In today’s briefing:
- Korea NPS’s Funds Influx into Local Stock Market Starting Next Year: What to Know
- Trading Strategy of Doosan Robotics in the First Day of Trading Post Book Building Results
- Asicland IPO Preview: The Only Value Chain Alliance (VCA) Company of TSMC in Korea
- KakaoBank – Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc
- Seoul Guarantee Insurance Pre-IPO – The Negatives – The Tide Could Be Turning. Overhang Looms
- Asicland IPO Valuation Analysis
- SK Biopharmaceuticals (326030 KS): Solid Growth in Xcopri US Sales in 2Q23; Operating Loss Narrowed
Korea NPS’s Funds Influx into Local Stock Market Starting Next Year: What to Know
- The proposal to increase NPS’s annual target investment return rate by 1%p by 2028. A rough mathematical estimate suggests the necessity of an additional investment of nearly ₩60T until 2028.
- It augments the overall investment volume in local stocks to ₩200T. This projection implies an annual net purchase of approximately ₩12T from the forthcoming year through 2028.
- Consequently, this matter is currently among the most captivating topics in the Korean local market, and efforts are underway to identify the sectors and stocks that stand to benefit.
Trading Strategy of Doosan Robotics in the First Day of Trading Post Book Building Results
- Doosan Robotics (454910 KS) reported excellent IPO book building results. The IPO price has been finalized at 26,000 won (upper end of the IPO price range).
- A total of 1,920 institutional investors participated in the IPO demand forecast survey and the demand ratio was 272 to 1.
- The trading strategy on the first day of IPO is to take some profits (25%-50% of total) if the share price shoots much higher than the IPO price by 70-100%+.
Asicland IPO Preview: The Only Value Chain Alliance (VCA) Company of TSMC in Korea
- Asicland is one of eight companies in the world and the only TSMC VCA (Value Chain Alliance) company in Korea.
- The IPO price range is from 19,100 won to 21,400 won. The IPO offering amount is from 50.4 billion won to 56.4 billion won.
- Asicland’s sales and operating profit increased at a CAGR of 71.8% and 220%, respectively from 2020 to 2022. Operating margin improved from 4.7% in 2020 to 16.5% in 2022.
KakaoBank – Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc
- Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction
- Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23
- Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.
Seoul Guarantee Insurance Pre-IPO – The Negatives – The Tide Could Be Turning. Overhang Looms
- Seoul Guarantee Insurance (031210 KS) is looking to raise around US$270m in its Korean IPO.
- Seoul Guarantee Insurance (SGI) is a guarantee insurance firm operating predominantly in Korea.
- In this note, we will talk about the not so positive aspects of the deal.
Asicland IPO Valuation Analysis
- Our base case valuation of Asicland is target price of 40,571 won per share, which is 90% higher than the high end of the IPO price range (21,400 won).
- Our target price of 40,571 won is based on 43x P/E using our estimated net profit of 10.1 billion won in 2024.
- Asicland is one of eight companies in the world and the only TSMC VCA (Value Chain Alliance) company in Korea.
SK Biopharmaceuticals (326030 KS): Solid Growth in Xcopri US Sales in 2Q23; Operating Loss Narrowed
- In 2Q23, Xcopri U.S. sales increased 57% YoY and 18% QoQ to KRW63.4B, marking the 13th consecutive quarter of growth since the company launched Xcopri in the U.S. in May’20.
- Operating loss narrowed for the second consecutive quarters to KRW18.9B from KRW22.7B in 1Q23 and KRW40.1B in 2Q22. The company is on track to swing back to black in 4Q23.
- SK Biopharmaceuticals (326030 KS) entered licensing agreement with Hikma Pharmaceuticals (HIK LN) to commercialize Xcopri in 16 countries in MENA, including Saudi Arabia, Egypt, and Algeria – three biggest epilepsy markets.
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