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

ME2ZEN IPO: First HK-Based Company to Be Listed in Korea

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/me2zen-limited" target="_blank" data-smartkarma-citation="entities:28395:1" rel="noopener">ME2ZEN (951211 KS)</a> is getting ready to complete it IPO in the KOSDAQ exchange in August. ME2ZEN is a Hong Kong based company that makes casual and social casino games. This is a second time that ME2ZEN is trying to complete an IPO in Korea after a failed attempt in 4Q 2019.<div class="content-highlight">
Overall, applying a 9.5x P/E multiple to our estimated net profit of 43 billion won for the company in 2020 suggests an implied market cap of 409.9 billion won or implied price of 29,700 won per share, which represents a 24% upside to the mid-point (24,000 won) of the IPO price range. Given the relatively attractive upside, we would take this deal but if the IPO is priced at the high end, it would become less attractive.
There are three main reasons why ME2ZEN IPO is more attractive this time as compared to November 2019.
<ul>
<li>
First, COVID-19 has resulted in a big capital inflow into the global games sector as millions of people around the world spend more time at home and play games. This has been a favorable trend for the global game industry.</li>
<li>
Second, the IPO price range has been lowered.</li>
<li>
Third, the company's financials have gotten better with the company posting strong results in 2019 as well as in 1Q 2020. </li>
</ul>
</div>

ME2ZEN (951211 KS) is getting ready to complete it IPO in the KOSDAQ exchange in August. ME2ZEN is a Hong Kong based company that makes casual and social casino games. This is a second time that ME2ZEN is trying to complete an IPO in Korea after a failed attempt in 4Q 2019.
Overall, applying a 9.5x P/E multiple to our estimated net profit of 43 billion won for the company in 2020 suggests an implied market cap of 409.9 billion won or implied price of 29,700 won per share, which represents a 24% upside to the mid-point (24,000 won) of the IPO price range. Given the relatively attractive upside, we would take this deal but if the IPO is priced at the high end, it would become less attractive.
There are three main reasons why ME2ZEN IPO is more attractive this time as compared to November 2019.


First, COVID-19 has resulted in a big capital inflow into the global games sector as millions of people around the world spend more time at home and play games. This has been a favorable trend for the global game industry.

Second, the IPO price range has been lowered.

Third, the company's financials have gotten better with the company posting strong results in 2019 as well as in 1Q 2020. 



ME2ZEN IPO - Trying for an IPO Again at a Lower IPO Price Range