Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

In our view, on Monday (16 November) when Big Hit Entertainment's one-month locked-up period ended shares could be sold, we think that its share price could decline by about 5-10%+.Warner Music Group's EV/EBITDA is 22x, which is nearly 37% lower than Bit Hit's current EV/EBITDA multiple. We do not believe is much higher EV/EBITDA multiple premium for Big Hit Entertainment is appropriate versus Warner Music Group. Given the continued concerns about the selling by the institutional investors (who want to lock in their gains after the lock-up period ends), Kakao Games' share price could face continued weakness leading up to the end of the 3-months lock-up period.

In our view, on Monday (16 November) when Big Hit Entertainment's one-month locked-up period ended shares could be sold, we think that its share price could decline by about 5-10%+.Warner Music Group's EV/EBITDA is 22x, which is nearly 37% lower than Bit Hit's current EV/EBITDA multiple. We do not believe is much higher EV/EBITDA multiple premium for Big Hit Entertainment is appropriate versus Warner Music Group. Given the continued concerns about the selling by the institutional investors (who want to lock in their gains after the lock-up period ends), Kakao Games' share price could face continued weakness leading up to the end of the 3-months lock-up period. 

End of the Lock-Up Periods for Big Hit Entertainment & Kakao Games

Cross Asset Strategy

October continued to see sector rotation in Korea with growth-oriented stocks under performing value-oriented stocks. The following were the top 10 issues related to Korean stock market, economy, and politics in October 2020.1) DEATH OF SAMSUNG GROUP CHAIRMAN LEE KUN HEE2) BIG HIT ENTERTAINMENT IPO3) REGULATORS GOING AFTER THE OPTIMUS FUNDS 4) MAJOR POTENTIAL CHANGE IN TAX LAWS THAT COULD RESULT IN BIG SELLING BY RETAIL IN DECEMBER 5) LG CHEM APPROVES TO SEPARATE THE BATTERY BUSINESS 6) STRATEGIC PARTNERSHIP BETWEEN NAVER &amp; THE CJ GROUP7) SK TELECOM SPINS OFF MOBILITY BUSINESS &amp; PARTNERS WITH UBER 8) PAYPAL ALLOWS TRANSACTIONS IN CRYPTOS 9) INCREASED NEWS FLOW ABOUT THE NEED TO RECOUNT VOTES OF 4.15 (15 April 2020) PARLIAMENTARY ELECTION 10) SOCAR BECOMES THE NEXT UNICORN

October continued to see sector rotation in Korea with growth-oriented stocks under performing value-oriented stocks. The following were the top 10 issues related to Korean stock market, economy, and politics in October 2020.1) DEATH OF SAMSUNG GROUP CHAIRMAN LEE KUN HEE2) BIG HIT ENTERTAINMENT IPO3) REGULATORS GOING AFTER THE OPTIMUS FUNDS 4) MAJOR POTENTIAL CHANGE IN TAX LAWS THAT COULD RESULT IN BIG SELLING BY RETAIL IN DECEMBER 5) LG CHEM APPROVES TO SEPARATE THE BATTERY BUSINESS 6) STRATEGIC PARTNERSHIP BETWEEN NAVER &amp; THE CJ GROUP7) SK TELECOM SPINS OFF MOBILITY BUSINESS &amp; PARTNERS WITH UBER 8) PAYPAL ALLOWS TRANSACTIONS IN CRYPTOS 9) INCREASED NEWS FLOW ABOUT THE NEED TO RECOUNT VOTES OF 4.15 (15 April 2020) PARLIAMENTARY ELECTION 10) SOCAR BECOMES THE NEXT UNICORN 

Korea Stock Market Monthly Recap #53 (October 2020)

