Category

South Korea

May 13
0

Daily Brief South Korea: Amorepacific Group, GigaVis and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Timing Stub Trade on Amorepacific Group with a Key Passive Inflow Event Coming Up
  • Gigavis IPO Bookbuilding Results Analysis

Timing Stub Trade on Amorepacific Group with a Key Passive Inflow Event Coming Up

By Sanghyun Park

  • AmoreG has been closely moving relative to Amorepacific Corp (090430 KS) over the past few months, but starting from mid-April, it rapidly entered a downward diversion phase.
  • It appears to have experienced greater sensitivity towards the recent tensions in Sino-Korean relations, possibly due to its higher price correlation with the Chinese market.
  • The issue lies in the timing of entry aimed at reversion, and there may be one upcoming passive inflow event that we should pay attention to in this regard.

Gigavis IPO Bookbuilding Results Analysis

By Douglas Kim

  • On 12 May, GigaVis announced its IPO price of 43,000 won, which is 8% higher than the high end of the IPO price range of 39,700 won. 
  • Our base case valuation of Gigavis is target price of 61,755 won per share, which is 44% higher than the IPO price of 43,000 won.
  • Gigavis makes automatic optical inspection equipment (AOI) and automatic optical repair equipment (AOR) for the inspection and repair process of inner layer substrates, which are core components of semiconductor substrates.

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May 12
0

Daily Brief South Korea: KT Corp, Ecopro Co Ltd, Aekyung Chemical , Coupang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KT Cloud Receives 600 Billion Investment from IMM at a Valuation of 4.6 Trillion Won
  • Delving into the Nature of the Legal Risks that Ecopro Is Facing After Yesterday’s Court Verdict
  • Aekyung Chemical: Sodium-Ion Battery Materials & Candidate for KOSPI200 Inclusion in 2H23/2024
  • [Coupang Inc. (CPNG US) Target Price Change]: Fulfilment of 3P Orders Is Next Revenue Driver

KT Cloud Receives 600 Billion Investment from IMM at a Valuation of 4.6 Trillion Won

By Douglas Kim

  • On 11 May, it was announced that KT Cloud received a 600 billion investment from IMM, valuing KT Cloud at 4.6 trillion won. 
  • Given that KT Cloud is valued at 4.6 trillion won, an 86.6% stake would be worth 4 trillion won which would be 49% of KT’s current market. 
  • The investment in KT Cloud is likely to have a positive impact on KT Corp. Plus, KT Corp is a likely candidate for MSCI Korea Standard inclusion in May 2023.

Delving into the Nature of the Legal Risks that Ecopro Is Facing After Yesterday’s Court Verdict

By Sanghyun Park

  • The severity of yesterday’s ruling has caught the market’s attention as it may provide insight into an ongoing investigation into insider trading based on undisclosed internal information.
  • This matter is not limited to the operational risk caused by the imprisonment of Lee Dong-chae. There is a possibility that it could lead to delisting, depending on the circumstances.
  • The substantial legal risk that could lead to delisting will further amplify price volatility. Adopting a more segmented approach appears crucial, like specific setups in each tighter interval.

Aekyung Chemical: Sodium-Ion Battery Materials & Candidate for KOSPI200 Inclusion in 2H23/2024

By Douglas Kim

  • Aekyung Chemical produces materials and additives for sodium-ion batteries. If sodium-ion batteries become more popular for EV batteries, Aekyung Chemical could benefit from this trend. 
  • Aekyung Chemical is increasingly likely to be included in KOSPI 200 index in 2H 2023 or 2024.
  • The Aekyung Group completed the merger of three chemical businesses (Aekyung Petrochemical, AK ChemTech, and Aekyung Chemical) into one entity (Aekyung Chemical) in 2021. 

[Coupang Inc. (CPNG US) Target Price Change]: Fulfilment of 3P Orders Is Next Revenue Driver

By Shawn Yang

  • CPNG reported C1Q23 top-line, EBITDA, and non-GAAP net income in-line, 8.1%, and (3.7%) vs. our est., and 3.1%, 8.2%, and in-line vs. cons., respectively. 
  • We estimate CPNG’s penetration of its 3P marketplace fulfilment (FLC) rose 6ppts~ YoY to 20%~ in 1Q23. 
  • We maintain our BUY rating and raise our TP to US$21.

