Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. </li>
<li>CJ ENM's valuations are much more attractive and offer higher value as compared to HYBE. CJ ENM shares are trading at EV/EBITDA of 2.7x versus 10.9x for HYBE in 2023. </li>
<li>The Korean government is likely to require BTS members to conscript for military service which is likely to lead to sharp decline in earnings estimates for HYBE.</li>
</ul>


In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. 
CJ ENM's valuations are much more attractive and offer higher value as compared to HYBE. CJ ENM shares are trading at EV/EBITDA of 2.7x versus 10.9x for HYBE in 2023. 
The Korean government is likely to require BTS members to conscript for military service which is likely to lead to sharp decline in earnings estimates for HYBE.


Korea Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)

<ul>
<li>CJ Cheiljedang (097950 KS) reported better than expected earnings in 1Q 2022 and we continue to have a POSITIVE view of this stock.</li>
<li>Bio business sales increased by 39.3% YoY to 1.08 trillion won and operating profit jumped by 128% YoY 175.8 billion won in 1Q 2022, driven by strong demand for lysine. </li>
<li>We also like a pair trade between CJ Cheiljedang and CJ Logistics at current prices. We recommend on going long on CJ Cheiljedang and going short on CJ Logistics.</li>
</ul>


CJ Cheiljedang (097950 KS) reported better than expected earnings in 1Q 2022 and we continue to have a POSITIVE view of this stock.
Bio business sales increased by 39.3% YoY to 1.08 trillion won and operating profit jumped by 128% YoY 175.8 billion won in 1Q 2022, driven by strong demand for lysine. 
We also like a pair trade between CJ Cheiljedang and CJ Logistics at current prices. We recommend on going long on CJ Cheiljedang and going short on CJ Logistics.


A Pair Trade Between CJ Cheiljedang and CJ Logistics

<ul>
<li>CJ Logistics, the largest logistics company in Korea, is facing four major headwinds which are likely to result in further downside risk for the stock in the next 6-12 months.</li>
<li>The four major headwinds include greater competition from Coupang (CPNG US), lower e-commerce demand (parcel delivery), higher fuel prices, and higher interest rates.</li>
<li>Amid the four major challenges, we believe the consensus earnings estimates are overly aggressive and they are likely to be revised down further in the next several months. </li>
</ul>


CJ Logistics, the largest logistics company in Korea, is facing four major headwinds which are likely to result in further downside risk for the stock in the next 6-12 months.
The four major headwinds include greater competition from Coupang (CPNG US), lower e-commerce demand (parcel delivery), higher fuel prices, and higher interest rates.
Amid the four major challenges, we believe the consensus earnings estimates are overly aggressive and they are likely to be revised down further in the next several months. 


CJ Logistics: Four Major Headwinds Suggests Further Downside Risk

<ul>
<li>On 19 April, the US CDC stated that the national mask requirement on public transportation is no longer in effect in the United States.</li>
<li><strong>The CDC lifting the mask mandate is a key catalyst and other major countries are likely to follow the US in the coming months. </strong></li>
<li><em>Will the world likely to become more like Shanghai and enforce even greater lockdown policies or will they become more like the US and drop social distancing and mask mandates?  </em></li>
</ul>


On 19 April, the US CDC stated that the national mask requirement on public transportation is no longer in effect in the United States.
The CDC lifting the mask mandate is a key catalyst and other major countries are likely to follow the US in the coming months. 
Will the world likely to become more like Shanghai and enforce even greater lockdown policies or will they become more like the US and drop social distancing and mask mandates?  


CDC Ends Public Transportation Mask Mandate & Will the World Follow Shanghai or Vice Versa?

Equity Capital Markets

<ul>
<li>CJ Olive Young is the number one health and beauty (H&amp;B) store chain in Korea. CJ Olive Young is well positioned to complete its IPO in 2H 2022.</li>
<li>The local media have noted that CJ Olive Young's market value could reach 3.5 trillion won to 4.0 trillion won after the IPO.</li>
<li>If CJ Olive Young is valued at 3.5 trillion won, CJ Corp's 51.1% stake would be 1.8 trillion won, which would be worth 71% of CJ Corp's current market cap. </li>
</ul>


CJ Olive Young is the number one health and beauty (H&amp;B) store chain in Korea. CJ Olive Young is well positioned to complete its IPO in 2H 2022.
The local media have noted that CJ Olive Young's market value could reach 3.5 trillion won to 4.0 trillion won after the IPO.
If CJ Olive Young is valued at 3.5 trillion won, CJ Corp's 51.1% stake would be 1.8 trillion won, which would be worth 71% of CJ Corp's current market cap. 


CJ Olive Young: Well Positioned to Complete IPO in 2H 2022 After Solid Results in 2021

South Korea

CJ Corp. is an investment holding company.  The Company, through its subsidiaries, manufactures processed food products.  The subsidiaries' products include refined sugar, monosodium glutamate (MSG), condiment, wheat powder, flour, cooking oil, processed meats, and animal feed.

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CJ Corp (001040 KS)

Korea Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)

In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. CJ ENM's valuations are much more attractive and offer...

Douglas Kim

A Pair Trade Between CJ Cheiljedang and CJ Logistics

CJ Cheiljedang reported better than expected earnings in 1Q 2022. We recommend going long CJ Cheiljedang and going short on CJ Logistics.

Douglas Kim

CJ Logistics: Four Major Headwinds Suggests Further Downside Risk

CJ Logistics faces four major headwinds including greater competition from Coupang (CPNG US), lower e-commerce demand (parcel delivery), higher...

Douglas Kim

CDC Ends Public Transportation Mask Mandate & Will the World Follow Shanghai or Vice Versa?

The CDC lifting the mask mandate is a key catalyst and other major countries are likely to follow the US in the coming months.

Douglas Kim

CJ Olive Young: Well Positioned to Complete IPO in 2H 2022 After Solid Results in 2021

CJ Olive Young is the number one health and beauty (H&B) store chain in Korea. After excellent results in 2021, CJ Olive Young is well positioned...

Douglas Kim

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