Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Icure Pharm (175250 KS): Post IPO Short Selling Opportunity Checkup

Icure Pharm (175250 KS): High Hope for Transdermal Patch-Type Dementia Treatment Option

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/27142" target="_blank" data-smartkarma-citation="entities:27142:1">Icure Pharm Inc (175250 KS)</a> will offer a total of 1,200,000 shares (100% new rights offering) at ₩44,000 - ₩55,000 which gives a market cap of ₩300.1bil - ₩375.1bil.<table class="table table-striped"><tbody><tr><td colspan="2" style="width: 771px;">IPO summary</td></tr><tr><td style="width: 290.6750183105469px;">Company name</td><td style="width: 480.3249816894531px;"><a href="https://www.smartkarma.com/entities/27142" target="_blank" data-smartkarma-citation="entities:27142:1">Icure Pharm Inc (175250 KS)</a></td></tr><tr><td style="width: 290.6750183105469px;">Foundation year</td><td style="width: 480.3249816894531px;">2000</td></tr><tr><td style="width: 290.6750183105469px;">CEO</td><td style="width: 480.3249816894531px;">Choi Young-kwon</td></tr><tr><td style="width: 290.6750183105469px;">HQ address</td><td style="width: 480.3249816894531px;">7, Saimdang-ro 1-gil, Seocho-gu, Seoul, South Korea</td></tr><tr><td style="width: 290.6750183105469px;">Corporate homepage</td><td style="width: 480.3249816894531px;"><a href="https://www.smartkarma.com/lab/compose/20843/www.icure.co.kr" target="_blank">www.icure.co.kr</a></td></tr><tr><td style="width: 290.6750183105469px;">Business</td><td style="width: 480.3249816894531px;">Icure Pharm develops and manufactures pharmaceutical and cosmetic products.</td></tr><tr><td style="width: 290.6750183105469px;">Total number of share offerings</td><td style="width: 480.3249816894531px;">1,200,000 shares (100% new rights offering)</td></tr><tr><td style="width: 290.6750183105469px;">Indicative price band</td><td style="width: 480.3249816894531px;">₩44,000 - ₩55,000</td></tr><tr><td style="width: 290.6750183105469px;">Total amount to be raised (at ₩44,000)</td><td style="width: 480.3249816894531px;">₩52,800,000,000</td></tr><tr><td style="width: 290.6750183105469px;">Target valuation (at ₩44,000)</td><td style="width: 480.3249816894531px;">₩300.1bil</td></tr><tr><td style="width: 290.6750183105469px;">Bookrunners</td><td style="width: 480.3249816894531px;"><a href="https://www.smartkarma.com/entities/20418" target="_blank" data-smartkarma-citation="entities:20418:1">Kiwoom Securities Co Ltd (039490 KS)</a> <a href="https://www.smartkarma.com/entities/512" target="_blank" data-smartkarma-citation="entities:512:1"></a></td></tr><tr><td style="width: 290.6750183105469px;">Bourse</td><td style="width: 480.3249816894531px;">KOSDAQ</td></tr><tr><td colspan="2" style="width: 771px;">Source: DART</td></tr></tbody></table>75% will be allocated to institutional investors, whereas 20% will be allocated to retail investors. The remaining 5% will be going to the ESOP.<table class="table table-striped"><tbody><tr><td>Type</td><td style="text-align: right;">Shares</td><td style="text-align: right;">Ratio</td><td style="text-align: right;">Price</td><td style="text-align: right;">Total amount</td></tr><tr><td>Retail</td><td style="text-align: right;">240,000</td><td style="text-align: right;">20%</td><td rowspan="4" style="text-align: right;">₩44.000</td><td style="text-align: right;">₩10,560,000,000</td></tr><tr><td>Institutional</td><td style="text-align: right;">900,000</td><td style="text-align: right;">75%</td><td style="text-align: right;">₩39,600,000,000</td></tr><tr><td>ESOP</td><td style="text-align: right;">60,000</td><td style="text-align: right;">5%</td><td style="text-align: right;">₩2,640,000,000</td></tr><tr><td>Total</td><td style="text-align: right;">1,200,000</td><td style="text-align: right;">100%</td><td style="text-align: right;">₩50,160,000,000</td></tr><tr><td colspan="5">Source: DART</td></tr></tbody></table>Current CEO and founder Choi Young-kwon is the major shareholder who will retain a 20.76% stake after the IPO. He will carry a 3-year lock up obligation for his 20.76% stake after the IPO. Various venture capital funds will retain a 28.35% post-IPO stake.