In today’s briefing:
- Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- NAV Valuation of Young Poong Precision and A Case Study for Future Tender Offers in Korea
- K Bank IPO Valuation Analysis
- Celltrion Inc (068270 KS)– Is the Sell-Side’s Bullishness Justified?
- K Bank IPO – The Positives – Fast Growth
- Samsung Electronics (005930-KR): Quality Generative AI Play, Trading at a Discount
Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
- KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
- In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.
NAV Valuation of Young Poong Precision and A Case Study for Future Tender Offers in Korea
- Our NAV valuation of Young Poong Precision suggests NAV of 325 billion won or NAV per share of 20,657 won which is 70% higher than current price.
- Young Poong Precision tender offer could become one of the most important case studies for future tender offers in Korea.
- The biggest component of the NAV is Young Poong Precision’s 1.85% stake in Korea Zinc which is worth 255 billion won (133% of its current market cap).
K Bank IPO Valuation Analysis
- Our base case valuation of K Bank is target price of 9,151 won per share, which is 4% lower than the low end of the IPO price range.
- Given the lack of upside in our target price relative to the IPO price range, we would avoid in subscribing to the IPO.
- Our base case valuation is based on 1.6x P/B multiple using the company’s equity post IPO (2.35 trillion won).
Celltrion Inc (068270 KS)– Is the Sell-Side’s Bullishness Justified?
- The biosimilar market is forecast to grow three to four times faster than the generic drug market over the next five years.
- However, we believe that this high growth will not necessarily imply good profitability, given the early stage of the biosimilar market, complications and competition.
- We also believe that the company’s guidance is too optimistic resulting in an expensive multiple. We prefer some room for error.
K Bank IPO – The Positives – Fast Growth
- K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
- K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
- In this note, we talk about the positive aspects of the deal.
Samsung Electronics (005930-KR): Quality Generative AI Play, Trading at a Discount
- Samsung Electronics (005930 KS) is a leading beneficiary of the recovery in global Smartphone demand, and strength in Memory prices, driven by the proliferation of Gen AI demand.
- Global Memory prices have recovered by up to +80%y/y driven by demand from hyperscaler customers for leading-technology DDR5, HBM, and other high-value-added memory products.
- Samsung Electronics trades more than one standard deviation below its 5-year historic average trading range, a historically proved to be an excellent buying point.
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