Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>APR announced it will delay its IPO. Now, APR's book building has been postponed to 2 to 8 February. The IPO price range remains the same.</li>
<li>The company has provided updated preliminary sales and operating profits for 2023 in the revised IPO prospectus. Revenue was a bit light but OP was better than expected in 4Q23.</li>
<li>Our base case valuation of APR is 370,809 won per share which represents an 85% upside from the high end of the bankers' valuation range (200,000 won).</li>
</ul>


APR announced it will delay its IPO. Now, APR's book building has been postponed to 2 to 8 February. The IPO price range remains the same.
The company has provided updated preliminary sales and operating profits for 2023 in the revised IPO prospectus. Revenue was a bit light but OP was better than expected in 4Q23.
Our base case valuation of APR is 370,809 won per share which represents an 85% upside from the high end of the bankers' valuation range (200,000 won).


<ul>
<li>Our base case valuation of APR is implied price of 370,809 won per share, representing an 85% upside from the high end of the bankers' valuation range. </li>
<li>We estimate APR to generate sales of 683.9 billion won (up 25.7% YoY) and operating profit of 114.6 billion won (up 39.5% YoY) in 2024. </li>
<li>APR is one of the best IPOs in the Korean cosmetics sector in the past several years.</li>
</ul>


Our base case valuation of APR is implied price of 370,809 won per share, representing an 85% upside from the high end of the bankers' valuation range. 
We estimate APR to generate sales of 683.9 billion won (up 25.7% YoY) and operating profit of 114.6 billion won (up 39.5% YoY) in 2024. 
APR is one of the best IPOs in the Korean cosmetics sector in the past several years.


Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Event-Driven

<ul>
<li>Considering the progress of the legislative process at this juncture, the effective date could be as early as the end of this year or, at the latest, early next year.</li>
<li>
<strong><a href="https://www.smartkarma.com/entities/ilooda-co-ltd" target="_blank" data-smartkarma-citation="entities:40136:1" rel="noopener">Ilooda (164060 KS)</a></strong> will likely become the first case. A tender offer at ₩11,000 (a 30% premium to the current price) per share for 14%+1 share may greet us.</li>
<li>There is sufficient value in monitoring the interaction between the offer structure and stock price movement in the context of the first application of a mandatory tender offer in Korea.</li>
</ul>


Considering the progress of the legislative process at this juncture, the effective date could be as early as the end of this year or, at the latest, early next year.

Ilooda (164060 KS) will likely become the first case. A tender offer at ₩11,000 (a 30% premium to the current price) per share for 14%+1 share may greet us.
There is sufficient value in monitoring the interaction between the offer structure and stock price movement in the context of the first application of a mandatory tender offer in Korea.


Latest Development & Potential First Target of Mandatory Tender Offer in Korea

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

<ul>
<li>Following the two tender offers, Han &amp; Co now holds more than 90% of the common shares in <a href="https://www.smartkarma.com/entities/lutronic-corp" target="_blank" data-smartkarma-citation="entities:2250:1" rel="noopener">Lutronic Corp (085370 KS)</a> and is looking to buy the remaining shares.</li>
<li>
<a href="https://www.smartkarma.com/entities/lutronic-corp" target="_blank" data-smartkarma-citation="entities:2250:1" rel="noopener">Lutronic Corp (085370 KS)</a> is a member of the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index</a> and delisting would mean an index replacement. <a href="https://www.smartkarma.com/entities/value-added-technologies" target="_blank" data-smartkarma-citation="entities:9946:1" rel="noopener">Value Added Technologies (043150 KS)</a> is a potential inclusion.</li>
<li>
<a href="https://www.smartkarma.com/entities/value-added-technologies" target="_blank" data-smartkarma-citation="entities:9946:1" rel="noopener">Value Added Technologies (043150 KS)</a> has underperformed its peers and trades cheaper on nearly all valuation parameters.</li>
</ul>


Following the two tender offers, Han &amp; Co now holds more than 90% of the common shares in Lutronic Corp (085370 KS) and is looking to buy the remaining shares.

Lutronic Corp (085370 KS) is a member of the KOSDAQ 150 Index and delisting would mean an index replacement. Value Added Technologies (043150 KS) is a potential inclusion.

Value Added Technologies (043150 KS) has underperformed its peers and trades cheaper on nearly all valuation parameters.


KOSDAQ150 Ad Hoc Index Rebalance Preview: VAT Could Replace Lutronic

<ul>
<li>NPS has expressed concerns about the wide risk range of the KOSDAQ 150 index, and there has been speculation about whether they will take advantage of the KOSDAQ Global Index.</li>
<li>The launch of these ETFs should be closely watched as it could potentially be a turning point in the investment patterns of local pension funds in KOSDAQ.</li>
<li>It may be worth considering the constituents included in this index where the NPS ownership stake does not reach 5%.</li>
</ul>


NPS has expressed concerns about the wide risk range of the KOSDAQ 150 index, and there has been speculation about whether they will take advantage of the KOSDAQ Global Index.
The launch of these ETFs should be closely watched as it could potentially be a turning point in the investment patterns of local pension funds in KOSDAQ.
It may be worth considering the constituents included in this index where the NPS ownership stake does not reach 5%.


Potential Changes to NPS's KOSDAQ Benchmark with the Launch of KOSDAQ Global Index ETFs

South Korea

Classys Inc. operates as a medical equipment manufacturing company. The Company develops and sells non surgical painless fat reduction instruments, fat freezing fat reduction instruments, and other products. Classys markets its products worldwide.

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Classys (214150 KS)

Why Is APR IPO Getting Delayed?

APR announced it will delay its IPO. Its book building has been postponed to 2 to 8 February. The IPO price range is the same. The company has...

Douglas Kim

APR IPO Valuation Analysis

Our base case valuation of APR is implied price of 370,809 won per share, representing an 85% upside from the high end of the bankers' valuation...

Douglas Kim

Latest Development & Potential First Target of Mandatory Tender Offer in Korea

This post offers an update on the progress made in legalizing the proposed mandatory tender offer in Korea and discovers the potential first target...

Sanghyun Park

KOSDAQ150 Ad Hoc Index Rebalance Preview: VAT Could Replace Lutronic

HanCo holds over 90% of the shares in Lutronic. if Lutronic is delisted, Value Added Tech could be added to the KOSDAQ150 Index. Value Added Tech...

Brian Freitas

Potential Changes to NPS's KOSDAQ Benchmark with the Launch of KOSDAQ Global Index ETFs

This post investigates the possibility of changes to NPS's benchmark for KOSDAQ investments due to the launch of KOSDAQ Global Index ETFs.

Sanghyun Park

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