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Event-Driven

Today is the first lock-up expiry day (15D).<table class="table table-striped">
<colgroup>
<col width="300">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Lock-up"}'>Lock-up</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Qty."}'>Qty.</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"% of SO"}'>% of SO</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"% of SO+RCPS"}'>% of SO+RCPS</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Resumption"}'>Resumption</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"15 days"}' data-sheets-formula="=Bookbuilding!R[90]C[0]">15 days</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":205463}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=Bookbuilding!R[90]C[0]">205,463</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0060704908841739125}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=Bookbuilding!R[90]C[0]">0.61%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.005767583208510275}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula='=R[0]C[-2]/(googlefinance(R49C2, "shares")+R73C2)'>0.58%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44134}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"m\". \"d","3":1}'>2020. 10. 30</td>
</tr>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>Unsurprisingly, the shares are again taking a hit as the price loses 5% this morning.It is now 58% down from the peak reached on the market debut day.<table class="table table-striped">
<colgroup>
<col width="300">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Status (₩B)"}'>Status (₩B)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Name"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>Name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Big Hit Entertainment Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "name")'>Big Hit Entertainment Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"352820"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='="352820"'>352820</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market cap"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>Market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5026.159512}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-formula="=R[1]C[0]*R[9]C[0]/1000000000">5,026.2</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>Price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":148500}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "price")'>₩148,500</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Previous"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- Previous</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":157000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "closeyest")'>₩157,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.054140127388535034}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R5C[-1]-R[0]C[-1])/R[0]C[-1]">-5.41%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Open"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- Open</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":149000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "priceopen")'>₩149,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.003355704697986577}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R5C[-1]-R[0]C[-1])/R[0]C[-1]">-0.34%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - High"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- High</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":151500}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "high")'>₩151,500</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.019801980198019802}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R5C[-1]-R[0]C[-1])/R[0]C[-1]">-1.98%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Low"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- Low</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":147000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "low")'>₩147,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.01020408163265306}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R5C[-1]-R[0]C[-1])/R[0]C[-1]">1.02%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"52W high"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>52W high</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":351000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "high52")'>₩351,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.5769230769230769}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R5C[-1]-R[0]C[-1])/R[0]C[-1]">-57.69%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"52W low"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>52W low</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":147000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "low52")'>₩147,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.01020408163265306}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R5C[-1]-R[0]C[-1])/R[0]C[-1]">1.02%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trading volume"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>Trading volume</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":546352}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "volume")'>546,352</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - SO"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33846192}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "shares")'>33,846,192</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of SO"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- % of SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.01614219998515638}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]">1.61%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trading value"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>Trading value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":81.133272}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-formula="=R[-3]C[0]*R[-10]C[0]/1000000000">81.1</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"DTV"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>DTV</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2107326}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula='=googlefinance(R3C[0], "volumeavg")'>2,107,326</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Value"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- Value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":312.937911}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-formula="=R[-1]C[0]*R[-12]C[0]/1000000000">312.9</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of SO"}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>- % of SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.062261834359386724}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-2]C[0]/R[-5]C[0]">6.23%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>-</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX &amp; Google Finance"}'>Source: KRX &amp; Google Finance</td></tr>
</tbody>
</table><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/405/original/smartkarma_download.png?1604023183" class="editor-image img-responsive" data-smartkarma-image-id="168405"></figure></section>But the bashing seems to be settling at a ₩150,000 level, a market cap of ₩5T.PER-wise, it is still twice more expensive than direct local peers. But it came down to a level in line with Kakao, which appears to be a short-term support zone. <table class="table table-striped">
<colgroup>
<col width="300">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"12M PER (₩B)"}'>12M forward PER (₩B)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"12M PER (x)"}'>12M PER (x)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Price"}'>Price</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"MC"}'>MC</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SM Entertainment Co Ltd"}' data-sheets-formula="=R[-16]C[0]">SM Entertainment Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"041510"}' data-sheets-formula="=R[-16]C[8]">041510</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":25.13}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[-16]C[8]">25.13</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":29250}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]' data-sheets-formula="=R[-16]C[5]">₩29,250</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":684.7400292}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula='=googlefinance(R[-16]C[5], "marketcap")/1000000000'>684.7</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"YG Entertainment Inc"}' data-sheets-formula="=R[-16]C[0]">YG Entertainment Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"122870"}' data-sheets-formula="=R[-16]C[8]">122870</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":35.22}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[-16]C[8]">35.22</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":40050}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]' data-sheets-formula="=R[-16]C[5]">₩40,050</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":737.358948}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula='=googlefinance(R[-16]C[5], "marketcap")/1000000000'>737.4</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"JYP Entertainment Corp"}' data-sheets-formula="=R[-16]C[0]">JYP Entertainment Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"035900"}' data-sheets-formula="=R[-16]C[8]">035900</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":31.66}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[-16]C[8]">31.66</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":31400}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]' data-sheets-formula="=R[-16]C[5]">₩31,400</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1116.3961234}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula='=googlefinance(R[-16]C[5], "marketcap")/1000000000'>1,116.4</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Average"}'>- Average</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":30.669999999999998}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=average(R[-3]C[0]:R[-1]C[0])">30.67</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Naver Corp"}' data-sheets-formula="=R[7]C[0]">Naver Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"035420"}' data-sheets-formula="=R[14]C[8]">035420</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":39.57}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[14]C[8]">39.57</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":293000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[14]C[5]">₩293,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":48211.3064325}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula='=googlefinance(R[14]C[5], "marketcap")/1000000000'>48,211.3</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kakao Corp"}' data-sheets-formula="=R[7]C[0]">Kakao Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"035720"}' data-sheets-formula="=R[14]C[8]">035720</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":62.46}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[14]C[8]">62.46</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":336500}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[14]C[5]">₩336,500</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":29695.39143}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula='=googlefinance(R[14]C[5], "marketcap")/1000000000'>29,695.4</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Average"}'>- Average</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":51.015}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=average(R[-2]C[0]:R[-1]C[0])">51.02</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Big Hit"}'>Big Hit</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"352820"}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=Terms!R[-22]C[0]">352820</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60.923145600000005}' data-sheets-numberformat='[null,2,"#,##0.00",1]' data-sheets-formula="=R[0]C[1]/R13C8">60.92</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":148500}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=Misc!R[33]C[-2]">₩148,500</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5026.159512}' data-sheets-numberformat='[null,2,"#,##0.0"]' data-sheets-formula="=Misc!R[33]C[-2]">5,026.2</td>
</tr>
<tr><td colspan="5" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX &amp; FnGuide"}'>Source: KRX &amp; FnGuide</td></tr>
</tbody>
</table>

