Category

South Korea

Apr 12
0

Daily Brief South Korea: Ecopro Co Ltd, Manyo Factory, Solus Advanced Materials and more

By | Daily Briefs, South Korea

In today’s briefing:

  • StubWorld: Ecopro’s Spike Makes No Sense
  • Manyo Factory IPO Valuation Analysis
  • Solus Advanced Materials: Key Catalysts to Continue Its Outperformance in 2023

StubWorld: Ecopro’s Spike Makes No Sense

By David Blennerhassett

  • Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)‘s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials. 
  • Preceding my comments on Ecopro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Manyo Factory IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Manyo Factory is target price of 29,555 won per share, which represents 111% higher than the high end of the IPO price range.
  • We estimate the company to generate sales of 147.7 billion won in 2023 (up 45.1% YoY) and its operating margins to improve from 24.1% in 2022 to 24.7% in 2023. 
  • We believe a 20% premium valuation multiple to the comps is appropriate due to its higher sales growth rate, higher operating margins, and higher ROE than the comps.

Solus Advanced Materials: Key Catalysts to Continue Its Outperformance in 2023

By Douglas Kim

  • We believe the following three catalysts will likely drive share price of Solus Advanced Materials’ continued outperformance relative to the market this year. 
  • They include the sale of Solus Biotech, improved control of its operating costs, and rapid increase in capacity for copper foil.
  • The company has already secured strong order backlog from customers including LG Energy Solution, Tesla Motors, and SK On.

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Apr 11
0

Daily Brief South Korea: Youlchon Chemical, Manyo Factory, Naver Z, Shinpoong Pharmaceutical and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Target May 15th for LONG Youlchon Chemical with Dongkuk Steel’s Split Approval
  • Manyo Factory IPO Preview
  • NAVER Z: Owner of The Fastest Growing Avatar Platform Zepeto
  • Shinpoong Pharmaceutical (019170 KS): Widening Operating Loss; COVID Drug Loses Steam

Target May 15th for LONG Youlchon Chemical with Dongkuk Steel’s Split Approval

By Sanghyun Park

  • Through the regular rebalancing, Kum Yang and Cosmo Chemical will be included in KOSPI 200, and Youlchon Chemical will be included as an ad-hoc change due to Dongkuk Steel’s deletion.
  • We should prepare for an aggressive long position on Youlchon Chemical from a day trading perspective, targeting May 15th, the day after Dongkuk Steel’s general meeting.
  • If the meeting is scheduled for the morning, we should consider entering the position in the afternoon of the 12th.

Manyo Factory IPO Preview

By Douglas Kim

  • Manyo Factory is well known for its functional skin care products made from naural ingredients. Its products have been enjoying excellent sales in Japan and Korea.
  • Given the company’s superior sales growth and operating margins than its peers combined with the large IPO discount, there is likely to be a strong interest in Manyo Factory IPO. 
  • Unlike other major Korean cosmetic companies with poor sales and operating profit in the past three years, Manyo Factory experienced excellent growth of its sales and profits in this period. 

NAVER Z: Owner of The Fastest Growing Avatar Platform Zepeto

By Shifara Samsudeen, ACMA, CGMA

  • Naver Z Corporation, a subsidiary of NAVER Corporation, focuses on developing VR and AR technologies. The company can be regarded as one of the promising players in the Metaverse market.
  • The company’s flagship product, ZEPETO, has become particularly popular among younger users and has been downloaded over 300 million times worldwide.
  • Naver Z (1838597D KS) ‘s VR and AR technologies have a variety of use cases, and the company has worked with businesses and brands in a variety of industries.

Shinpoong Pharmaceutical (019170 KS): Widening Operating Loss; COVID Drug Loses Steam

By Tina Banerjee

  • Shinpoong Pharmaceutical (019170 KS) recorded operating loss of KRW34 billion in 2022 from operating loss of KRW14 billion in 2021 and an operating profit of KRW8 billion in 2020.
  • Shinpoong is investing heavily on R&D, which is taking a toll on its financial health. During 2022, R&D expenses accounted for 21% of total revenue, up from 16% in 2021.
  • The company is revising phase 3 trial plan for anti-malarial drug Pyramax as COVID-19 treatment. Even if Pyramax succeeds to get approval, the drug is expected to have limited uptake.

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Apr 09
0

Daily Brief South Korea: KT Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Pair Trade Between KT & LG Uplus

A Pair Trade Between KT & LG Uplus

By Douglas Kim

  • In this insight, we discuss a pair trade between KT Corp (030200 KS) (go long) and LG Uplus Corp (032640 KS) (go short).
  • The three major reasons for going long on KT Corp include a) the potential inclusion in MSCI Korea Standard index, b) attractive valuations, and c) a new CEO. 
  • KT Corp is a potential inclusion candidate for MSCI Korea Standard index in May 2023. With foreign room at 17%, it is comfortably above the 15% level threshold requirement.

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Apr 08
0

Daily Brief South Korea: GigaVis and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Gigavis IPO Valuation Analysis

Gigavis IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Gigavis IPO is target price of 61,755 won per share, representing 56% higher than the high end of the IPO price range.
  • We estimate the company to generate sales of 126.6 billion won (up 27% YoY) in 2023 and 150.9 billion won (up 19.2% YoY) in 2024.
  • Our base case valuation is based on 21.8x P/E using our estimated net profit of 35.9 billion won in 2023.

