

PhilEnergy IPO Preview

By Douglas Kim

  • PhilEnergy is offering 2.8 million shares in the IPO and expected market cap range of the IPO is from 279 billion won to 318 billion won. 
  • The IPO price range is from 26,300 won to 30,000 won and the total offering amount is 74 billion to 84.4 billion won.
  • The company’s core products include stacking and laser notching equipment used in the rechargeable batteries manufacturing process. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 18
0

Daily Brief South Korea: SK Pharmteco, Dongsuh Companies and more

By | Daily Briefs, South Korea

In today’s briefing:

  • SK Pharmteco Pre-IPO Funding & Impact on SK Inc
  • Notable Recent Insiders Buying in Five Korean Companies

SK Pharmteco Pre-IPO Funding & Impact on SK Inc

By Douglas Kim

  • SK Pharmteco is currently 100% owned by SK Inc. It is one of the largest CMO players in Korea. SK Pharmteco is trying to raise nearly 600 billion won. 
  • SK Pharmteco is seeking valuation of about 5 trillion won which is much higher than its book value of 1.65 trillion won.
  • Our NAV valuation of SK Inc suggests an implied NAV of 21.2 trillion won or 286,636 won per share, representing 75% upside from current levels.

Notable Recent Insiders Buying in Five Korean Companies

By Douglas Kim

  • In this insight, we discuss recent insiders buying in five Korean companies including Dongsuh, Green Cross Holdings, Megastudy, Yuanta Securities, and YG Entertainment. 
  • With the exception of YG Entertainment, the share prices of the four other companies are trading at nearly 50% since their peak levels in the past several years. 
  • Of these five companies, three of them (YG Entertainment, Yuanta Securities, and Dongsuh Co) generated positive operating profit on a YoY basis.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 17
0

Daily Brief South Korea: Clio Cosmetics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Focus on 5 Korean Small Cap, Cosmetics Stocks With Significant Growth in Operating Profit in 1Q 2023

Focus on 5 Korean Small Cap, Cosmetics Stocks With Significant Growth in Operating Profit in 1Q 2023

By Douglas Kim

  • In this insight, we discuss 10 small cap cosmetic stocks in Korea, which are up on average 26.6% YTD, outperforming KOSPI which is up 10.9% YTD. 
  • The drivers of their strong share price performances include reopening after the COVID-19 pandemic and ending of nearly all pandemic related restrictions (including wearing of face masks).
  • Among the 10 companies, we would focus on the top five small cap cosmetics stocks with the highest growth in operating profit in 1Q 2023 including Cosmecca Korea and Clio.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 16
0

Daily Brief South Korea: Dongwon Industries, Doosan Enerbility, SD Biosensor, Celltrion Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Checking on Dongwon Industries’ KS200 Deletion Situation After Last Friday’s Share Cancellation Plan
  • NPS: Increasing Capital Allocation to More Defensive Stocks in Korea
  • SD Biosensor: Further Share Price Decline Likely & Candidate for KOSPI 200 Exclusion in 2024
  • Celltrion Inc (068270 KS): Turning Bullish As Biosimilar Revenue Rebounds & US Launches Imminent

Checking on Dongwon Industries’ KS200 Deletion Situation After Last Friday’s Share Cancellation Plan

By Sanghyun Park

  • It is highly likely that Dongwon Industries will be removed from the KOSPI 200 index in this June review.
  • Additionally, based on the confirmed cancellation timeline, the possibility of reinstatement during the December review seems unlikely.
  • As a result, it would be wise to maintain shorting position strategies that factor in this information.

NPS: Increasing Capital Allocation to More Defensive Stocks in Korea

By Douglas Kim

  • In this insight, we discuss the recent Korean stock portfolio allocation changes by the NPS.
  • The data suggests that NPS has been increasing its holdings into more defensive sectors such as insurance, convenience stores, and industrials. 
  • On the other hand, it has been decreasing capital allocation in consumer discretionary related stocks.

SD Biosensor: Further Share Price Decline Likely & Candidate for KOSPI 200 Exclusion in 2024

By Douglas Kim

  • We discuss about the likely exclusion of SD Biosensor from KOSPI 200 in 2024, a big earnings miss in 1Q 2023, and higher probability of further share price decline. 
  • SD Biosensor reported terrible earnings in 1Q 2023. It had sales of 182.4 billion won (down 86.9% YoY and 48% lower than consensus) in 1Q 2023. 
  • Our core bearish case of SD Biosensor is that in most countries around the world, there is no longer any need to test millions of people for COVID-19.

Celltrion Inc (068270 KS): Turning Bullish As Biosimilar Revenue Rebounds & US Launches Imminent

By Tina Banerjee

  • Celltrion Inc (068270 KS) recorded double-digit revenue and operating profit growth in Q1. Biosimilars reported first-ever KRW400B+ quarterly revenue. Operating margin reached to 30.5% in 1Q23 from 24.3% in 1Q22.
  • Remsima SC sales (27% of revenue) resumed at full scale and rebounded to KRW100B quarterly revenue after a gap of ~2.5 years, driven by increasing market share in EU.
  • This year, Celltrion is expected to launch three products in the U.S.: Vegzelma (biosimilar bevacizumab), Yuflyma (biosimilar adalimumab), and a novel subcutaneous formulation of infliximab.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 15
0

Daily Brief South Korea: Daejoo Electronic Materials and more

By | Daily Briefs, South Korea

In today’s briefing:

  • The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names

The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names

By Sanghyun Park

  • The possibility of experiencing a CFD margin call is a genuine and persistent concern. Even a small trigger causes selling pressure to intensify and results in a rapid downward trend.
  • The counter that the local market is closely monitoring is JPM. The selling pressure from the JPM counter since May 8th has exhibited an abnormal pattern. 
  • Eight names are screened. They are KOSPI 200/KOSDAQ 150 constituents with JPM’s net selling volume to SO being 0.2% or higher, and a margin-equity ratio of 3% or higher.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
May 14
0

Daily Brief South Korea: Dong Yang P&F and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Crash in 2 More Korean Stocks Related to CFD Derivatives: Margin Calls Again

A Crash in 2 More Korean Stocks Related to CFD Derivatives: Margin Calls Again

By Douglas Kim

  • In this insight, we discuss two stocks in Korea, Dong Yang P&F and Shindaeyang Paper, whose share prices declined sharply on 12 May.
  • It appears that the main culprit behind their collapse in share price appears to be unwinding of the excessive leverage (especially CFD derivatives trading).
  • Post the sharp decline in their share price for DYPNF and Shindeyang Paper on 12 May, further downside is likely on these stocks in the coming weeks.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free