In today’s briefing:
- Insulet Accuses EOFlow Of Stealing Trade Secrets
- Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow
- Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
- China to Finally Allow Group Tours to Korea and Japan?
- South Korean Banks Screen; Stick with Hana Financial (086790 KS)
- [Coupang (CPNG US, SELL, TP US$14.4) TP Change]: Margin Beat Due to Higher 3P Spend on Ads and FLC
Insulet Accuses EOFlow Of Stealing Trade Secrets
- From the outset, EOFlow (294090 KS) has traded wide (~7% of average) to Medtronic Plc (MDT US)‘s Offer. An apparent delay in filing with Korean regulators formed one argument.
- Now there’s a compelling reason. Key insulin pump competitor Insulet (PODD US) has filed a lawsuit accusing EOFlow of the misappropriation of trade secrets, patent infringement, and trademark dilution.
- Singapore-Based Flex (FLEX US) and three ex-employees of Insulet are also defendants. This does not bode well for the transaction.
Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow
- This signifies the official commencement of a lawsuit against Eoflow in the United States, which has been considered one of the most significant risks for Eoflow.
- Eoflow is externally saying that the aspect of patents claimed by Insulet is actually based on previously expired patents. Hence, Eoflow believes they can win this patent lawsuit.
- This lawsuit emerged before the acquisition decision by Medtronic suggesting a need to consider trading the current spread based on the inference that the tender offer is still valid.
Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
- Insulet Corp (PODD US)’s lawsuit against Eoflow (294090 KS) caused a sharp decline in Eoflow’s share price today (down 10.7% to 24,950 won).
- Insulet is accusing Eoflow of hiring several senior personnel that have helped Eoflow to develop a product that could take away market share from Insulet.
- The most important factor may be Eoflow’s “special sauce” which is some kind of technology/mechanism that allows this 17% greater efficiency/convenience for the wearable EOPatch insulin device.
China to Finally Allow Group Tours to Korea and Japan?
- In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days.
- The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.
- Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.
South Korean Banks Screen; Stick with Hana Financial (086790 KS)
- In our latest South Korean banks screener; we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to fast rising credit quality headwinds
- NPLs and precautionary quality credits continue on a rising trend, whilst Hana seems to be containing delinquency better than most
- Hana has a low PBV ratio relative to its premium ROE, high post-provision returns, a sound CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist
[Coupang (CPNG US, SELL, TP US$14.4) TP Change]: Margin Beat Due to Higher 3P Spend on Ads and FLC
- CPNG reported C2Q23 top-line, adjusted EBITDA, and GAAP net profit in-line, 45%, and 102% vs. our estimate, and 2%, 27%, and 49% vs. consensus, respectively.
- Product commerce EBITDA margin rose 2ppts QoQ, which offset the 126% QoQ increase to developing offerings losses, which rose due to increased investment in its Taiwan business.
- Given improved product commerce profitability, we raise our TP to US$ 14.4, but maintain SELL to reflect the impact of China e-commerce on CPNG.
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