Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

The past two weeks involved a long Chinese New Year holiday for many so last weekend's Week That Was was carried over. The "slow" two week period saw 361 insights published on the platform with 85 published specifically about Japan and South Korea (links to the Smartkarma country pages) there.I admit to not having read all of them so am sure I have missed many. This week because there are so many, they will be presented differently. Insights will not be separated by Country but by Category. Macro, Macro-Thematic, Technical Analysis InsightsThe past two weeks have seen jostling in the Japanese press and speculation about whether Japanese Prime Minister Abe would select current BOJ Governor Kuroda to lead the Bank of Japan for another 5 years. That speculation was put to rest a week ago when the government passed to the Rules and Administration committees of both Diet chambers its nominations of Kuroda, and for his deputies to be BOJ Executive Director Masayoshi Amamiya, and Waseda U Professor Masazumi Wakatabe, (a well-known reflationist) to be Deputy Governors. Kuroda's term ends April 8th but the current deputies see their terms end March 19th. All three will soon end up in the Diet for "questioning" and the next round of pushing-and-shoving will be about whether the BOJ is buying too many bonds (the opposition parties have been harshly critical of the overemphasis on monetary easing measures in Abe's "economic reforms"), and whether the BOJ has encouraged enough other reform to allow inflation to rise (the BOJ has delayed the target date for reaching its 2% inflation target 6 times in the last several years). Macro, Macro-Thematic, Technical Analysis InsightsDateInsight ProviderTitle23-Feb-18Takuji OkuboSlow Inflation to Prompt BoJ to Turn More Dovish22-Feb-18Dr. Jim WalkerProfits and the Business Cycle21-Feb-18Peter BeuttellTopix: Why 1,680 Is Critical to the 20-Month Uptrend (TA)21-Feb-18Douglas KimExploding Use of Margin Debt in the Korean Stock Market19-Feb-18Pelham SmithersJapan Casino Bill Back in the Headlines19-Feb-18Douglas KimKorean IPOs - Evidence-Based Analysis &amp; The Whiplash Effect18-Feb-18Peter Beuttell$/¥: Nearing Downside Target Area, but Not Quite Finished (TA)17-Feb-18Takuji OkuboA Bullish Pick for BoJ Vice-Governors14-Feb-18Takuji OkuboJapan: Weak GDP Headline Hides Healthier Growth13-Feb-18Takuji OkuboKuroda's Next 5 Years (Part 2): Prepare to Ease Again13-Feb-18Douglas KimThe Upcoming Summit Between Moon Jae-In and Kim Jong-Un13-Feb-18Federico D'IncaBBSP H1 2018 Macro Strategy (Nikkei 225)(TA)12-Feb-18Thomas SchroederBullish SK Hynix Breakout Pattern (TA)12-Feb-18Travis LundyTrading the BOJ-Nikkei 225 Baskets (refers to prior piece re: possible Nikkei 225 Rebal)11-Feb-18Takuji OkuboKuroda's Next 5 Years11-Feb-18Callum HendersonJapan: Kuroda Stays, Focus on Fiscal Reform10-Feb-18Takuji OkuboThe Next BoJ Governor, What If It Is Not Kuroda?10-Feb-18Sanghyun ParkKRX 300 Members w/ Float Rate - Comparisons to KOSPI 200 &amp; KOSDAQ 150Equity Bottom Up and Catalyst-Driven SituationsWhat the table below shows, other than that equity-related Insight Providers need to shorten their titles) is that there is a fair bit of content even in a slow period. I would point to some of the interesting stories being...A number of large buybacks in Japan announced into the year-end. Some are capital-enhancing (NTT, Docomo, Kirin, Astellas, Nisshinbo) and some are to generate cash/capital to take losses elsewhere (Ricoh selling 8.3% of Coca-Cola).  