Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.</li>
<li>We see 8 migrations from MidCap to LargeCap, 7 migrations from LargeCap to MidCap, 6 new adds to MidCap, and 16 migrations from SmallCap to MidCap.</li>
<li>Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.</li>
</ul>


The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.
We see 8 migrations from MidCap to LargeCap, 7 migrations from LargeCap to MidCap, 6 new adds to MidCap, and 16 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.


KOSPI Size Indices - Plenty of Overlap With Other Index Flows

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>K Car completed its IPO in South Korea in Oct 21. It raised around US$300m after having downsized the offering and cut the asking price to below the IPO range. </li>
<li>K Car is a used car marketplace and dealership operating in South Korea.</li>
<li>In this note, we will talk about the recent updates and the upcoming lockup expiry.</li>
</ul>


K Car completed its IPO in South Korea in Oct 21. It raised around US$300m after having downsized the offering and cut the asking price to below the IPO range. 
K Car is a used car marketplace and dealership operating in South Korea.
In this note, we will talk about the recent updates and the upcoming lockup expiry.


K Car Lockup - Small Stock with a Big Lockup - Money Recouped, Any Price Is a Good Price to Sell

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Equity Capital Markets

<ul>
<li>There must be a rationale for car sharing to receive a higher valuation than the traditional rental car business. For this, profit per vehicle must be provided, not sales.</li>
<li>Also, whether SOCAR can justify its valuation built on the relatively high valuation premiums granted to ccOS and FMS companies is still questionable.</li>
<li>Concerning fund flow, it is positive that SOCAR can aim for LG Energy's six-month lockup release. But it is unclear how much flow will be left for SOCAR after WCP.</li>
</ul>


There must be a rationale for car sharing to receive a higher valuation than the traditional rental car business. For this, profit per vehicle must be provided, not sales.
Also, whether SOCAR can justify its valuation built on the relatively high valuation premiums granted to ccOS and FMS companies is still questionable.
Concerning fund flow, it is positive that SOCAR can aim for LG Energy's six-month lockup release. But it is unclear how much flow will be left for SOCAR after WCP.


SOCAR Revised Prospectus: Critical Issues Still Not Addressed

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>Our base case valuation of Socar is target price of 27,967 won, which is 18% lower than the low end of the IPO price range of 34,000 won.</li>
<li>Given the lack of upside, we would Pass on this IPO. Our valuation is also 23% lower than the valuation that Lotte Rental paid for its 13.9% stake in Socar.</li>
<li>We estimate Socar to generate sales of 396.4 billion won (up 37.2% YoY) and EBITDA margins of 12.6% in 2022. </li>
</ul>


Our base case valuation of Socar is target price of 27,967 won, which is 18% lower than the low end of the IPO price range of 34,000 won.
Given the lack of upside, we would Pass on this IPO. Our valuation is also 23% lower than the valuation that Lotte Rental paid for its 13.9% stake in Socar.
We estimate Socar to generate sales of 396.4 billion won (up 37.2% YoY) and EBITDA margins of 12.6% in 2022. 


<ul>
<li>This IPO's valuation is the trickiest among Korea's recent IPOs. Whether all of these ten valuation peers have high enough business relevance to SOCAR is highly doubtful.</li>
<li>Whether SOCAR can evolve from a simple car sharing (or rental) operator to an in-vehicle software platform provider actually determines the success or failure of this IPO.</li>
<li>However, the IPO prospectus available to us lacks the evidence to favorably judge SOCAR's growth potential. So, I will consider taking this IPO as conservatively as possible.</li>
</ul>


This IPO's valuation is the trickiest among Korea's recent IPOs. Whether all of these ten valuation peers have high enough business relevance to SOCAR is highly doubtful.
Whether SOCAR can evolve from a simple car sharing (or rental) operator to an in-vehicle software platform provider actually determines the success or failure of this IPO.
However, the IPO prospectus available to us lacks the evidence to favorably judge SOCAR's growth potential. So, I will consider taking this IPO as conservatively as possible.


South Korea

SK Rent A Car Co., Ltd. provides cars rental and leasing services. The Company also offers passenger car leasing, and other motor vehicles leasing services. SK Rent A Car also offers used cars distribution services.

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SK Rent A Car (068400 KS)

KOSPI Size Indices - Plenty of Overlap With Other Index Flows

We currently forecast 52 changes for the KOSPI Size Indices. While there are few passive assets tracking these indices, they are used by active...

Brian Freitas

K Car Lockup - Small Stock with a Big Lockup - Money Recouped, Any Price Is a Good Price to Sell

K Car completed its IPO in South Korea in Oct 21. It raised around US$300m after having downsized the offering. Its IPO lockup will expire soon...

Sumeet Singh

SOCAR Revised Prospectus: Critical Issues Still Not Addressed

This post investigates SOCAR's revised prospectus, especially the additional information concerning the valuation peer group, and argues why the...

Sanghyun Park

Socar IPO Valuation Analysis

Our base case valuation of Socar is target price of 27,967 won, which is 18% lower than the low end of the IPO price range of 34,000 won. Given the...

Douglas Kim

SOCAR IPO: Another Absurd Valuation

This post details the terms of the SOCAR IPO and discusses the irrational valuation done by the bankers, considering that the IPO prospectus...

Sanghyun Park

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