Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

Amorepacific Corporation / Equity Bottom-Up

<ul>
<li>In this insight, we provide the major changes in NPS' stakes in 25 Korean companies in 3Q 2023.</li>
<li>In 3Q 2023, NPS reduced its stakes in the IT, construction, and contents related stocks. On the other hand, NPS increased its stakes in China's re-opening and cosmetics related stocks.</li>
<li>Five Korean cosmetics stocks that NPS net purchased in 3Q 2023 are up on average 12.8% from end of June 2023 to as of 6 October 2023. </li>
</ul>


In this insight, we provide the major changes in NPS' stakes in 25 Korean companies in 3Q 2023.
In 3Q 2023, NPS reduced its stakes in the IT, construction, and contents related stocks. On the other hand, NPS increased its stakes in China's re-opening and cosmetics related stocks.
Five Korean cosmetics stocks that NPS net purchased in 3Q 2023 are up on average 12.8% from end of June 2023 to as of 6 October 2023. 


<ul>
<li>In this insight, we discuss 10 small cap cosmetic stocks in Korea, which are up on average 26.6% YTD, outperforming KOSPI which is up 10.9% YTD. </li>
<li>The drivers of their strong share price performances include reopening after the COVID-19 pandemic and ending of nearly all pandemic related restrictions (including wearing of face masks).</li>
<li>Among the 10 companies, we would focus on the top five small cap cosmetics stocks with the highest growth in operating profit in 1Q 2023 including Cosmecca Korea and Clio.</li>
</ul>


In this insight, we discuss 10 small cap cosmetic stocks in Korea, which are up on average 26.6% YTD, outperforming KOSPI which is up 10.9% YTD. 
The drivers of their strong share price performances include reopening after the COVID-19 pandemic and ending of nearly all pandemic related restrictions (including wearing of face masks).
Among the 10 companies, we would focus on the top five small cap cosmetics stocks with the highest growth in operating profit in 1Q 2023 including Cosmecca Korea and Clio.


Focus on 5 Korean Small Cap, Cosmetics Stocks With Significant Growth in Operating Profit in 1Q 2023

Equity Capital Markets

<ul>
<li>Our base case valuation of Manyo Factory is target price of 29,555 won per share, which represents 111% higher than the high end of the IPO price range.</li>
<li>We estimate the company to generate sales of 147.7 billion won in 2023 (up 45.1% YoY) and its operating margins to improve from 24.1% in 2022 to 24.7% in 2023. </li>
<li>We believe a 20% premium valuation multiple to the comps is appropriate due to its higher sales growth rate, higher operating margins, and higher ROE than the comps.</li>
</ul>


Our base case valuation of Manyo Factory is target price of 29,555 won per share, which represents 111% higher than the high end of the IPO price range.
We estimate the company to generate sales of 147.7 billion won in 2023 (up 45.1% YoY) and its operating margins to improve from 24.1% in 2022 to 24.7% in 2023. 
We believe a 20% premium valuation multiple to the comps is appropriate due to its higher sales growth rate, higher operating margins, and higher ROE than the comps.


<ul>
<li>Manyo Factory is well known for its functional skin care products made from naural ingredients. Its products have been enjoying excellent sales in Japan and Korea.</li>
<li>Given the company's superior sales growth and operating margins than its peers combined with the large IPO discount, there is likely to be a strong interest in Manyo Factory IPO. </li>
<li>Unlike other major Korean cosmetic companies with poor sales and operating profit in the past three years, Manyo Factory experienced excellent growth of its sales and profits in this period. </li>
</ul>


Manyo Factory is well known for its functional skin care products made from naural ingredients. Its products have been enjoying excellent sales in Japan and Korea.
Given the company's superior sales growth and operating margins than its peers combined with the large IPO discount, there is likely to be a strong interest in Manyo Factory IPO. 
Unlike other major Korean cosmetic companies with poor sales and operating profit in the past three years, Manyo Factory experienced excellent growth of its sales and profits in this period. 