The Nisshinbo Holdings Inc (3105 JP) buyback ends shortly and may have had a material impact. Docomo's ends at the end of March. The NTT, Kirin, and Astellas buybacks are just starting.Our Insight Providers are writing about stocks which move. Mio Kato, CFA has been all over the JDI situation since months ago and has called some of the moves very well. Scott Foster talked about SMC in early Feb noting profits were levelling off and he was bearish despite the recent fall. SC Capital wrote on the 14th that investors could look forward to an ugly FY18 forecast from Toyo Tire, allowing them to trade the morning session before earnings were out. The stock ended down 7% on the day. Kemp Dolliver, CFA's look at overpriced Biosimilars in his latest contribution to the Biosimilar Battlefield series Biosimilar Battlefield: An Update is interesting. Investors should be aware of TAM and how it changes.Q3 earnings season was one of grand success (Denso, Horiba, Shimadzu, Docomo, Koito, TDK, Toshiba, Kansai Paint), and high disappointment (SMC, Optex, Toyo Tire, Nissan, JDI (mixed, actually)).Toshiba Corp (6502 JP): I wrote about the name in January regarding the lack of its TOPIX re-inclusion for five years, and ten days ago Mio pointed to the possibility of Toshiba cancelling the sale of TMC to instead IPO it on its own in Toshiba: Likely Delay in Deal Approval and Poor Non-Memory Earnings Make IPO More Likely.  Equity Bottom Up and Catalyst-Driven EventsDateInsight ProviderTitle22-FebSC CapitalJapan Tobacco (2914)--Getting Crushed by Philip Morris22-FebTravis LundyNisshinbo - Outperformance Achievement Unlocked - But Big Buyback Nearing End21-FebMio Kato, CFAKansai Paint: India Drives Growth But Kansai Nerolac's 50x PE Is Also a Risk21-FebMorningstarUntimely Overseas Investments in Rising Interest Rates, Reducing MEC's FVE to JPY 2,10021-FebNicholasTannerFoster Electric (6794) All Priced in Now21-FebTravis LundyNTT (9432 JP) Back on the Buyback Trail21-FebTravis LundyCoca Cola Bottlers Japan - Big Tender Offer Buyback &amp; Cross-Holding Unwind21-FebTravis LundyKansai Mirai: Post Tender - Where To From Here?20-FebScott FosterOptex (6914 JP): Earnings Momentum Lost, Guiding for Recovery in 2H20-FebChacko JacobBridgestone Results Below Guidance; Higher RM Costs to Impact Bottomline in FY201820-FebMio Kato, CFAMurata: Diversification into New Markets and M&amp;A to Propel Long-Term Growth20-FebMorningstarRaising TDK’s FVE to JPY 11,500; Robust Demand From Auto Drives Growth in MLCCs20-FebMio Kato, CFAJDI: Equity Finance and Dilution Incoming?19-FebMorningstarDespite Improved B/S, Toshiba Will Not Change Plan to Sell NAND Flash Memory Business16-FebScott FosterHoriba (6856 JP): Results Above Guidance, Estimates Raised16-FebTravis LundyLarge Kirin (2503 JP) Buyback15-FebMio Kato, CFAJDI: 3Q Revenue Strong, Margins Weak - Did Non-IPhone X Sales Overshoot 36%?15-FebMorningstarStrengthening Ecosystem, Tough EC Competition : Mixed Impression of Rakuten’s Results15-FebSC CapitalToyo Tire--Q4 &amp; FY18 Guidance Much Worse Than Expected15-FebKemp Dolliver, CFABiosimilar Battlefield: An Update14-FebMorningstarUphill Battle Awaits for Building Large Asset Risk Ahead of Demand, MF Shares Overvalued14-FebMorningstarDenso Reports in Line 3Q Result, Raise FVE to JPY 6,400 on Stronger Renminbi and Euro.14-FebDouglas KimKorea M&amp;A Spotlight: Tencent Invests in Kakao Games14-FebMio Kato, CFAToshiba: Likely Delay in Deal Approval + Poor Non-Memory Earnings Make IPO More Likely14-FebSC CapitalToyo Tire Could Be Weak on Bearish FY18 Guidance13-FebSupun WalpolaNissan: US Tax Cut Offsets Weak Q3 Operating Results13-FebAqila AliStrong 3Q Results Following Koito’s Shift to High-Margin LED Headlights13-FebMio Kato, CFAHarmonic Drive: Revenue Expansion Resumes but What Happens Next Year?13-FebMio Kato, CFAChiyoda: Return to Profitability, Potential for Orders Rising13-FebMio Kato, CFADowa: Metal Processing, Zinc and Heat Treatment Power This Sub-10x Stock13-FebMorningstarShiseido Improved Its Margin More Than Expected; Raising FVE to JPY 6,20012-FebScott FosterSMC (6273 JP): Share Price Down 18%, Profits Leveling Off12-FebMorningstarNTT’s 3Q Posts Solid Growth Excluding Impacts of Several Small Write-Downs12-FebVincent Fernando, CFAKakao 4Q17: Revenue &amp; Earnings Miss Estimates; Stock Falls 7%12-FebTravis LundyDocomo Buyback - Updated Estimates of Impact11-FebScott FosterShimadzu (7701 JP): Strong 3Q, Share Price Spike Reversed10-FebAqila AliStocks Down Despite Strong 3Q Results and Revised GuidanceOther Interesting Equity StoriesWe don't have a section for this on Smartkarma but perhaps we should. Mio Kato, CFA, Douglas Kim, and William Keating constantly come up with very interesting pieces which aren't necessarily immediately actionable per se, but if they don't make you think you weren't paying attention. William Keating took a look at the Silicon Wafer sector (again) and noted.2017 was the best year for silicon wafer manufacturers in almost a decade...  