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Apr 07
0

Daily Brief South Korea: KT Corp, Samsung Electronics Pref Shares and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
  • Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2023

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?

By Sanghyun Park

  • There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
  • If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
  • This implies an essential premise for us to set up a more aggressive preemptive position on KT.

Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2023

By Douglas Kim

  • In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 2Q 2023. 
  • The excessive gaps in the preferred and common shares of CJ Corp, Samsung Electronics, and LG Electronics could reverse in the next several months, in our view. 
  • We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung SDI which have especially high discounts for the preferred shares versus their counterpart common shares.

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Apr 06
0

Daily Brief South Korea: DB Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • DB Group: Kim Family Feud Leading to a Potential M&A Fight?

DB Group: Kim Family Feud Leading to a Potential M&A Fight?

By Douglas Kim

  • In this insight, we discuss another very interesting situation brewing which is the potential family feud at the DB Group.
  • One of the scenarios of the Kim family at DB Group is a sibling conflict between Nam-Ho Kim (Chairman) and his sister Ju-Won Kim.
  • Our base case valuation of DB Inc is target market cap of 488 billion won or 2,428 won per share, which is 36% higher than current price.

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Apr 05
0

Daily Brief South Korea: CUBox and more

By | Daily Briefs, South Korea

In today’s briefing:

  • CUBox IPO Valuation Analysis

CUBox IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of CUBox is target price of 34,172 won per share, which is 47% higher than the high end of the IPO price range of 23,200 won. 
  • Our base case valuation uses our estimated sales of 24.5 billion won for the company in 2023 and P/S multiple of 17.2x.
  • Given that CUBox is a leading player in the AI technology driven facial recognition in Korea, many investors are likely to pay higher premium for its technology. 

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Apr 04
0

Daily Brief South Korea: Ecopro Co Ltd, GigaVis, Samsung Electronics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • MSCI Korea May QCIR: Potential Adds, Deletes & ‘Extreme Price Increase’ Triggers
  • Gigavis IPO Preview
  • Samsung Electronics (005930 KS) – Bullish LT Uptrend Confirmation in Q1 2023 Implies 15-25% Upside

MSCI Korea May QCIR: Potential Adds, Deletes & ‘Extreme Price Increase’ Triggers

By Brian Freitas

  • Based on closing price from 3 April, we forecast 5 adds and 4 deletes for the MSCI Korea Index at the May QCIR.
  • Three of the adds are close to triggering the extreme price increase criteria – if triggered, index inclusion could be deferred to a subsequent index review.
  • Retail investors have been buying three of the potential adds, while foreign investors have taken the lead on two. Foreign investors have been sellers on all the potential deletions.

Gigavis IPO Preview

By Douglas Kim

  • Gigavis is offering 2.22 million shares in this IPO. The expected market cap of the IPO is from 436 billion won to 503 billion won.
  • The maximum IPO offering amount is 88.1 billion won. The IPO price is between 34,400 won to 39,700 won.
  • Gigavis makes automatic optical repair equipment (AOR) for the semiconductor industry. 

Samsung Electronics (005930 KS) – Bullish LT Uptrend Confirmation in Q1 2023 Implies 15-25% Upside

By David Coloretti, CMT

  • At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
  • LT RSI’s typically maintain a 40-80 range in sustainable uptrends and a 20-60 range in sustainable downtrends. Quarterly RSI has maintained a 45-85 range since 2001 (LT uptrend bias).
  • The material correction of 2021/2022 has produced a high probability confirmation of a renewed LT uptrend (quarterly Morning Star pattern). Minimum target range at 74300/79610 (+15-25%) in the coming year.

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Apr 03
0

Daily Brief South Korea: Hyundai Elevator Co and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group

Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group

By Douglas Kim

  • On 30 March, it was announced that Hyun Jeong-Eun (Chairwoman of the Hyundai Group) lost a final lawsuit against the Schindler Group.
  • The Supreme Court upheld an appeal court ruling that Chairwoman Hyun needs to pay 170 billion won (US$131 million) and delayed interest payments to Hyundai Elevator. 
  • Although this major lawsuit loss for Chairwoman Hyun is a tremendous catalyst, the downturn in the construction sector and uncertainty in the reduction in Chairwoman’s stake remain key negatives. 

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Apr 01
0

Daily Brief South Korea: DB Hitek Co., Ltd. and more

By | Daily Briefs, South Korea

In today’s briefing:

  • DB Hitek: KCGI Goes Activist & A Potential Inclusion in MSCI Korea Standard Index in 2023

DB Hitek: KCGI Goes Activist & A Potential Inclusion in MSCI Korea Standard Index in 2023

By Douglas Kim

  • It was announced on 30 March that a local activist firm called KCGI has invested 7.05% stake in DB Hitek, spending 196.4 billion won on buying this amount.
  • KCGI mentioned that DB Hitek’s corporate value is extremely undervalued that the company should cancel its treasury shares and establish independent Board of Directors. 
  • The probability of DB Hitek being included in MSCI Korea Standard could rise materially if its market cap climbs to more than 4 trillion won in the coming weeks.

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