In today’s briefing:
- Discussing Kakao Bank Block Deal Trading Dynamics
- A Block Deal Sale of 3.1% of Kakao Bank by KB Kookmin Bank
- SoCar IPO Trading – Weak Subscription Rates and Remains Overvalued
Discussing Kakao Bank Block Deal Trading Dynamics
- It seems clear that Kakao Bank’s situation is not good as the block deal risk exposure has increased. Additional disposable volume is 15% owned by the non-strategic institutional shareholders.
- The factor that will reverse this, flow-wise, is MSCI’s float adjustment. But chances are low. So, we’d better maintain a short position betting on Kakao Bank’s further correction.
- Nevertheless, if that happens, Kakao Bank will welcome additional passive flows equal to the amount of passive money currently parked, which is a major event causing a significant passive impact.
A Block Deal Sale of 3.1% of Kakao Bank by KB Kookmin Bank
- On 19 August, KB Kookmin Bank sold a 3.1% stake (14.76 million shares) in KakaoBank (323410 KS).
- The block deal sale price was 28,704 won, which was 8% discount to the previous day’s closing price.
- We continue to have a Negative view of Kakao Bank, due to further overhang on more share sales, concerns about partial ban of simple remittance, and unattractive valuations.
SoCar IPO Trading – Weak Subscription Rates and Remains Overvalued
- SOCAR (403550 KS) raised around US$78m in its South Korea IPO, after the deal was priced at 28,000 KRW/share, below the bottom end of its initial IPO price range.
- Subscription rates for SoCar have been tepid, and previous deals with similar subscription rates as that of SoCar have had poor debuts, closing -8.2% on average.
- The lack of instis opting for lockup will likely result in a selldown given its weak fundamentals and lofty valuations.
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