In the face of continuing supply-demand imbalance, almost zero capacity upside and continued strong semiconductor sales, we expect another year of record earnings &amp; profits growth for the leading silicon wafer manufacturers.And when you sit down with his piece Automotive Semiconductors- All You Never Wanted To Know But Probably Should- Part 1, make sure you have a place to take notes. Mio's piece on scientists finding ways to make wood super-strong and light (stronger by weight than titanium, etc) through partial delignification and then compression was interesting. His comments on Toyota's research finding ways to eliminate use of Dysprosium and Terbium and replacing some Neodymium use in rare earth magnets in cars through using more Lanthanum and Cerium shows efforts to lower costs near-term and lower costs far more longer-term (through preserving stockpiles of Neodymium.And Douglas Kim led us through a visit to SK Telecom's and KT's 5G demonstration sites in Seoul. Other Interesting Equity StoriesDateInsight ProviderTitle21-Feb-18Travis LundyRenault/Nissan/Mitsubishi - A Thinkpiece21-Feb-18Mio Kato, CFAToyota: Down with Dysprosium20-Feb-18William KeatingAutomotive Semiconductors- All You Never Wanted To Know But Probably Should- Part 119-Feb-18Mio Kato, CFAOne Wood to Replace Them All13-Feb-18William KeatingSilicon Wafers-The Golden Goose With More To Give12-Feb-18Douglas KimMy Visit of SKT's "Igloo" And KT's "5G Live Site"Event-Driven, ECM, and OtherMy Hong Kong-based colleague David Blennerhassett writes an always-well-regarded weekly called Last Week in Event SPACE - CJ Cheiljedang, Japan Display, Westfield, Nissan about Stubs, Pairs, Arbitrage, Share Class, and Event trades which discusses what he sees as the interesting development in event space during the week. Toh Zhen Zhou writes a weekly on ECM-related developments - this week's is Smartkarma: ECM Coverage Weekly Update (24 February 2018). Both of them provide good summary coverage of their respective domains so I won't do it here, so it's just a list of the insights these past two weeks. Event-Driven, ECM, and OtherDateInsight ProviderTitle24-FebDouglas KimTC IPO Preview (Part 1) - A Japanese DFS Operator Listing on the Korean Stock Market23-FebPatrick HansenWhich Names Are the Japanese Brokers More Bullish / Bearish On....23-FebSanghyun ParkSK Discovery &amp; SK Chemicals Tender Offer Summary22-FebSanghyun ParkHyundai Heavy Rights Offering - New Arb Trades on First Sub Rights Trade Day22-FebDouglas KimKiwoom Securities' Issuance of RCPS &amp; Margin Debt21-FebTravis LundyKansai Mirai: Post Tender - Where To From Here?20-FebMio Kato, CFAJDI: Equity Finance and Dilution Incoming?20-FebSanghyun ParkHyundai Heavy Rights Offering - Arb Trade Situational Update20-FebDouglas KimKorea Kolmar Group Named Preferred Bidder for CJ Healthcare - #1 Korea M&amp;A Deal YTD20-FebDouglas KimCarelabs IPO Preview (Part 1) - Leading Provider of HC &amp; Cosmetics Surgery O2O Platforms18-FebD BlennerhassettLast Week in Event SPACE: Fast Retailing, Samsung, Yakult, JCNC, CCASS18-FebTravis LundyWillplus (3538 JP) TSE1 Promotion and TOPIX Inclusion18-FebTravis LundyAvant (3836 JP) II: TSE1 Promotion and TOPIX Inclusion18-FebTravis LundyRenova (9519 JP) - TOPIX Inclusion Is Well-Flagged. Stock Is Expensive. But May Be Squeezy18-FebTravis LundySeiwa Electric (6748) Offer and Move To TOPIX18-FebTravis LundyCharm Care (6062) Offering, TSE2 Listing, and Growth18-FebTravis LundyAvant (3836 JP) I:  The Offering17-FebSanghyun ParkKakao Games - Rights Offering Details &amp; IPO Valuation Study15-FebMio Kato, CFAYakult: A Digestible Deal Indeed15-FebSanghyun ParkLooking into Samsung Electronics' Price Fall During Feb 2-9 and Rise Since Then15-FebSanghyun ParkMirae Asset Daewoo Pref Issuance - Latest Situation15-FebTravis LundyDanone To Sell Down Yakult Stake - It's a Big Deal14-FebPatrick HansenWith 3Q Earnings Mostly Done, Names Are Best / Worst Position for Full-Year End....13-FebFederico D'IncaHYNIX Semi - Bullish Break Out of 4 Month Correction12-FebSanghyun ParkSamsung Electronics Stock Split - Short Selling Opportunity Checkup12-FebThomas SchroederBullish SK Hynix Breakout Pattern10-FebDouglas KimAekyung Co. IPO Preview (Part 2): Facing Headwinds

