Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

SJ Group Valuation Analysis (KANGOL & HELEN KAMINSKI BRANDS)

Fila Korea Plans to Form a Holding Company

Equity Capital Markets

In this report, we provide a trading strategy for <a href="https://www.smartkarma.com/entities/sj-group-co-ltd" target="_blank" data-smartkarma-citation="entities:28369:1" rel="noopener">SJ Group Co Ltd (306040 KS)</a>, which is expected to start trading on November 18th. The IPO price has been finalized at  38,600 won, which is at the high end of the IPO price range. The institutional investors' demand for the SJ Group IPO was exceptionally strong at 946.6 to 1.Given the very strong institutional demand for this IPO, it appears that our base case valuation (57,491 won), which is 49% higher than the IPO price, may be too conservative. A more likely scenario now is that the stock reaches the 50,000 won to 70,000 won in the first few days of trading, sells off a bit afterwards, enters a consolidation phase, and then resumes its long term appreciation again. Of the 1,047 institutional investors that participated in the SJ Group IPO survey, 98% of them thought that the intrinsic value of the company should be equal to or more than the high end of the IPO price range (38,600 won), which provides a strong vote of confidence that this IPO should do well once it starts trading.

In this report, we provide a trading strategy for SJ Group Co Ltd (306040 KS), which is expected to start trading on November 18th. The IPO price has been finalized at  38,600 won, which is at the high end of the IPO price range. The institutional investors' demand for the SJ Group IPO was exceptionally strong at 946.6 to 1.Given the very strong institutional demand for this IPO, it appears that our base case valuation (57,491 won), which is 49% higher than the IPO price, may be too conservative. A more likely scenario now is that the stock reaches the 50,000 won to 70,000 won in the first few days of trading, sells off a bit afterwards, enters a consolidation phase, and then resumes its long term appreciation again. Of the 1,047 institutional investors that participated in the SJ Group IPO survey, 98% of them thought that the intrinsic value of the company should be equal to or more than the high end of the IPO price range (38,600 won), which provides a strong vote of confidence that this IPO should do well once it starts trading.

SJ Group Co Ltd

A Trading Strategy for SJ Group Post IPO