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May 11
0

Daily Brief South Korea: LG Energy Solution, KG Mobility and more

By | Daily Briefs, South Korea

In today’s briefing:

  • CATL & BYD’s Hybrid Sodium-Ion/ Lithium-Ion Batteries to Take Away Share from Korean Battery Makers
  • Overlooked Aspects of KG Mobility’s Passive Flow Trading Opportunities: KOSPI 200 & KRX Auto

CATL & BYD’s Hybrid Sodium-Ion/ Lithium-Ion Batteries to Take Away Share from Korean Battery Makers

By Douglas Kim

  • One of the biggest breakthroughs in the global EV rechargeable battery industry this year has been CATL and BYD’s launch of hybrid sodium-ion and lithium-ion batteries in 2H 2023.
  • This is expected to take away market share from Korean EV battery makers including LG Energy Solution and Samsung SDI.
  • It is expected that eventually, that sodium-ion batteries could be about 30-40% cheaper than conventional lithium-ion batteries.

Overlooked Aspects of KG Mobility’s Passive Flow Trading Opportunities: KOSPI 200 & KRX Auto

By Sanghyun Park

  • KG Mobility belongs to the Consumer Discretionary sector, and if we consider its market cap on April 28th, it comfortably qualifies for inclusion in KOSPI 200 in the upcoming review.
  • Although the KOSPI 200 eligibility rules do not explicitly prohibit a stock based on such short trading periods, there is a chance that KRX might exercise its discretionary provision (6.1.2).
  • There is another significant event approaching us. As per current market cap levels, there is a high chance of KG Mobility being included in the KRX Auto Index in September.

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May 10
0

Daily Brief South Korea: Hyundai Motor (2nd Pref), Cosmo AM&T, Naver Corp, Kum Yang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Where Are We Now Regarding New Dividend Distribution Procedure in Korea?
  • KOSPI Size Indices – Potential Changes in September
  • Naver (2023 High Conviction Update): Poshmark & Gen Z – Key Drivers of Higher Sales in North America
  • Potential Inclusions & Exclusions for KOSPI 200 and KOSDAQ 150 in May 2023 Highlighted by Locals

Where Are We Now Regarding New Dividend Distribution Procedure in Korea?

By Sanghyun Park

  • 646 listed companies (28.5%) in Korea have modified their articles of incorporation this March to prioritize determining the dividend amount before setting the dividend record date.
  • New practices will arise involving the use of single-stock futures for arbitrage trading through baskets among major high-dividend companies whose dates of the dividend records overlap.
  • It will be crucial to keep track of the dividend record dates with precision. In this connection, KLCA and KOSDAQCA will create a website monitoring this information.

KOSPI Size Indices – Potential Changes in September

By Brian Freitas

  • The review period for the September rebalance of the KOSPI Size Indices will run from 1 June to 31 August. The changes will be implemented at the close 7 September.
  • We see 6 migrations from MidCap to LargeCap, 56 migrations from LargeCap to MidCap, 2 new adds to MidCap, and 11 migrations from SmallCap to MidCap.
  • Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

Naver (2023 High Conviction Update): Poshmark & Gen Z – Key Drivers of Higher Sales in North America

By Douglas Kim

  • In this insight, we provide an update of Naver Corp which is our 2023 high conviction stock. Naver’s shares are up 19% YTD, outperforming KOSPI which is up 12% YTD. 
  • The total transaction amount of Naver Commerce was 11.6 trillion won (up 19.7% YoY) in 1Q 2023. Poshmark also generated positive EBITDA in 1Q 2023. 
  • Naver plans to cancel about 1.6 million treasury shares per year (1% of outstanding shares) in the next three years (for a combined 3% of outstanding shares). 

Potential Inclusions & Exclusions for KOSPI 200 and KOSDAQ 150 in May 2023 Highlighted by Locals

By Douglas Kim

  • In this insight, we discuss the potential inclusions and exclusions that the locals are highlighting for the KOSPI 200 and KOSDAQ 150 rebalance in May 2023. 
  • The top five best performing stocks YTD that are expected to be included in either KOSPI200 and KOSDAQ150 include Rainbow Robotics, Kumyang, Cosmo Chemical, Yunsung F&C, and Posco M Tech.
  • In the coming weeks, there is a higher probability these five stocks underperform the market on average as many investors sell the news on them getting included in these indices. 