The Two Weeks in NorthAsia@Smartkarma That Were: BOJ/N225, Buybacks, & Biosimilars

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/26730" target="_blank" data-smartkarma-citation="entities:26730:1">Kakao Games Corp (1404796D KS)</a> said in a regulatory filing that it had raised ₩140bil in the form of new rights offering from multiple investors.</p><div class="content-highlight"><p><em>This is the regulatory filing at DART.</em></p><p><em><a href="https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20180214800097" target="_blank">https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20180214800097</a></em></p></div><p>Kakao's pre offering shares outstanding was 4,505,650 common shares. In this rights offering, Kakao offered a total of 901,132 common shares to raise ₩140,000,768,652 (₩140.0bil). This means the offering price for each share was ₩155,361.</p><table class="table table-striped"><tbody><tr><td colspan="2" style="width: 713px;">Kakao Games rights offering summary</td></tr><tr><td style="width: 403.4px;">Pre offering shares outstanding</td><td style="text-align: right; width: 309.6px;">4,505,650 common shares</td></tr><tr><td style="width: 403.4px;">New rights offering</td><td style="text-align: right; width: 309.6px;">901,132 common shares</td></tr><tr><td style="width: 403.4px;">Total offering amount</td><td style="text-align: right; width: 309.6px;">₩140,000,768,652 (₩140.0bil)</td></tr><tr><td style="width: 403.4px;">Offering price per share</td><td style="text-align: right; width: 309.6px;">₩155,361</td></tr><tr><td colspan="2" style="width: 713px;"><em>Source: DART</em></td></tr></tbody></table><p>At this offering price of ₩155,361, Kakao Games is now being valued at ₩840bil. This is a substantial increase from a ₩500bil level that the market seemed to grant for the value of Kakao Games only a year ago.</p><table class="table table-striped"><tbody><tr><td colspan="2" style="width: 711px;">Kakao Games valuation</td></tr><tr><td style="width: 403.4px;">Offering price per share</td><td style="text-align: right; width: 307.6px;">₩155,361</td></tr><tr><td style="width: 403.4px;">Post offering shares outstanding</td><td style="text-align: right; width: 307.6px;">5,406,782 common shares</td></tr><tr><td style="width: 403.4px;"><em><strong>Company valuation based on the offering price of ₩155,361</strong></em></td><td style="text-align: right; width: 307.6px;"><em><strong>₩840,003,058,302 (₩840.0bil)</strong></em></td></tr><tr><td colspan="2" style="width: 711px;"><em>Source: <a href="https://www.smartkarma.com/profiles/354" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a></em></td></tr></tbody></table><p>We don't yet have official FY17 financial numbers for Kakao Games. But it is estimated that Kakao Games' FY17 sales is ₩200bil with ₩80bil in operating profit. This means this 840bil valuation is like 4.2 times FY17 sales and 10.5 times FY17 OP.</p><table class="table table-striped"><tbody><tr><td colspan="2" style="width: 713px;">Kakao Games FY17 estimated financials (₩ bil)</td></tr><tr><td style="width: 406.8px;">Sales</td><td style="width: 306.2px;">About 200</td></tr><tr><td style="width: 406.8px;"> - ₩840bil valuation</td><td style="width: 306.2px;">4.2x FY17 sales</td></tr><tr><td style="width: 406.8px;">OP</td><td style="width: 306.2px;"><p>80 (40% OPM)</p><p><em>* About 30% NPM</em></p></td></tr><tr><td style="width: 406.8px;"> - ₩840bil valuation</td><td style="width: 306.2px;">10.5x FY17 OP</td></tr><tr><td colspan="2" style="width: 713px;"><em>Source: FnGuide, <a