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

SK IE Technology: Immediate Float 15.04% & KOSPI 200 Index Float 21.80%

SK IE Tech KOSPI 200: Fast Entry Done, Passive Inflow at 7% of Float, & Entry Timing Is June

KOSPI 200 Rebalancing: SK BioS/SK IET Fast Entry & LG Corp New Entity (8 Added & 9 Deleted)

SK IE Technology IPO: Key Info & Issues at Hand

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Equity Capital Markets

SK IE Technology   / Equity Capital Markets

SK IET book opens tomorrow.This post has the checklist for the BB to help formulating BB strategies.1. Pricing discountsThe IPO book EV/EBITDA multiple is 48.12x. The MTM EV/EBITDA rises to 54.03x.










EV/EBITDA, IPO book (₩B)
Yunnan Energy New Material Co Ltd
Ecopro BM Co Ltd
Iljin Materials Co Ltd
Posco Chemical Co Ltd
Chunbo Co Ltd


Ticker
SHE:002812
247540
020150
003670
278280


Ref MC
16,579.1
3,298.3
2,881.9
8,959.2
1,576.0


Interest-bearing debt
1,027.8
197.0
49.8
841.4
26.0


Cash &amp; cash equivalents
645.7
59.2
150.8
121.7
62.9


Net borrowings
382.1
137.8
-101.0
719.7
-36.9


Non-controlling int
85.7
23.7
251.1
22.9
0.0


EV
17,046.8
3,459.8
3,032.1
9,701.9
1,539.1


OP
228.8
54.8
51.0
60.3
30.1


D&amp;A
97.7
36.9
34.2
64.4
11.2


EBITDA
326.5
91.6
85.3
124.7
41.3


EV/EBITDA (x)
52.20
37.80
35.60
77.80
37.20


Average (x)
48.12

Source: DART












EV/EBITDA, MTM (₩B)
Yunnan Energy New Material Co Ltd
Ecopro BM Co Ltd
Iljin Materials Co Ltd
Posco Chemical Co Ltd
Chunbo Co Ltd


Ticker
SHE:002812
247540
020150
003670
278280


Current MC
17,156.1
3,796.8
3,550.5
10,307.0
1,730.0


Interest-bearing debt
1,027.8
197.0
49.8
841.4
26.0


Cash &amp; cash equivalents
645.7
59.2
150.8
121.7
62.9


Net borrowings
382.1
137.8
-101.0
719.7
-36.9


Non-controlling int
85.7
23.7
251.1
22.9
0.0


EV
17,623.8
3,958.4
3,700.7
11,049.7
1,693.1


OP
228.8
54.8
51.0
60.3
30.1


D&amp;A
97.7
36.9
34.2
64.4
11.2


EBITDA
326.5
91.6
85.3
124.7
41.3


EV/EBITDA (x)
53.97
43.19
43.40
88.63
40.97


Average (x)
54.03

Source: DART, KRX, &amp; Bloomberg

At MTM, the discount range moves up from 19.59~40.27% to 28.52~46.90%.







Discount (₩B)
Lower
Upper


Price (₩)
₩78,000
₩105,000


Base deal size
1,668.4
2,246.0


- Institutional allotment
917.6
1,235.3


Implied MC
5,561.2
7,486.2


EV/EBITDA, IPO book
9,310.4
9,310.4


- Discount
40.27%
19.59%


EV/EBITDA, MTM
10,472.6
10,472.6


- Discount
46.90%
28.52%

Source: DART

At MTM PER, the range falls to 13.78~35.95%, if excluding POSCO Chemical, whose 348.45x PER should make it an outlier.







Discount (₩B)
Lower
Upper


Price (₩)
₩78,000
₩105,000


Base deal size
1,668.4
2,246.0


- Institutional allotment
917.6
1,235.3


Implied MC
5,561.2
7,486.2


PER, MTM
8,682.8
8,682.8


- Discount
35.95%
13.78%

Source: DART








PER, MTM valuation (₩B)



SO
71,297,592


Earnings
88.2


EPS
₩1,521


PER (x)
80.07


MC
8,682.8


Price per share
₩121,782

Source: DART












PER, MTM (₩B)
Yunnan Energy New Material Co Ltd
Ecopro BM Co Ltd
Iljin Materials Co Ltd
Posco Chemical Co Ltd
Chunbo Co Ltd


Ticker
SHE:002812
247540
020150
003670
278280


Current MC
17,156.5
3,796.8
3,550.5
10,307.0
1,730.0


SO
887,721,966
21,035,166
46,110,835
60,988,220
10,000,000


Price per share
₩19,326
₩180,500
₩77,000
₩169,000
₩173,000


Earnings
191.7
42.7
44.2
29.6
27.4


EPS
₩216
₩2,065
₩959
₩485
₩2,742


PER (x)
89.47
87.41
80.29
348.45
63.09


Average (x) (excl. POSCO Chem)
80.07

Source: DART, KRX, &amp; Bloomberg

Compared with the more direct peers (Asahi Kasei and Toray Industries), SK IET's indicative price band is at a 21.71~63.85% premium (PER) and a whopping 239.89~357.54% premium (EV/EBITDA).The Asahi Kasei/Toray multiple raised a valuation concern earlier. But the current sentiment doesn't seem to be taking it critically. The market seems to be paying more attention to the aspect that they aren't a pure-play company as their LiBS portion is less than 30% of the total revenue.







