In today’s briefing:
- Preparing for ATS Arrival in Korea: Strategies to Adapt to Changing Intraday Flow Patterns
- KT&G: First Shares Cancellation in 14 Years
- Kakao Pay: Worsening Profit Margins Due to Heightened Competition
- Overhang Concerns from Remaining Irum TNC Exchangeable Bonds Conversion on Ecopro BM Shares
- HK Inno.N (195940 KS): 2Q23 Result Shows Strong Sequential Improvement; K-CAB Continues to Fly High
Preparing for ATS Arrival in Korea: Strategies to Adapt to Changing Intraday Flow Patterns
- Nextrade aims to secure the business permit within the next year’s second half. They intend to launch their services by the end of next year or early the following year.
- All eyes are focused on the proposal to be operational from 8:30 AM to 11:59 PM, with the afternoon call auction session running from 3:00 PM to 6:00 PM.
- It would be crucial to observe how the elongation of the time period for specific issues to be reflected in prices could potentially lead to changes in intraday flow patterns.
KT&G: First Shares Cancellation in 14 Years
- KT&G announced that it will buy back 3.47 million shares (2.5% of outstanding shares) and cancel them. This would be the first share cancellation for KT&G in 14 years.
- If the company’s DPS is 5,200 won for 2023 fiscal year, this would represent dividend yield of 6.2% at current prices.
- Although we have a positive view on KT&G’s share buyback and cancellation of 3.47 million shares, the company could do much more to improve its shareholder returns to its shareholders.
Kakao Pay: Worsening Profit Margins Due to Heightened Competition
- We believe the added threat from Apple Pay has been one of the reasons for the worsening profit margins and lower than expected sales growth of Kakao Pay in 2Q23.
- After the poor earnings results in 2Q 2023,the consensus is likely to reduce Kakao Pay’s sales estimate in 2024 by 3-5% and positive operating profit to be postponed to 2025.
- We continue to be Bearish on Kakao Pay due to its high valuations, likelihood of consensus earnings downgrades, heightened competition, and concerns about continued profit margin weakness.
Overhang Concerns from Remaining Irum TNC Exchangeable Bonds Conversion on Ecopro BM Shares
- It has been reported in local media that investors in exchangeable bonds issued by Irum TNC converted about 0.24 million shares of EBs into Ecopro BM equity on 26 July.
- There are increasing concerns that the remaining EB could be released into the market in the coming months.
- After the poor 2Q 2023 results, we believe the consensus is likely to reduce sales and profit estimates of Ecopro BM from 2023 to 2025.
HK Inno.N (195940 KS): 2Q23 Result Shows Strong Sequential Improvement; K-CAB Continues to Fly High
- HK inno.N (195940 KS) recorded impressive sequential improvement in 2Q23 result, while YoY comparison is negatively impacted by high base due to one-off cervical cancer vaccine revenue recorded in 2Q22.
- In 2Q23, revenue increased 11% QoQ to KRW204B and operating profit grew 172% QoQ to KRW15B. Growth was mainly driven by a 19% QoQ growth in K-CAB domestic revenue.
- HK inno targets KRW1T K-CAB revenue by entering 100 countries globally by 2028. The company is adding new growth engines such as IV fluids products, MSD vaccine, and biosimilars.
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