href="https://www.smartkarma.com/profiles/354" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a></em></td></tr></tbody></table><p>Who got the new rights? <a href="https://www.smartkarma.com/entities/22839" target="_blank" data-smartkarma-citation="entities:22839:1">Netmarble Games Corporation (251270 KS)</a> and <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings Ltd (700 HK)</a> (through Aceville PTE. LTD) got 321,832 common shares (₩50bil) each. As a result, their respective post-offering shareholding % will be 5.95%. <a href="https://www.smartkarma.com/entities/15445" target="_blank" data-smartkarma-citation="entities:15445:1">Actoz Soft Co Ltd (052790 KS)</a> got 128,734 common shares (₩20bil) for a 2.38% stake. Bluehole, the developer of the PUBG, invested ₩10bil and Premier M&amp;A PEF invested ₩10bil.</p><table class="table table-striped"><tbody><tr><td colspan="4" style="width: 742px;">Kakao Games' new shareholders</td></tr><tr><td style="width: 312px;"><em><strong>Investor</strong></em></td><td style="text-align: right; width: 190px;"><em><strong>Shares</strong></em></td><td style="text-align: right; width: 95px;"><em><strong>Amount</strong></em></td><td style="text-align: right; width: 145px;"><em><strong>Post offering shareholding %</strong></em></td></tr><tr><td style="width: 312px;"><a href="https://www.smartkarma.com/entities/22839" target="_blank" data-smartkarma-citation="entities:22839:1">Netmarble Games Corporation (251270 KS)</a></td><td style="text-align: right; width: 190px;">321,832 common shares</td><td style="text-align: right; width: 95px;">₩50bil</td><td style="text-align: right; width: 145px;">5.95%</td></tr><tr><td style="width: 312px;"><p>Aceville PTE. LTD</p><p>* <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings Ltd (700 HK)</a></p></td><td style="text-align: right; width: 190px;">321,832 common shares</td><td style="text-align: right; width: 95px;">₩50bil</td><td style="text-align: right; width: 145px;">5.95%</td></tr><tr><td style="width: 312px;"><p>Actozsoft HongKong LTD</p><p> * <a href="https://www.smartkarma.com/entities/15445" target="_blank" data-smartkarma-citation="entities:15445:1">Actoz Soft Co Ltd (052790 KS)</a></p></td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td style="width: 312px;"><p>DianDian Interactive Holding</p><p> * <a href="https://www.smartkarma.com/entities/15445" target="_blank" data-smartkarma-citation="entities:15445:1">Actoz Soft Co Ltd (052790 KS)</a></p></td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td style="width: 312px;">Bluehole Inc.</td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td style="width: 312px;">Premier M&amp;A PEF</td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td colspan="4" style="width: 742px;"><em>Source: DART</em></td></tr></tbody></table><p>Currently, Kakao owns a 74.86% stake in Kakao Games. The total shareholding owned by Kakao and its special affiliate persons amounts to 83.11%.</p><table class="table table-striped"><tbody><tr><td style="text-align: center;">Kakao Games shareholding structure before this rights offering</td></tr><tr><td style="text-align: center;">Kim Beom-su (including K-Cube Holdings &amp; his affiliate persons)</td></tr><tr><td style="text-align: center;">↓ 35.7%</td></tr><tr><td style="text-align: center;"><a href="https://www.smartkarma.com/entities/15002" target="_blank" data-smartkarma-citation="entities:15002:1">Kakao Corp (035720 KS)</a></td></tr><tr><td style="text-align: center;"><p>↓ 75.5% (before this rights offering)</p></td></tr><tr><td style="text-align: center;"><em><strong>Kakao Games</strong></em></td></tr><tr><td><p><em>Note: Kim Beom-su owns a 100% stake in K-Cube Holdings.