Category

South Korea

Sep 17
0

Daily Brief South Korea: Korea Zinc, Tapex Co and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Insights on the Odds of MBK Ramping up the Tender Price by 20%
  • Sung Woo IPO Preview

Insights on the Odds of MBK Ramping up the Tender Price by 20%

By Sanghyun Park

  • MBK can cut their target volume to 12% and, with 2 trillion won, raise the tender price to ₩800,000, leaving them a 20% cushion.
  • MBK’s tight schedule aims to hit the 6.98% target while minimizing price volatility and market risk by shortening the offer window.
  • MBK plans to sweeten the deal by about 20%, similar to Hankook, aiming for a 6.98% target with a 20% price hike from the start.

Sung Woo IPO Preview

By Douglas Kim

  • Sung Woo is getting ready to complete its IPO in KOSDAQ in October 2024. Founded in 1992, Sung Woo produces components for cylindrical rechargeable battery, energy storage system, and automotive. 
  • The IPO price range is from 25,000 won to 29,000 won. According to the bankers’ valuation, the expected market cap is 376 billion won to 436 billion won. 
  • The book building for the institutional investors will be conducted from 10 to 16 October. The lead underwriter of this IPO is Korea Investment & Securities. 

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Sep 16
0

Daily Brief South Korea: Hyundai Rotem Company and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat

Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat

By Sanghyun Park

  • The cutoff market cap is around ₩3.6T, and Hyundai Rotem is the only stock that screens into the inclusion zone.
  • Hyundai Rotem might see a repeat of LS Electric’s pattern: heavy chasing towards screening and a big dive at the decision. Watch for aggressive momentum trades starting late September.
  • The stock with the lowest full market cap, Kum Yang, is at risk, but Celltrion Pharm is close behind. KT Corp’s exclusion might save Kum Yang or Celltrion Pharm.

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Sep 15
0

Daily Brief South Korea: K Bank and more

By | Daily Briefs, South Korea

In today’s briefing:

  • K Bank IPO Preview
  • K-Bank’s IPO Details Out: Aggressive Pricing, but as a Crypto Play, It Might Surprise

K Bank IPO Preview

By Douglas Kim

  • K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago. 
  • Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank. 
  • Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.

K-Bank’s IPO Details Out: Aggressive Pricing, but as a Crypto Play, It Might Surprise

By Sanghyun Park

  • Compared to its overseas peers, K-Bank’s high valuation still stands out due to a significant gap in net income size relative to market cap.
  • The offering structure, with 50% secondary sales and weak lock-up commitments, means post-IPO float could spike to around 40%, making a stock price bump unlikely.
  • K-Bank’s crypto-focused model might attract investors valuing it as a crypto play, potentially influencing IPO pricing and post-listing stock performance.

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Sep 14
0

Daily Brief South Korea: Korea Zinc, Young Poong and more

By | Daily Briefs, South Korea

In today’s briefing:

  • StubWorld: Young Poong & MBK Jostle For Control Of Korea Zinc (010130 KS)
  • NAV Analysis of Young Poong and Three Potential Scenarios of Choi Family’s Strategy to Fight Back
  • Clearing up Legal Confusion on Counter Offers and Getting a Clear Read on the Korea Zinc Tender

StubWorld: Young Poong & MBK Jostle For Control Of Korea Zinc (010130 KS)

By David Blennerhassett

  • MBK has teamed up with Young Poong (000670 KS) to secure control of Korea Zinc (010130 KS) via Partial Tender Offers for Korea Zinc and Young Poong Precision (036560 KS).
  • Preceding my comments on Young Poong, Korea Zinc, and Young Poong Precision are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

NAV Analysis of Young Poong and Three Potential Scenarios of Choi Family’s Strategy to Fight Back

By Douglas Kim

  • We have significantly raised the NAV of Young Poong to 965,193 won (up 105% than previously). Our current NAV estimate of the company is 150% higher than current price.
  • Some traders have been positioning for Young Poong to be deleted from the KOSPI200 in the next round of rebalancing. Young Poong is not likely to be deleted from KOSPI200.
  • We also provide three potential scenarios of the Choi family’s strategy to fight back to gain control of Korea Zinc.

Clearing up Legal Confusion on Counter Offers and Getting a Clear Read on the Korea Zinc Tender

By Sanghyun Park

  • Since Choi and his affiliates can’t buy shares directly, his only play is to recruit more white knights to boost his stake.
  • He needs at least 6% from the 23% free float, costing over ₩800 billion. This hefty price tag is why the stock hasn’t moved much from the tender offer price.
  • The market isn’t ruling out Hyundai getting aggressive to secure Korea Zinc’s nickel, making this a hot trading point during the tender offer.

