In this briefing:
- A Comparison of Recent Visitors Trend to Korea and Japan
- This Week in Blockchain & Cryptos: Revisiting LINE’s Crypto Plans
- GrainCorp (GNC AU): Pressure Mounts, Diminishing the Prospects of a Bump to the LTAP Bid
- LG Uplus: Risks Now Largely Priced In. Raise to Neutral on CJ Hello Deal Synergies
1. A Comparison of Recent Visitors Trend to Korea and Japan
- In this report, we compare the recent dynamic foreign tourists trend to Korea and Japan. In January 2019, the number of foreign visitors to Japan rose 7.5% YoY to 2.69 million. A total of 0.78 million from South Korea visited Japan in January (DOWN 3% YoY) followed by 0.75 million people from China (up 19.3% YoY).
- According to Korea Ministry of Economy & Finance (MoEF), the number of people from China to Korea increased 35.1% YoY in January 2019.
- As evidenced by the better than expected Chinese visitors to Korea and worse than expected South Korean visitors to Japan in January, there is an increasing indication that this trend could continue in 2019. Many of the Korean related cosmetics stocks have positively reacted to the recent data. One of the interesting trades to be long on a basket of Korean cosmetics related stocks and be short on a basket of Japanese cosmetics related names.
2. This Week in Blockchain & Cryptos: Revisiting LINE’s Crypto Plans
LINE Corp (3938 JP) is one of the top Japanese names in our “Watchlist” of listed companies in Japan and South Korea that are adopting blockchain technologies or have exposure to cryptocurrencies.
Since being added to the “Watchlist” in May last year (2018), LINE has launched a cryptocurrency, a cryptocurrency exchange, and a blockchain venture fund. In this note, we revisit LINE’s blockchain and cryptocurrency plans.
In our opinion, potential synergies between LINE’s cryptocurrency business and its other business ventures are quite enticing. LINE could very well lure “millions” of its existing messaging and LINE Pay users to be a part of its blockchain eco-system.
3. GrainCorp (GNC AU): Pressure Mounts, Diminishing the Prospects of a Bump to the LTAP Bid
Frustration on the slow progress of the LTAP bid came to a head at the recent AGM, where shareholders registered what appeared to be protest votes aimed at Graincorp Ltd A (GNC AU)’s director elections and remuneration. The Board has currently three options to unlock shareholder value – achieve a binding LTAP bid, commence the portfolio review driven sale process or adopt the Tanarra Capital proposal.
The option with the highest potential to unlock shareholder value remains the LTAP bid. However, the Board’s dithering and pursual of unattractive alternative options have given LTAP more justification to lower than bump its bid, in our view.
4. LG Uplus: Risks Now Largely Priced In. Raise to Neutral on CJ Hello Deal Synergies
LG Uplus (032640 KS) shares have fallen around 20% from the highs of January when the market was excited by 5G. That always seemed overly optimistic given the lack of viable business cases and unknown investment requirements and we were comfortable with our Sell rating from mid October and KRW15,000 target price. Following weak results, an easing of 5G enthusiasm and the recently announced CJ Hello (037560 KS) deal the share price has fallen to around the KRW15,000. Alastair Jones now thinks a lot of bad news is in the price and the available synergies from CJ Hello offset a weaker earnings outlook.
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