</em></p><p><em>Source: DART</em></p></td></tr></tbody></table><table class="table table-striped"><tbody><tr><td style="width: 449.4px;">Shareholder (before this rights offering)</td><td style="text-align: right; width: 264.6px;">Shareholding %</td></tr><tr><td style="width: 449.4px;">Kakao</td><td style="text-align: right; width: 264.6px;">74.86</td></tr><tr><td style="width: 449.4px;">K-Cube Holdings</td><td style="text-align: right; width: 264.6px;">1.66</td></tr><tr><td style="width: 449.4px;">Namgung Hoon (current co-CEO)</td><td style="text-align: right; width: 264.6px;">5.35</td></tr><tr><td style="width: 449.4px;">Lee Si-woo</td><td style="text-align: right; width: 264.6px;">0.54</td></tr><tr><td style="width: 449.4px;">Nam Jae-kwan</td><td style="text-align: right; width: 264.6px;">0.16</td></tr><tr><td style="width: 449.4px;">Park Young-ho</td><td style="text-align: right; width: 264.6px;">0.05</td></tr><tr><td style="width: 449.4px;">Kim Dong-joon</td><td style="text-align: right; width: 264.6px;">0.46</td></tr><tr><td style="width: 449.4px;"><em><strong>Total owned by the major shareholder &amp; its special affiliate persons</strong></em></td><td style="text-align: right; width: 264.6px;"><em><strong>83.11</strong></em></td></tr><tr><td style="width: 449.4px;"> - Treasury shares</td><td style="text-align: right; width: 264.6px;">0.03</td></tr><tr><td style="width: 449.4px;">Other minority shareholders</td><td style="text-align: right; width: 264.6px;">16.89</td></tr><tr><td colspan="2" style="width: 714px;"><em>Source: DART</em></td></tr></tbody></table><p>After this rights offering, the total owned by the major shareholder and its special affiliate persons will be reduced from 83.11% to 69.26%.</p><table class="table table-striped"><tbody><tr><td style="width: 449.8px;">Shareholders (after this rights offering)</td><td style="text-align: right; width: 263.2px;">Shareholding %</td></tr><tr><td style="width: 449.8px;">Kakao</td><td style="text-align: right; width: 263.2px;">62.38</td></tr><tr><td style="width: 449.8px;">K-Cube Holdings</td><td style="text-align: right; width: 263.2px;">1.38</td></tr><tr><td style="width: 449.8px;">Namgung Hoon (current co-CEO)</td><td style="text-align: right; width: 263.2px;">4.46</td></tr><tr><td style="width: 449.8px;">Lee Si-woo</td><td style="text-align: right; width: 263.2px;">0.45</td></tr><tr><td style="width: 449.8px;">Nam Jae-kwan</td><td style="text-align: right; width: 263.2px;">0.13</td></tr><tr><td style="width: 449.8px;">Park Young-ho</td><td style="text-align: right; width: 263.2px;">0.04</td></tr><tr><td style="width: 449.8px;">Kim Dong-joon</td><td style="text-align: right; width: 263.2px;">0.38</td></tr><tr><td style="width: 449.8px;"><em><strong>Total owned by the major shareholder &amp; its special affiliate persons</strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>69.26</strong></em></td></tr><tr><td style="width: 449.8px;"> - Treasury shares</td><td style="text-align: right; width: 263.2px;">0.02</td></tr><tr><td style="width: 449.8px;">Other minority shareholders</td><td style="text-align: right; width: 263.2px;">14.07</td></tr><tr><td style="width: 449.8px;"><em><strong><a href="https://www.smartkarma.com/entities/22839" target="_blank">Netmarble Games Corporation (251270 KS)</a></strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>5.95</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong><a href="https://www.smartkarma.com/entities/26" target="_blank">Tencent Holdings Ltd (700 HK)</a></strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>5.95</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong><a href="https://www.smartkarma.com/entities/15445" target="_blank">Actoz Soft Co Ltd (052790 KS)</a></strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>3.38</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong>Bluehole Inc.</strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>1.19</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong>Premier M&amp;A PEF</strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>1.19</strong></em></td></tr><tr><td colspan="2" style="width: 713px;"><em>Source: DART</em></td></tr></tbody></table>