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May 09
0

Daily Brief South Korea: Samsung Securities, CUBox, Coupang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Will Woori Financial Group Acquire Samsung Securities?
  • CUBox IPO Bookbuilding Results Analysis
  • [Coupang Inc. (CPNG US) Earnings Preview]: Market Share Solid Given Limited Competitive Threat

Will Woori Financial Group Acquire Samsung Securities?

By Douglas Kim

  • The new head of Woori Financial Group (316140 KS) Chairman Lim Jong-Ryong recently revealed his willingness to acquire a major/mid-scale securities company.
  • Among these potential acquisition candidates, Samsung Securities is considered to be the most likely securities companies that could be purchased by Woori Financial Group.
  • In the long term (next 2-3 years), there is a good probability that Woori Financial Group could acquire Samsung Securities, which is not a core business of the Samsung Group.

CUBox IPO Bookbuilding Results Analysis

By Douglas Kim

  • On 8 May, CUBox (340810 KS) announced its IPO price of 15,000 won, which is 13% lower than the lower end of the IPO price range of 17,200 won.
  • Our base case valuation of CUBox is implied target price of 22,719 won per share, which represents 51% higher than the IPO price of 15,000 won.
  • CUBox claims that it has one of the world’s best technologies in the field of AI face recognition. 

[Coupang Inc. (CPNG US) Earnings Preview]: Market Share Solid Given Limited Competitive Threat

By Shawn Yang

  • We expect CPNG to report C1Q23 top-line and non-GAAP net income 2.0% and 4.8% vs. consensus, respectively. 
  • AliExpress became S. Korea’s most downloaded app after increasing spending, but product overlap with Coupang is limited, while other S. Korean competitors recorded declining MAU, in our understanding.
  • South Korean economic indicators, including CPI and retail data, point towards a recovery. We maintain our BUY rating and US$19 TP.

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May 08
0

Daily Brief South Korea: Kum Yang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Kum Yang: Shorting Entry Timing on the Inevitable Block Deals

Kum Yang: Shorting Entry Timing on the Inevitable Block Deals

By Sanghyun Park

  • Kum Yang IR director Park once mentioned that the block deals to sell the 2M treasury shares would likely occur in late May or early June.
  • There has been speculation in the market that the timing of the block deal may be postponed until after its inclusion in the KOSPI 200, allowing for short selling.
  • Considering the immediate funding needs faced by the company, setting an aggressive approach to shorting from shortly after its inclusion in the KOSPI 200 would be reasonable regarding entry timing.

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May 07
0

Daily Brief South Korea: Tokai Carbon Korea and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Long Short Trading Event Likely to Have a High Hit Rate: HPSP & TCK

A Long Short Trading Event Likely to Have a High Hit Rate: HPSP & TCK

By Sanghyun Park

  • The Korean local sector ETF with the fastest growing AUM is TIGER Fn Semiconductor Top 10 ETF, whose AUM has increased more than twice over the past two months.
  • HPSP (403870 KS) will replace Tokai Carbon Korea (064760 KS) by a comfortable margin in the upcoming review in October.
  • From a day trading perspective, this presents a significant Long-Short opportunity. Considering the relatively sizeable passive impact size, setting an entry point more aggressively may not be a bad idea.

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May 06
0

Daily Brief South Korea: Ecopro BM Co Ltd, SK Biopharmaceuticals Co Ltd, BNC Korea and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Insiders Sell at Ecopro BM
  • SK Biopharmaceuticals (326030 KS): Xcopri US Sales Doubled in 2022; More Stream Still Left
  • BNC Korea (256840 KS): Margin Pressure; Base Business Faces Regulatory Risk; COVID Drug in Doldrum

Insiders Sell at Ecopro BM

By Douglas Kim

  • It was recently reported that Choi Mun-Ho (CEO of Ecopro BM) sold 2,000 shares of Ecopro BM Co Ltd (247540 KS) at 254,000 won per share.
  • It was also recently announced that Eroom T&C, the family company of Lee Dong-Chae, the chairman of Ecopro Group, also sold shares of Ecopro BM.
  • Recent selling of Ecopro BM shares by CEO Choi Mun-Ho and Ecopro affiliate Eroom T&C are negative signs on the Ecopro BM. Lofty valuations are also negative on Ecopro BM. 