<table class="table table-striped"><colgroup></colgroup><tbody><tr><td>Shareholders</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"공모 후 \n주식수(주)"}'>Post IPO shareholding</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"지분율(%)"}'>Post IPO shareholding %</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"보호예수기간"}'>Lock-up period</td></tr><tr><td data-sheets-value='{"1":2,"2":"최대주주"}'>Major shareholder (Choi Young-kwon)</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":1273035}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,273,035</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2076}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.76%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"상장 후 3년"}'>3 years</td></tr><tr><td data-sheets-value='{"1":2,"2":"특수관계인"}'>Special affiliate persons</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":101650}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>101,650</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0166}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>1.66%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"상장 후 1년"}'>1 year</td></tr><tr><td data-sheets-value='{"1":2,"2":"벤처금융"}'>Venture capital funds</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":479740}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>479,740</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0783}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>7.83%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"상장 후 1개월"}'>1 month</td></tr><tr><td data-sheets-value='{"1":2,"2":"상장주선인"}'>Bookrunner (Kiwoom)</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":22727}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>22,727</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0037}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>0.37%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"상장 후 3개월"}'>3 months</td></tr><tr><td data-sheets-value='{"1":2,"2":"우리사주조합"}'>ESOP</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":60000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>60,000</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0098}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>0.98%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"예탁 후 1년"}'>1 year</td></tr><tr><td data-sheets-value='{"1":2,"2":"유통제한물량 소계 (1)"}'><div> - Total shares to be locked up</div></td><td style="text-align: right;" data-sheets-value='{"1":3,"3":1937152}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,937,152</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.316}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>31.60%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td></tr><tr><td data-sheets-value='{"1":2,"2":"벤처금융"}'>Venture capital funds</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":1258283}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,258,283</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2052}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.52%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td></tr><tr><td data-sheets-value='{"1":2,"2":"기타주주(구주주)"}'>Minority shareholders</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":1795426}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,795,426</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2929}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>29.29%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td></tr><tr><td data-sheets-value='{"1":2,"2":"공모주주(우리사주조합 제외)"}'><div>IPO new shareholders (excl. ESOP)</div></td><td style="text-align: right;" data-sheets-value='{"1":3,"3":1140000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,140,000</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1859}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>18.59%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td></tr><tr><td>Total post IPO shares</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":6130861}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>6,130,861</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>100.00%</td><td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td></tr><tr><td colspan="4">Source: DART</td></tr></tbody></table>Corporate IR will be held on June 19, and Bookbuilding will take place from June 19 to 20. Subscription will be June 25 and 26. Payment date is June 28 and shares will also be allocated on June 28. Listing date will be announced later.