Today is the first lock-up expiry day (15D).









Lock-up
Qty.
% of SO
% of SO+RCPS
Resumption


15 days
205,463
0.61%
0.58%
2020. 10. 30

Source: KRX

Unsurprisingly, the shares are again taking a hit as the price loses 5% this morning.It is now 58% down from the peak reached on the market debut day.






Status (₩B)

Name
Big Hit Entertainment Co Ltd
-


Ticker
352820
-


Market cap
5,026.2
-


Price
₩148,500
-


- Previous
₩157,000
-5.41%


- Open
₩149,000
-0.34%


- High
₩151,500
-1.98%


- Low
₩147,000
1.02%


52W high
₩351,000
-57.69%


52W low
₩147,000
1.02%


Trading volume
546,352
-


- SO
33,846,192
-


- % of SO
1.61%
-


Trading value
81.1
-


DTV
2,107,326
-


- Value
312.9
-


- % of SO
6.23%
-

Source: KRX &amp; Google Finance

But the bashing seems to be settling at a ₩150,000 level, a market cap of ₩5T.PER-wise, it is still twice more expensive than direct local peers. But it came down to a level in line with Kakao, which appears to be a short-term support zone. 









12M forward PER (₩B)
Ticker
12M PER (x)
Price
MC


SM Entertainment Co Ltd
041510
25.13
₩29,250
684.7


YG Entertainment Inc
122870
35.22
₩40,050
737.4


JYP Entertainment Corp
035900
31.66
₩31,400
1,116.4


- Average
-
30.67
-
-


Naver Corp
035420
39.57
₩293,000
48,211.3


Kakao Corp
035720
62.46
₩336,500
29,695.4


- Average
-
51.02
-
-


Big Hit
352820
60.92
₩148,500
5,026.2

Source: KRX &amp; FnGuide



Big Hit: Fast Entry into KOSPI 200 & Lock-Up Expiries (Incl. RCPS)

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Shinpoong Pharmaceutical / Index Rebalance

The Korea Exchange (KRX) will announce the results of the December 2020 review of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> in November. The constituent changes will be effective from the open on 11 December 2020 and the rebalancing trades will need to be done at the closing auction on 10 December 2020.At the current time, we see nine stocks being added to and deleted from the index with another three stocks as very close adds and deletes. There could be an additional change with <a href="https://www.smartkarma.com/entities/big-hit-entertainment" target="_blank" data-smartkarma-citation="entities:28959:1" rel="noopener">Big Hit Entertainment (352820 KS)</a> getting index inclusion as a Fast Entry - this change could be announced ahead of the regular review announcement or as a part of the regular announcement, though the implementation will be at the same time as the December review.The potential inclusions have outperformed the potential exclusions by a wide margin over the last 6 months though the performance has been subdued over the last 2 months. With the short sell ban still in force, we could see the potential inclusions continue to outperform the potential exclusions after this period of consolidation, especially once the announcement of the changes has been made.In the Insight, we look at the expected changes, the impact of the changes on the stocks, the performance of the stocks and the short interest, the behaviour of the inclusions/exclusions at the June review and recommend some trades going forward.