SK Biopharmaceuticals (326030 KS): Xcopri US Sales Doubled in 2022; More Stream Still Left

By Tina Banerjee

  • For 2022, SK Biopharmaceuticals Co Ltd (326030 KS) recorded Xcopri U.S. revenue of KRW169B, up 116% YoY. This year, the company expects to secure Xcopri sales of ~KRW300B in U.S.
  • Thus far, Xcopri has been launched in 15 countries in Europe. The company expects to launched Xcopri in eight more countries in Europe this year.
  • By 2025, SKBP plans to submit sNDA for cenobamate in primary generalized tonic-clonic (PGTC) seizures and pediatric patients, and carisbamate for orphan pediatric epilepsy.

BNC Korea (256840 KS): Margin Pressure; Base Business Faces Regulatory Risk; COVID Drug in Doldrum

By Tina Banerjee

  • During 2022, BNC Korea (256840 KS) reported gross profit margin of 48.3%, lower than 51.9% reported in 2021, as increasing competition is leading to price erosion of botulinum toxin products.
  • In March 2023, prosecutors have indicted BNC Korea for allegedly selling botulinum toxin injections to exporters without the approval of the MFDS from December 2015 to December 2021.
  • With the pandemic on a downward trend for more than a year now, we are skeptical about BNC Korea’s in-licensed COVID-19 drug candidate for a milestone payment of $15M.

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May 05
0

Daily Brief South Korea: Ecopro Co Ltd, Kiwoom Securities and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Ecopro – Is This the Start of the End?
  • Chairman Kim Ik-Rae of Daou Kiwoom Group Resigns & Says Sorry – But Is This Enough?

Ecopro – Is This the Start of the End?

By Ken S. Kim

  • A SELL note from a broker on Ecopro BM Co Ltd (247540 KS) was a key reason for the 7% and 8+% fall for Ecopro Co Ltd (086520 KS) .  
  • Is this finally start of the end of the rally for the poster boy for Korean EV 
  • When will earnings matter and what are the catalysts that could start the downfall?

Chairman Kim Ik-Rae of Daou Kiwoom Group Resigns & Says Sorry – But Is This Enough?

By Douglas Kim

  • After the market close today, Kim Ik-Rae (Chairman of the Daou Kiwoom Group) announced his resignation of the Chairman position.
  • Chairman Kim mentioned he has not done anything legally wrong. He will donate the entire amount (60.5 billion won) which was gained from selling 1.4 million shares of Daou Data. 
  • We believe that Kiwoom Securities’ share price could fall additional 10-30% in the next several weeks/months. This could be offset by a large share buyback & cancellation by the company. 

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May 04
0

Daily Brief South Korea: HLB Inc, Hyundai Rotem Company, Douzone Bizon and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX Plans to List Single-Stock Futures of All KS200 & KQ150 Constituents
  • Asian Defence Contractors: Up In Arms
  • KRX New Deal Index Rebalance Preview: Potential & Close Changes in September

KRX Plans to List Single-Stock Futures of All KS200 & KQ150 Constituents

By Sanghyun Park

  • According to Chosun, KRX plans to list the single-stock futures of all constituents of KOSPI 200 and KOSDAQ 150 within 2-3 years.
  • This information comes from a KRX official, who directly confirmed it. As Chosun is the most well-established news outlet in Korea, the credibility of this article is quite high.
  • We should consider screening those with a high proportion of short-selling positions and devising a positioning strategy in conjunction with the new listing event of single stock futures in July.

Asian Defence Contractors: Up In Arms

By David Blennerhassett

  • According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.
  • A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.
  • South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. 

KRX New Deal Index Rebalance Preview: Potential & Close Changes in September

By Brian Freitas

  • The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
  • There are potential changes to some of the indices and then there are close changes that will result in big flows if they eventuate.
  • The March rebalance saw some funky moves on the stocks that had big flows and we could see more of that at the September rebalance.

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