In today’s briefing:
- Kakao Pay (377300 KS): MSCI Inclusion (Finally!)
- HYBE’s Tender Offer of SM Entertainment: Closing the Price Gap
- Koolearn (1797 HK): Don’t Overpay for Growth
- Sa Sa Intl (178 HK): On-Ground Observations and Outlook
Kakao Pay (377300 KS): MSCI Inclusion (Finally!)
- MSCI will add Kakao Pay (377300 KS) to the MSCI Korea Index at the February QCIR. There are 7 trading days to implementation on 28 February.
- Local institutions and foreign investors have been sellers in the last couple of weeks and retail investors have been buying to mop up the selling.
- Cumulative excess volume indicates a fair amount of pre-positioning and we’d look to sell ahead of the passive MSCI buying.
HYBE’s Tender Offer of SM Entertainment: Closing the Price Gap
- We believe that there is a very high probability of a successful tender offer of 25% stake in SM Entertainment by HYBE.
- There is a 4.6% gap between the tender offer price and current price. There is a strong probability of this gap being closed in the next several weeks.
- There could also be an on-going interest by Kakao to try to take over the controlling interest in SM Entertainment but HYBE is not likely to give up control easily.
Koolearn (1797 HK): Don’t Overpay for Growth
- Koolearn’s successful transformation into a live-streaming e-commerce business showcased outstanding entrepreneurship and leadership of its founder Michael Yu, whom we highly respect.
- That said, we expect its growth to decelerate materially after hitting RMB18 billion GMV by 2024. We value Koolearn at RMB36 billion (20% downside), drawing reference to VIPShop growth trajectory.
- While high-frequency data on live-streaming business will drive near-term stock price (and potentially to the upside), its current valuation doesn’t pay off for long -term investors in our view.
Sa Sa Intl (178 HK): On-Ground Observations and Outlook
- We observed that businesses at Sa Sa International Hldgs (178 HK) have picked up during the Chinese New Year, but a significant overall significant recovery is still lacked.
- The full relaxation of mainland-HK border control has brought about a 110% surge in mainland arrival between 6 Feb and 11 Feb. This suggests that momentum is clearly building up.
- Sa Sa has embarked on strategies like re-opening important stores, selectively increase store counts and re-adjusting staff arrangement and opening hours to capture the opportunities.
💡 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
