In today’s briefing:
- KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- Hyundai Motor India IPO Valuation Analysis
- STCube: Rights Offering Capital Raise of 89 Billion Won
- KOSPI Size Indices: Momentum Stalls; (Some) Upward Migrations Sell-Off
KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- KRX plans to launch the Value-Up Index as two separate indices: the “Excellent Value-Up Index” and the “Promising Value-Up Index.”
- The universe will include 150 constituents from KOSPI 200 and KOSDAQ 150. Allocation between indices is undecided, with sector limits on number and weight confirmed.
- The key indicators (ROE, PBR, shareholder return rate) remain unchanged. The Promising Index’s weights are undisclosed, but the Excellent Index favors financial and automotive stocks.
Hyundai Motor India IPO Valuation Analysis
- Our base case valuation of Hyundai Motor India is market cap of US$18.6 billion, based on P/E of 24.4x our estimated net profit of 64.1 billion INR in FY25.
- There have been some increasing concerns about Hyundai Motor India paying out higher royalty to its parent Hyundai Motor and dividend to shareholders, which could lower profit.
- According to a recent article by livemint, the expected valuation of Hyundai Motor India has fallen to about USD16 billion to USD20 billion.
STCube: Rights Offering Capital Raise of 89 Billion Won
- STCube announced it plans to increase capital by 89 billion won (13 billion won through a third party rights offering and 75.7 billion won through shareholder preferred capital increase).
- We have a positive view of STCube’s capital raise and there could be some alpha generating returns in our view.
- The fact that the company’s share price surged nearly 5x from the last rights offering in May 2022 (to October 2022) is likely to positively impact capital raise this time.
KOSPI Size Indices: Momentum Stalls; (Some) Upward Migrations Sell-Off
- The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August. Only 4 trading days to go.
- We see 7 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 12 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
- The upward migrations have underperformed the downward migrations over the last month as a few stocks have sold off hard. Some despite being included in global indices.
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