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Sep 13
0

Daily Brief South Korea: Korea Zinc, Young Poong Precision, DL Holdings Co and more

By | Daily Briefs, South Korea

In today’s briefing:

  • MBK’s Dual Tenders for Korea Zinc and Youngpoong Precision: The Largest Deal Ever in Korea
  • MBK Partners and Jang Family Partner to Control Korea Zinc + Tender Offer of 14.6% of Korea Zinc
  • Tender Offer of 43.4% Stake in Young Poong Precision by MBK
  • KRX Releases November SSFs and SSOs Reshuffle: Here’s the Breakdown

MBK’s Dual Tenders for Korea Zinc and Youngpoong Precision: The Largest Deal Ever in Korea

By Sanghyun Park

  • MBK launches a tender offer to acquire 14.6% of Korea Zinc at ₩660,000 per share, a ₩2T deal with an 18.7% premium. Offer runs from September 13 to October 4.
  • On top of that, MBK’s also rolling out a tender offer for Young Poong Precision at ₩20,000 per share—a hefty 113% premium over yesterday’s close.
  • Spread action is possible if the Choi family counters, driving volatility. The market’s watching for a higher bid, which could create trading opportunities amid rising spread volatility.

MBK Partners and Jang Family Partner to Control Korea Zinc + Tender Offer of 14.6% of Korea Zinc

By Douglas Kim

  • After the market close on 12 September, Maekyung Business Daily reported that MBK Partners will become the largest shareholder of Korea Zinc (010130 KS) along with Young Poong (000670 KS). 
  • MBK Partners, along with Youngpoong and advisor Jang Hyung-jin, also plans to conduct a tender offer of 14.6% stake in Korea Zinc. 
  • The tender offer price for Korea Zinc is 660,000 won per share, which is 18.7% higher than the closing price on 12 September.

Tender Offer of 43.4% Stake in Young Poong Precision by MBK

By Douglas Kim

  • After the market close on 12 September, Hankyung Business Daily reported that MBK Partners plans to conduct a tender offer of 43.43% stake in Young Poong Precision.
  • The tender offer price is 20,000 won per share (113% higher than the closing price on 12 September). 
  • Choi family currently controls Young Poong Precision. MBK plans to secure a controlling stake and obtain voting rights for the 1.85% stake in Korea Zinc held by Young Poong Precision.

KRX Releases November SSFs and SSOs Reshuffle: Here’s the Breakdown

By Sanghyun Park

  • With the November reshuffle, single stock futures rise from 222 to 258 (+36) and single stock options increase from 52 to 58 (+6) across KOSPI 200 and KOSDAQ Global.
  • The main takeaway from this reshuffle is the price impact from a short-term volume spike as market makers jump into newly listed single-stock futures.
  • The volume surge in spot markets for newly listed assets consistently drives positive price impact, most notably right after listing, rather than waiting until contract expiry.

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Sep 12
0

Daily Brief South Korea: Samsung Electronics Pref Shares, Hanwha Galleria , The Born Korea and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Exploring Why Samsung Electronics’ Pref Discount Narrowing Took a Sharp Turn Yesterday
  • Hanwha Galleria Tender Results Are in with No Proration Issue Despite a Fat Spread. What’s Next?
  • The Born Korea IPO Valuation Vs Recent M&A Valuation of Compose Coffee by Jollibee Foods
  • Kim Dong-Sun Likely to Purchase More Shares of Hanwha Galleria Post Tender Offer

Exploring Why Samsung Electronics’ Pref Discount Narrowing Took a Sharp Turn Yesterday

By Sanghyun Park

  • Samsung’s preferred shares lagged significantly behind the common shares yesterday, showing the largest daily sigma move we’ve seen in a while.
  • Samsung’s delayed value-up announcement, despite regulatory pressure, has fueled speculation about a potential Biologics stake purchase from C&T.
  • It’s time to pause the trade on Samsung’s preferred discount narrowing that I highlighted in early August. The main inflection point will be when Samsung makes its value-up announcement.

Hanwha Galleria Tender Results Are in with No Proration Issue Despite a Fat Spread. What’s Next?

By Sanghyun Park

  • Hanwha Galleria’s tender offer, led by Kim Dong-sun, closed today with a subscription rate just over 80%, according to the local brokerage after market close.
  • Retail investors in small caps like Hanwha Galleria often skip tender offers, hoping for price gains. Kim Dong-sun may try to buy the remaining 10-15% soon, possibly via open-market buys.
  • Watch for signs that Kim Dong-sun might go for a second tender to take Galleria private. He might be aiming to avoid taxes and boost his stake’s value.

The Born Korea IPO Valuation Vs Recent M&A Valuation of Compose Coffee by Jollibee Foods

By Douglas Kim

  • In this insight, we compare the IPO valuation of The Born Korea (475560 KS) versus the recent M&A valuation of Compose Coffee by Jollibee Foods (JFC PM).
  • Using the recent M&A multiples of Compose Coffee by Jollibee Foods suggests an attractive upside to The Born Korea (relative to the IPO price range).
  • No other listed company in Korea has a restaurant business model that is consistently profitable, with strong balance sheet, and solid sales growth as The Born Korea. 