<table class="table table-striped"><tbody><tr><td colspan="2" style="width: 766px;">Upcoming events</td></tr><tr><td style="width: 405.57501220703125px;">Corporate IR</td><td style="text-align: right; width: 360.42498779296875px;">June 19</td></tr><tr><td style="width: 405.57501220703125px;">Bookbuilding</td><td style="text-align: right; width: 360.42498779296875px;">June 19 - 20- Icure Pharm (+82 2-6959-6909 ext. 258)- Kiwoom (+82 2-3787-4707)</td></tr><tr><td style="width: 405.57501220703125px;">IPO price determination</td><td style="text-align: right; width: 360.42498779296875px;">TBA</td></tr><tr><td style="width: 405.57501220703125px;">Subscription</td><td style="text-align: right; width: 360.42498779296875px;">June 25 - 26</td></tr><tr><td style="width: 405.57501220703125px;">Payment</td><td style="text-align: right; width: 360.42498779296875px;">June 28</td></tr><tr><td style="width: 405.57501220703125px;">Allocation</td><td style="text-align: right; width: 360.42498779296875px;">June 28</td></tr><tr><td style="width: 405.57501220703125px;">Listing</td><td style="text-align: right; width: 360.42498779296875px;">TBA</td></tr><tr><td colspan="2" style="width: 766px;">Source: DART</td></tr></tbody></table><hr>The following 2 companies, <a href="https://www.smartkarma.com/entities/5840" target="_blank" data-smartkarma-citation="entities:5840:1">Daehwa Pharm Co Ltd (067080 KS)</a> and Sinsin Pharmaceutical (002800 KS), are the valuation peers. The avg. PER based on both valuation peers' FY2017 NP was 36.46x.<table class="table table-striped"><tbody><tr><td>Valuation peers</td><td style="text-align: right;"><a href="https://www.smartkarma.com/entities/5840" target="_blank" data-smartkarma-citation="entities:5840:1">Daehwa Pharm Co Ltd (067080 KS)</a></td><td style="text-align: right;">Sinsin Pharmaceutical (002800 KS)</td></tr><tr><td>FY2017 NP to controlling stake</td><td style="text-align: right;">₩12,654mil</td><td style="text-align: right;">₩3,605mil</td></tr><tr><td>Outstanding shares</td><td style="text-align: right;">18,224,974</td><td style="text-align: right;">15,170,500</td></tr><tr><td>Earnings per share</td><td style="text-align: right;">₩694</td><td style="text-align: right;">₩238</td></tr><tr><td>Reference share price</td><td style="text-align: right;">₩25,100</td><td style="text-align: right;">₩8,750</td></tr><tr><td>PER</td><td style="text-align: right;">36.17x</td><td style="text-align: right;">36.76x</td></tr><tr><td>Avg. PER</td><td colspan="2" style="text-align: center;">36.46x</td></tr><tr><td colspan="3">Source: DART</td></tr></tbody></table>Below shows how the banker arrived at ₩76,936 as Icure's intrinsic price per share on a sorta pro forma basis. Basically, the banker used the company's FY2021 projected earnings, which has recently been a common practice in Korea's biopharma company IPOs. <table class="table table-striped"><tbody><tr><td colspan="3" style="width: 772px;">Icure valuation</td></tr><tr><td style="width: 395px;">FY2021 estimated NP</td><td style="text-align: right; width: 188.61248779296875px;">₩29,845mil</td><td style="text-align: right; width: 188.38751220703125px;">A</td></tr><tr><td style="width: 395px;">Annual discount rate</td><td style="text-align: right; width: 188.61248779296875px;">20%</td><td style="text-align: right; width: 188.38751220703125px;">-</td></tr><tr><td style="width: 395px;">PV of FY2021 estimated NP</td><td style="text-align: right; width: 188.61248779296875px;">₩14,392mil</td><td style="text-align: right; width: 188.38751220703125px;">B = A / (1.20^4)</td></tr><tr><td style="width: 395px;">Outstanding shares</td><td style="text-align: right; width: 188.61248779296875px;">6,820,813</td><td style="text-align: right; width: 188.38751220703125px;">C</td></tr><tr><td style="width: 395px;">FY2017 earnings per share based on FY2021 estimated NP</td><td style="text-align: right; width: 188.61248779296875px;">₩2,110</td><td style="text-align: right; width: 188.38751220703125px;">D = B / C</td></tr><tr><td style="width: 395px;">PER</td><td style="text-align: right; width: 188.61248779296875px;">36.46x</td><td style="text-align: right; width: 188.38751220703125px;">E</td></tr><tr><td style="width: 395px;">Price per share</td><td style="text-align: right; width: 188.61248779296875px;">₩76,936</td><td style="text-align: right; width: 188.38751220703125px;">F = D * E</td></tr><tr><td colspan="3" style="width: 772px;">Source: DART</td></tr></tbody></table>The banker came up with a 28.51 - 42.81% discount. So, the indicative price band is set at ₩44,000 - ₩55,000.