The Korea Exchange (KRX) will announce the results of the December 2020 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in November. The constituent changes will be effective from the open on 11 December 2020 and the rebalancing trades will need to be done at the closing auction on 10 December 2020.At the current time, we see nine stocks being added to and deleted from the index with another three stocks as very close adds and deletes. There could be an additional change with Big Hit Entertainment (352820 KS) getting index inclusion as a Fast Entry - this change could be announced ahead of the regular review announcement or as a part of the regular announcement, though the implementation will be at the same time as the December review.The potential inclusions have outperformed the potential exclusions by a wide margin over the last 6 months though the performance has been subdued over the last 2 months. With the short sell ban still in force, we could see the potential inclusions continue to outperform the potential exclusions after this period of consolidation, especially once the announcement of the changes has been made.In the Insight, we look at the expected changes, the impact of the changes on the stocks, the performance of the stocks and the short interest, the behaviour of the inclusions/exclusions at the June review and recommend some trades going forward.

KOSPI200 Index Rebalance Preview: Review Period Nearly Complete, Nine (Or Ten) Possible Changes

In this insight, we provide a preview of Big Hit Entertainment's 3Q 2020 earnings as well as a trading strategy post end of the lock-up period. Big Hit Entertainment has been one of the most hyped IPOs in Korea this year.<h3>Drifting lower to our target price </h3>Our one-year target price for Big Hit Entertainment remains 132,429 won, which is 2% lower than the IPO price and 30% lower than the current price. We continue to believe that the market is mispricing Big Hit right now and that it is likely to decline further. However, over the next 3-4 weeks, there could be some positive pressure from the addition to the KOSPI200 Fast Entry but the bigger problem could be the selling from the ending of the one-month lock-up.

In this insight, we provide a preview of Big Hit Entertainment's 3Q 2020 earnings as well as a trading strategy post end of the lock-up period. Big Hit Entertainment has been one of the most hyped IPOs in Korea this year.Drifting lower to our target price Our one-year target price for Big Hit Entertainment remains 132,429 won, which is 2% lower than the IPO price and 30% lower than the current price. We continue to believe that the market is mispricing Big Hit right now and that it is likely to decline further. However, over the next 3-4 weeks, there could be some positive pressure from the addition to the KOSPI200 Fast Entry but the bigger problem could be the selling from the ending of the one-month lock-up. 

Big Hit Entertainment: Trading Strategy Post End of Lockup, KOSPI200 Fast Entry, & 3Q 2020 Earnings

South Korea

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

Price Gauge
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HYBE (352820 KS)

End of the Lock-Up Periods for Big Hit Entertainment & Kakao Games

In our view, on Monday (16 November) when Big Hit Entertainment's one-month locked-up period ended shares could be sold, we think that its share...

Douglas Kim

Korea Stock Market Monthly Recap #53 (October 2020)

In this insight, it provides the summary of the top 10 issues related to Korean stock market, economy, and politics in October 2020.

Douglas Kim

Big Hit: Fast Entry into KOSPI 200 & Lock-Up Expiries (Incl. RCPS)

We can now safely say that Big Hit's KOSPI 200 fast entry is a done deal. An inflow estimate is ₩100B, 2% of the current MC. But a series of lock...

Sanghyun Park

KOSPI200 Index Rebalance Preview: Review Period Nearly Complete, Nine (Or Ten) Possible Changes

The KOSPI200 index review will be announced in the next 4 weeks. We see 9 inclusions/ exclusions and significant volume to sell on the deletions....

Brian Freitas

Big Hit Entertainment: Trading Strategy Post End of Lockup, KOSPI200 Fast Entry, & 3Q 2020 Earnings

In this insight, we provide a preview of Big Hit Entertainment's 3Q 2020 earnings as well as a trading strategy post end of the lock-up period and...

Douglas Kim

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52-week Range

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