In today’s briefing:
- Kakao Pay (377300 KS): MSCI Inclusion (Finally!)
- HYBE’s Tender Offer of SM Entertainment: Closing the Price Gap
- MSCI Korea: Names to Trade for Feb IR & Names to Watch for May IR
- South Korean Banks Screener; Highlighting Industrial Bank of Korea (024110 KS)
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.
MSCI Korea: Names to Trade for Feb IR & Names to Watch for May IR
- POSCO Holdings and Kumho Petro Chemical are expected to experience a level of passive outflow worthy of our attention in Feb QCIR.
- Newly emerging ones for May OCIR are Ecopro Co Ltd and Amorepacific Group. Ecopro’s inclusion is almost certain, and AmoreG isn’t too far off the borderline.
- Hanwha Aerospace also settled in the inclusion zone, whereas Posco International has moved somewhat away from the borderline. Lastly, there is S.M. Entertainment, which also deserves our attention.
South Korean Banks Screener; Highlighting Industrial Bank of Korea (024110 KS)
- In our latest South Korean banks screener; we add Industrial Bank of Korea to the buy list alongside Hana Financial; we cut KB Financial to a neutral rating
- Industrial Bank of Korea has very attractive multiples and PEG ratio and the best pre-provision and post-provision returns of the peer group, it also has sound broad credit quality metrics
- We introduce a broader credit quality metric to the screens and also EPS revisions over the last week and last month to give a sense of earnings momentum changes
💡 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