Kim Dong-Sun Likely to Purchase More Shares of Hanwha Galleria Post Tender Offer

By Douglas Kim

  • The tender offer period for Hanwha Galleria ended on 11 September. Its share price closed down 7.4% but still up 8.2% from its price prior to the tender offer announcement.
  • The local media accounts mentioned today that about 80-90% of the shares targeted in this tender offer have been filled.
  • If 90% of the tender offer is successful, Kim Dong-Sun’s stake in the company will rise from 2.3% to 18.1%.

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Sep 11
0

Daily Brief South Korea: KT Corp, LG Electronics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall
  • LG Electronics India IPO: Potential Big Gains. Booming Demand, Buoyant Valuations

Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall

By Sanghyun Park

  • KT’s foreign room is likely staying below 3.75% for November, setting up an ETF recall play. We’ve seen short-term buying pressure in similar past index reshuffles.
  • The ETF recall impact peaks right after the announcement. KT’s May downweight saw a 5% spike in two trading days post-announcement.
  • KT’s price moves more with downweights than SK Telecom’s because of higher overseas borrowing demand. This trend should hold, so setting up a position before the November announcement makes sense.

LG Electronics India IPO: Potential Big Gains. Booming Demand, Buoyant Valuations

By Devi Subhakesan

  • LG Electronics’s India business IPO could be valued above USD 7 billion, exceeding market expectations, driven by its dominant position in India’s growing home appliances market and strong sector valuations.
  • Favourable market conditions and robust sector growth make now an ideal time for LG Electronics (066570 KS) to launch its India IPO, securing high investor interest and compelling valuations.
  • In a recent interview, LG Electronics(066570 KS)  CEO William Cho mentioned that an Indian market debut is one of several options being considered to revitalise the company’s consumer electronics business.

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Sep 10
0

Daily Brief South Korea: K Bank and more

By | Daily Briefs, South Korea

In today’s briefing:

  • K Bank IPO – The Biggest IPO in Korea in 2024
  • The Story Behind K-Bank Leaking Pricing Details Before the IPO Prospectus Dropped

K Bank IPO – The Biggest IPO in Korea in 2024

By Douglas Kim

  • K Bank is the biggest IPO in Korea in 2024. The IPO price range is from 9,500 won to 12,000 won. It is offering 82 million shares in this IPO.
  • According to the bankers’ valuation, the expected market cap of the company is from 4.0 trillion won to 5.0 trillion won.
  • The IPO deal size is 779 billion (US$579 million) to 984 billion won (US$732 million). 

The Story Behind K-Bank Leaking Pricing Details Before the IPO Prospectus Dropped

By Sanghyun Park

  • To justify a higher multiple, K-Bank is comparing itself to international internet banks, with KakaoBank as the only local peer. Differences in market conditions could complicate this comparison.
  • This might explains why K-Bank is cautiously testing the market by announcing the rights issue first and delaying the prospectus, amid regulatory crackdowns on inflated IPOs.
  • Controversy over high multiples from overseas peers and KakaoBank’s legal discount will be key in setting K-Bank’s IPO pricing.

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Sep 09
0

Daily Brief South Korea: Hankook & Company, Hyundai Motor India and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX Sector Rebalance Shocker: Massive Flow Impact on Hankook & Company
  • Weekly Consumer Tales: India Festive Season: Hyundai Slows, Toyota Aces. First Cry Fails to Cheer

KRX Sector Rebalance Shocker: Massive Flow Impact on Hankook & Company

By Sanghyun Park

  • Hankook & Company is unexpectedly entering Autos, the only large-cap inclusion, likely getting a significant weight and facing a massive flow impact.
  • Like BBIG, this single-day flow event driven by one or two ETFs means smaller front-running impact, but names like Hankook & Company could see early positioning due to massive flows.
  • I’ll position in big impact names two days before the ETF rebalance trading. I’ll then go long on a basket of those with over 0.5x ADTV at Wednesday’s close.

Weekly Consumer Tales: India Festive Season: Hyundai Slows, Toyota Aces. First Cry Fails to Cheer

By Devi Subhakesan

  • Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
  • Hyundai Motor India’s August dispatch volumes were down 8% versus previous year – mostly due to sluggish demand for hatchback segment amd intense competition in the SUV segment.
  • Toyota Motor (7203 JP) is on a fast track in India recording high double digit volume growth thanks mainly to successful launch of rebadged Suzuki models.

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Sep 08
0

Daily Brief South Korea: The Born Korea and more

By | Daily Briefs, South Korea

In today’s briefing:

  • The Born Korea IPO Valuation Analysis

The Born Korea IPO Valuation Analysis

By Douglas Kim

  • According to our valuation analysis, it suggests an implied price of 34,365 won, which is 27% higher than the high end of the IPO price range.
  • We estimate The Born Korea to generate sales of 467.7 billion won (up 13.1% YoY) and operating profit of 31.4 billion won (up 22.8% YoY) in 2024.
  • We believe a premium to comps’ valuation is appropriate for The Born Korea mainly due to its higher sales growth, higher ROE, stronger balance sheet, and higher profit margins.

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