In today’s briefing:
- All the Scoop on the Korea Value-Up Index
- Korea Exchange Announces The Korea Value Up Index
- New Fast Entry Rule for KOSPI 200 & KOSDAQ 150: Post-IPO Price Swings Ramping Up
- K Bank IPO: Valuation Insights
- EQD | A Very Weak KOSPI 200 Is Ready to Pull Back Again
- Green Cross (006280 KS): Alyglo Is Accelerating U.S. Market Entry; Base Business Shows Strength
All the Scoop on the Korea Value-Up Index
- The index focuses on qualitative factors like capital efficiency and shareholder returns, but efforts to impose sector balance may have overextended its market benchmark role.
- Some companies not fitting the ‘value-up’ narrative got included, while market favorites were sidelined by sector rankings, which is puzzling given the index’s original goal.
- Still, with rebalancing cut down to once a year, we should expect the flow impact on the index names to hit harder than initially thought compared to their sector peers.
Korea Exchange Announces The Korea Value Up Index
- Korea Exchange announced the long awaited Korea Value Up Index (“K Value Up Index”) (composed of 100 stocks) today.
- Korea Exchange used a 5-step screening process to select the 100 companies in this index including market cap, profitability, shareholder returns, market evaluation, and capital efficiency.
- This Value Up index is part of the bigger “Corporate Value Up ” program in Korea. These efforts to improve Korea’s corporate governance policies is a marathon, not a sprint.
New Fast Entry Rule for KOSPI 200 & KOSDAQ 150: Post-IPO Price Swings Ramping Up
- Besides ranking in the top 50 by market cap, it must also meet a minimum float-adjusted cap for K200 fast entry: at least 50% of the 50th-ranked stock’s market cap.
- Even if new stocks meet KRX’s float cap, their actual float share volume may still be low, risking inflation from local pension funds’ preemptive passive inflows post-listing.
- This could reduce predictability for KOSPI 200 fast entry, increasing price swings post-listing and forcing traders to develop new volatility strategies after IPOs.
K Bank IPO: Valuation Insights
- K Bank (279570 KS) is a Korean internet bank. It has launched an IPO to raise up to US$734 million.
- We previously discussed the IPO in K Bank IPO: The Bear Case and K Bank IPO: The Bull Case.
- We examine the syndicate’s valuation methodology. Our analysis suggests that K Bank is unattractively valued in the IPO price range. We would pass on the IPO.
EQD | A Very Weak KOSPI 200 Is Ready to Pull Back Again
- The last 2 weeks have been painful for investors that were LONG the KOSPI 200 INDEX, and this week is not very promising either.
- The index has advanced less than 3% since its last WEEKLY negative Close on September 6th.
- The index is in its 3rd consecutive week up (to be confirmed this Friday at the Close) but the current pattern usually ends on the third week up and reverses.
Green Cross (006280 KS): Alyglo Is Accelerating U.S. Market Entry; Base Business Shows Strength
- Green Cross (006280 KS) has gained access to 80% of privately insured members in the U.S. for blood product Alyglo, which has been included in formularies of three major insurers.
- Green Cross targets to generate $50M revenue from Alyglo this year. The target seems to be conservative. The company further aims to sustain annual growth of 50%+, which is achievable.
- The company reported sequential improvement in 2Q24, with 17% QoQ revenue growth and significant improvement in gross margin. Revenue growth of 7–8% is expected during 2024–2026.
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