Discount (₩B)
Lower
Upper


Price (₩)
₩78,000
₩105,000


Base deal size
1,668.4
2,246.0


- Institutional allotment
917.6
1,235.3


Implied MC
5,561.2
7,486.2


EV/EBITDA, Asahi Kasei/Toray
1,636.2
1,636.2


- Discount
-239.89%
-357.54%


PER, Asahi Kasei/Toray
4,569.1
4,569.1


- Discount
-21.71%
-63.85%

Source: DART









Valuation (₩B)
EV/EBITDA, Asahi Kasei/Toray
PER, Asahi Kasei/Toray


Multiple
EV/EBITDA
PER


SO
71,297,592
71,297,592


EBITDA
196.6
-


EV/EBITDA (x)
9.08
-


EV
1,784.9
-


Interest-bearing debt
515.8
-


Cash &amp; cash equivalents
367.1
-


Net borrowings
148.7
-


Earnings
-
88.2


EPS
-
₩1,521


PER (x)
-
42.13


MC
1,636.2
4,569.1


Price per share
₩22,949
₩64,084

Source: DART









EV/EBITDA, Asahi Kasei/Toray (₩B)
Asahi Kasei
Toray Industries


Ticker
TYO:3407
TYO:3402


Current MC
17,491.1
11,317.8


EV
22,738.4
20,063.3


EV/EBITDA (x)
7.46
10.70


Average (x)
9.08

Source: DART, KRX, &amp; Bloomberg









PER, Asahi Kasei/Toray (₩B)
Asahi Kasei
Toray Industries


Ticker
TYO:3407
TYO:3402


Current MC
17,491.1
11,317.8


Earnings
823.9
179.5


PER (x)
21.23
63.04


Average (x)
42.13

Source: DART, KRX, &amp; Bloomberg

The 5-yr average pricing discount band of the KOSPI IPOs is 19.00~31.80%.Even the MTM PER isn't awfully skewed from the 5-yr average. 









Name
Ticker
IPO date
Lower
Upper


JS Corp
194370
2016-02-04
47.40%
36.40%


Daelim C&amp;S
-
2016-03-30
28.00%
15.10%


Haitai Confectionery and Foods Co Ltd
101530
2016-05-11
28.10%
11.80%


Yong Pyong Resort Corp
070960
2016-05-27
26.30%
16.20%


Haesung DS Co Ltd
195870
2016-06-24
27.60%
9.50%


Korea Asset In Trust Co Ltd
123890
2016-07-13
23.90%
13.80%


Dual Co Ltd
016740
2016-07-29
25.50%
10.60%


LS Cable &amp; System Asia Ltd
229640
2016-09-22
18.70%
6.50%


Hwaseung Enterprise Co Ltd
241590
2016-10-04
21.00%
10.70%


JW Life Science Corp
234080
2016-10-27
21.20%
5.20%


Samsung Biologics Co Ltd
207940
2016-11-10
32.20%
18.40%


Doosan Bobcat Inc
241560
2016-11-18
48.10%
40.90%


Hands Corporation Ltd
143210
2016-12-02
21.10%
7.90%


Hojeon Ltd
111110
2017-02-02
29.00%
17.20%


Dentium Co Ltd
145720
2017-03-15
39.10%
32.30%


Orange Life Ins
-
2017-05-11
22.20%
1.30%


Netmarble Corp
251270
2017-05-12
39.00%
20.90%


Tapex Inc
055490
2017-10-31
27.20%
17.80%


Samyang Packaging Corp
272550
2017-11-29
28.20%
17.20%


Jin Air Co Ltd
272450
2017-12-08
20.00%
5.10%


Dongyang Piston Co Ltd
092780
2017-12-08
34.60%
16.30%


Aekyung Industrial Co Ltd
018250
2018-03-22
31.50%
19.80%


Lotte Data Communication Co
286940
2018-07-27
27.20%
13.10%


T'way Air Co Ltd
091810
2018-08-01
31.10%
21.20%


Woojin I&amp;S Co Ltd
010400
2018-09-14
29.70%
20.30%


Hana Pharm Co Ltd
293480
2018-10-02
28.20%
17.90%


Asiana IDT Inc
267850
2018-11-23
45.50%
32.00%


Air Busan Co Ltd
298690
2018-12-27
38.40%
31.50%


DreamTech Co Ltd
192650
2019-03-14
36.30%
24.70%


Hyundai Autoever Corp
307950
2019-03-28
33.10%
26.40%


Zinus Inc
013890
2019-10-30
27.80%
18.80%


Xi S&amp;D Inc
317400
2019-11-06
31.50%
15.20%


Hanwha Systems Co Ltd
272210
2019-11-13
35.70%
26.50%


Hyundai Energy Solutions Co Ltd
322000
2019-11-19
33.30%
22.10%


CENTRAL MOTEK Co Ltd
308170
2019-11-25
31.70%
18.00%


SK Biopharmaceuticals Co Ltd
326030
2020-07-02
39.80%
18.00%


Big Hit Entertainment Co Ltd
352820
2020-10-15
34.40%
15.70%


Kyochon F&amp;B Co Ltd
339770
2020-11-12
31.20%
20.10%


A Plus Asset Advisor Co Ltd
244920
2020-11-20
45.10%
35.70%


Myoung Shin Industrial Co Ltd
009900
2020-12-07
27.60%
14.30%


SoluM Co Ltd
248070
2021-02-02
35.30%
26.80%


Prestige Biopharma Ltd
950210
2021-02-05
42.90%
26.90%


SK Bioscience Co Ltd
302440
2021-03-18
40.40%
21.00%


Average

-
31.80%
19.00%

Source: DART



SK IET BB: Pricing Discounts, Major Shareholder Selling, & K200 Entry