In today’s briefing:
- SM Entertainment: A Rights Offering & CB Issue to Kakao Corp
- Coupang(CPNG US) Rating Change: Margin Still Has Upside, Upgrade to BUY
SM Entertainment: A Rights Offering & CB Issue to Kakao Corp
- On 7 February, it was announced that SM Entertainment will conduct a third party rights offering and CB issue to Kakao Corp.
- Post these deals, Kakao Corp will own a 9.05% stake in SM Entertainment.
- The rights offering and the CB issue have all the hallmarks of an intermediate deal prior to an eventual takeover of SM Entertainment by the Kakao Group.
Coupang(CPNG US) Rating Change: Margin Still Has Upside, Upgrade to BUY
- We estimate that Coupang’s 4Q22’s revenue is in-line while non-GAAP net income beats cons by 29% because of the continuous cost-saving methods.
- We cut Coupang’s TP from US$22 to US$19 because of several challenges in 2023, including inflation, barriers in international expansion, and difficulty in growth.
- Yet, our TP is still 17% above current price, so we upgrade Coupang’s rating to BUY to reflect its advantages in competitive landscape, and margin expansions.
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