<table class="table table-striped"><tbody><tr><td colspan="2" style="width: 396.57501220703125px;">Indicative price band</td></tr><tr><td style="width: 396.57501220703125px;">Target price per share</td><td style="text-align: right; width: 376.42498779296875px;">₩76,936</td></tr><tr><td style="width: 396.57501220703125px;">Discount</td><td style="text-align: right; width: 376.42498779296875px;">28.51% - 42.81% </td></tr><tr><td style="width: 396.57501220703125px;">Indicative price band</td><td style="text-align: right; width: 376.42498779296875px;">₩44,000 - ₩55,000</td></tr><tr><td colspan="2" style="width: 396.57501220703125px;">Source: DART</td></tr></tbody></table>

Icure Pharm Inc (175250 KS) will offer a total of 1,200,000 shares (100% new rights offering) at ₩44,000 - ₩55,000 which gives a market cap of ₩300.1bil - ₩375.1bil.IPO summaryCompany nameIcure Pharm Inc (175250 KS)Foundation year2000CEOChoi Young-kwonHQ address7, Saimdang-ro 1-gil, Seocho-gu, Seoul, South KoreaCorporate homepagewww.icure.co.krBusinessIcure Pharm develops and manufactures pharmaceutical and cosmetic products.Total number of share offerings1,200,000 shares (100% new rights offering)Indicative price band₩44,000 - ₩55,000Total amount to be raised (at ₩44,000)₩52,800,000,000Target valuation (at ₩44,000)₩300.1bilBookrunnersKiwoom Securities Co Ltd (039490 KS) BourseKOSDAQSource: DART75% will be allocated to institutional investors, whereas 20% will be allocated to retail investors. The remaining 5% will be going to the ESOP.TypeSharesRatioPriceTotal amountRetail240,00020%₩44.000₩10,560,000,000Institutional900,00075%₩39,600,000,000ESOP60,0005%₩2,640,000,000Total1,200,000100%₩50,160,000,000Source: DARTCurrent CEO and founder Choi Young-kwon is the major shareholder who will retain a 20.76% stake after the IPO. He will carry a 3-year lock up obligation for his 20.76% stake after the IPO. Various venture capital funds will retain a 28.35% post-IPO stake.ShareholdersPost IPO shareholdingPost IPO shareholding %Lock-up periodMajor shareholder (Choi Young-kwon)1,273,03520.76%3 yearsSpecial affiliate persons101,6501.66%1 yearVenture capital funds479,7407.83%1 monthBookrunner (Kiwoom)22,7270.37%3 monthsESOP60,0000.98%1 year - Total shares to be locked up1,937,15231.60%-Venture capital funds1,258,28320.52%-Minority shareholders1,795,42629.29%-IPO new shareholders (excl. ESOP)1,140,00018.59%-Total post IPO shares6,130,861100.00%-Source: DARTCorporate IR will be held on June 19, and Bookbuilding will take place from June 19 to 20. Subscription will be June 25 and 26. Payment date is June 28 and shares will also be allocated on June 28. Listing date will be announced later.Upcoming eventsCorporate IRJune 19BookbuildingJune 19 - 20- Icure Pharm (+82 2-6959-6909 ext. 258)- Kiwoom (+82 2-3787-4707)IPO price determinationTBASubscriptionJune 25 - 26PaymentJune 28AllocationJune 28ListingTBASource: DARTThe following 2 companies, Daehwa Pharm Co Ltd (067080 KS) and Sinsin Pharmaceutical (002800 KS), are the valuation peers. The avg. PER based on both valuation peers' FY2017 NP was 36.46x.Valuation peersDaehwa Pharm Co Ltd (067080 KS)Sinsin Pharmaceutical (002800 KS)FY2017 NP to controlling stake₩12,654mil₩3,605milOutstanding shares18,224,97415,170,500Earnings per share₩694₩238Reference share price₩25,100₩8,750PER36.17x36.76xAvg. PER36.46xSource: DARTBelow shows how the banker arrived at ₩76,936 as Icure's intrinsic price per share on a sorta pro forma basis. Basically, the banker used the company's FY2021 projected earnings, which has recently been a common practice in Korea's biopharma company IPOs. Icure valuationFY2021 estimated NP₩29,845milAAnnual discount rate20%-PV of FY2021 estimated NP₩14,392milB = A / (1.20^4)Outstanding shares6,820,813CFY2017 earnings per share based on FY2021 estimated NP₩2,110D = B / CPER36.46xEPrice per share₩76,936F = D * ESource: DARTThe banker came up with a 28.51 - 42.81% discount. So, the indicative price band is set at ₩44,000 - ₩55,000.Indicative price bandTarget price per share₩76,936Discount28.51% - 42.81% Indicative price band₩44,000 - ₩55,000Source: DART

Icure Pharm IPO Summary - Front Runner of Dementia Patch Development Race