Kakao Games Corp (1404796D KS) said in a regulatory filing that it had raised ₩140bil in the form of new rights offering from multiple investors.This is the regulatory filing at DART.https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20180214800097Kakao's pre offering shares outstanding was 4,505,650 common shares. In this rights offering, Kakao offered a total of 901,132 common shares to raise ₩140,000,768,652 (₩140.0bil). This means the offering price for each share was ₩155,361.Kakao Games rights offering summaryPre offering shares outstanding4,505,650 common sharesNew rights offering901,132 common sharesTotal offering amount₩140,000,768,652 (₩140.0bil)Offering price per share₩155,361Source: DARTAt this offering price of ₩155,361, Kakao Games is now being valued at ₩840bil. This is a substantial increase from a ₩500bil level that the market seemed to grant for the value of Kakao Games only a year ago.Kakao Games valuationOffering price per share₩155,361Post offering shares outstanding5,406,782 common sharesCompany valuation based on the offering price of ₩155,361₩840,003,058,302 (₩840.0bil)Source: Sanghyun ParkWe don't yet have official FY17 financial numbers for Kakao Games. But it is estimated that Kakao Games' FY17 sales is ₩200bil with ₩80bil in operating profit. This means this 840bil valuation is like 4.2 times FY17 sales and 10.5 times FY17 OP.Kakao Games FY17 estimated financials (₩ bil)SalesAbout 200 - ₩840bil valuation4.2x FY17 salesOP80 (40% OPM)* About 30% NPM - ₩840bil valuation10.5x FY17 OPSource: FnGuide, Sanghyun ParkWho got the new rights? Netmarble Games Corporation (251270 KS) and Tencent Holdings Ltd (700 HK) (through Aceville PTE. LTD) got 321,832 common shares (₩50bil) each. As a result, their respective post-offering shareholding % will be 5.95%. Actoz Soft Co Ltd (052790 KS) got 128,734 common shares (₩20bil) for a 2.38% stake. Bluehole, the developer of the PUBG, invested ₩10bil and Premier M&amp;A PEF invested ₩10bil.Kakao Games' new shareholdersInvestorSharesAmountPost offering shareholding %Netmarble Games Corporation (251270 KS)321,832 common shares₩50bil5.95%Aceville PTE. LTD* Tencent Holdings Ltd (700 HK)321,832 common shares₩50bil5.95%Actozsoft HongKong LTD * Actoz Soft Co Ltd (052790 KS)64,367 common shares₩10bil1.19%DianDian Interactive Holding * Actoz Soft Co Ltd (052790 KS)64,367 common shares₩10bil1.19%Bluehole Inc.64,367 common shares₩10bil1.19%Premier M&amp;A PEF64,367 common shares₩10bil1.19%Source: DARTCurrently, Kakao owns a 74.86% stake in Kakao Games. The total shareholding owned by Kakao and its special affiliate persons amounts to 83.11%.Kakao Games shareholding structure before this rights offeringKim Beom-su (including K-Cube Holdings &amp; his affiliate persons)↓ 35.7%Kakao Corp (035720 KS)↓ 75.5% (before this rights offering)Kakao GamesNote: Kim Beom-su owns a 100% stake in K-Cube Holdings.Source: DARTShareholder (before this rights offering)Shareholding %Kakao74.86K-Cube Holdings1.66Namgung Hoon (current co-CEO)5.35Lee Si-woo0.54Nam Jae-kwan0.16Park Young-ho0.05Kim Dong-joon0.46Total owned by the major shareholder &amp; its special affiliate persons83.11 - Treasury shares0.03Other minority shareholders16.89Source: DARTAfter this rights offering, the total owned by the major shareholder and its special affiliate persons will be reduced from 83.11% to 69.26%.Shareholders (after this rights offering)Shareholding %Kakao62.38K-Cube Holdings1.38Namgung Hoon (current co-CEO)4.46Lee Si-woo0.45Nam Jae-kwan0.13Park Young-ho0.04Kim Dong-joon0.38Total owned by the major shareholder &amp; its special affiliate persons69.26 - Treasury shares0.02Other minority shareholders14.07Netmarble Games Corporation (251270 KS)5.95Tencent Holdings Ltd (700 HK)5.95Actoz Soft Co Ltd (052790 KS)3.38Bluehole Inc.1.19Premier M&amp;A PEF1.19Source: DART

Kakao Games - Rights Offering Details & IPO Valuation Study

South Korea

Kakao Games Corp. operates as a multiply platform gaming company. The Company provides mobile games, computer games, virtual reality games, and other related products. Kakao Games markets its products worldwide.

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Kakao Games (293490 KS)

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Kakao Games Corp (1404796D KS) said in a regulatory filing that it had raised ₩140bil in the form of new rights offering from multiple...

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