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The KRX has announced the list of inclusions and exclusions to the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> today. The rebalance is effective after the close of trading on 10 June.</p><p>There are 16 inclusions into and exclusions from the index at the June review with an estimated one-way turnover of 7.04%.</p><table class="table table-striped">
<colgroup>
<col>
<col>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td colspan="2" style="text-align: center; width: 233pt;"><h3>Inclusions</h3></td>
<td colspan="2" style="text-align: center; width: 242pt;"><h3>Exclusions</h3></td>
</tr>
<tr>
<td><strong>Code</strong></td>
<td><strong>Name</strong></td>
<td><strong>Code</strong></td>
<td><strong>Name</strong></td>
</tr>
<tr>
<td>015750.KQ</td>
<td>Sungwoo Hitech Co Ltd</td>
<td>018290.KQ</td>
<td>VT GMP Co Ltd</td>
</tr>
<tr>
<td>018000.KQ</td>
<td>Unison Co Ltd</td>
<td>034950.KQ</td>
<td>Korea Ratings Corp</td>
</tr>
<tr>
<td>027360.KQ</td>
<td>AJu IB Investment Co Ltd</td>
<td>035810.KQ</td>
<td>Easy Holdings Co Ltd</td>
</tr>
<tr>
<td>036810.KQ</td>
<td>Fine Semitech Corp</td>
<td>052020.KQ</td>
<td>STCube Inc</td>
</tr>
<tr>
<td>041190.KQ</td>
<td>Woori Technology Investment Co Ltd</td>
<td>052260.KQ</td>
<td>Hyundai BioLand Co Ltd</td>
</tr>
<tr>
<td>053030.KQ</td>
<td>Binex Co Ltd</td>
<td>060570.KQ</td>
<td>Dream Us Co</td>
</tr>
<tr>
<td>082270.KQ</td>
<td>GemVax &amp; KAEL Co Ltd</td>
<td>065660.KQ</td>
<td>Anterogen Co Ltd</td>
</tr>
<tr>
<td>100090.KQ</td>
<td>Samkang M&amp;T Co Ltd</td>
<td>082920.KQ</td>
<td>Vitzrocell Co Ltd</td>
</tr>
<tr>
<td>131290.KQ</td>
<td>TSE Co Ltd</td>
<td>092730.KQ</td>
<td>NeoPharm Co Ltd</td>
</tr>
<tr>
<td>131970.KQ</td>
<td>Tesna Inc</td>
<td>143240.KQ</td>
<td>Saramin HR Co Ltd</td>
</tr>
<tr>
<td>140860.KQ</td>
<td>Park Systems Corp</td>
<td>194700.KQ</td>
<td>Novarex Co Ltd</td>
</tr>
<tr>
<td>166090.KQ</td>
<td>Hana Materials Inc</td>
<td>214370.KQ</td>
<td>Caregen Co Ltd</td>
</tr>
<tr>
<td>175250.KQ</td>
<td>Icure Pharmaceutical Inc</td>
<td>215000.KQ</td>
<td>Golfzon Co Ltd</td>
</tr>
<tr>
<td>194480.KQ</td>
<td>Devsisters Corp</td>
<td>237880.KQ</td>
<td>Clio Cosmetics Co Ltd</td>
</tr>
<tr>
<td>222800.KQ</td>
<td>Simmtech Co Ltd</td>
<td>239610.KQ</td>
<td>HL Science Co Ltd</td>
</tr>
<tr>
<td>323990.KQ</td>
<td>Vaxcell Bio Therapeutics</td>
<td>243840.KQ</td>
<td>Shin Heung Energy &amp; Electronics Co Ltd</td>
</tr>
</tbody>
</table><p>There are 12 trading days to implementation of the changes and there are a lot of additions and deletions that have over 2 days of ADV to trade. There will be a lot of action in the next few days on the names with higher ADV to trade.</p><p>With short selling limited to the constituents 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 (KOSDQ150 INDEX)</a>, shorting the inclusions will be tough while selling/shorting the deletions is a lot easier since they are current index constituents. The inclusions could outperform the deletions till a couple of days before implementation date, while there could be a high risk/reward reverse trade if the outperformance is significant.</p>

The KRX has announced the list of inclusions and exclusions to the KOSDAQ 150 Index (KOSDQ150 INDEX) today. The rebalance is effective after the close of trading on 10 June.There are 16 inclusions into and exclusions from the index at the June review with an estimated one-way turnover of 7.04%.








Inclusions
Exclusions


Code
Name
Code
Name


015750.KQ
Sungwoo Hitech Co Ltd
018290.KQ
VT GMP Co Ltd


018000.KQ
Unison Co Ltd
034950.KQ
Korea Ratings Corp


027360.KQ
AJu IB Investment Co Ltd
035810.KQ
Easy Holdings Co Ltd


036810.KQ
Fine Semitech Corp
052020.KQ
STCube Inc


041190.KQ
Woori Technology Investment Co Ltd
052260.KQ
Hyundai BioLand Co Ltd


053030.KQ
Binex Co Ltd
060570.KQ
Dream Us Co


082270.KQ
GemVax &amp; KAEL Co Ltd
065660.KQ
Anterogen Co Ltd


100090.KQ
Samkang M&amp;T Co Ltd
082920.KQ
Vitzrocell Co Ltd


131290.KQ
TSE Co Ltd
092730.KQ
NeoPharm Co Ltd


131970.KQ
Tesna Inc
143240.KQ
Saramin HR Co Ltd


140860.KQ
Park Systems Corp
194700.KQ
Novarex Co Ltd


166090.KQ
Hana Materials Inc
214370.KQ
Caregen Co Ltd


175250.KQ
Icure Pharmaceutical Inc
215000.KQ
Golfzon Co Ltd


194480.KQ
Devsisters Corp
237880.KQ
Clio Cosmetics Co Ltd


222800.KQ
Simmtech Co Ltd
239610.KQ
HL Science Co Ltd


323990.KQ
Vaxcell Bio Therapeutics
243840.KQ
Shin Heung Energy &amp; Electronics Co Ltd


There are 12 trading days to implementation of the changes and there are a lot of additions and deletions that have over 2 days of ADV to trade. There will be a lot of action in the next few days on the names with higher ADV to trade.With short selling limited to the constituents of the KOSDAQ 150 Index (KOSDQ150 INDEX), shorting the inclusions will be tough while selling/shorting the deletions is a lot easier since they are current index constituents. The inclusions could outperform the deletions till a couple of days before implementation date, while there could be a high risk/reward reverse trade if the outperformance is significant.

KOSDAQ150 Index Rebalance: 16 Changes & Large Turnover

South Korea

Clio Cosmetics Co., Ltd. manufactures and markets lines of skin care and make-up products.  The Company owns multiple brands including Club Clio Professional, Peripera, and Goodal.

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Clio Cosmetics (237880 KS)

What Did NPS Buy and Sell in 3Q 2023?

In this insight, we provide the major changes in NPS' stakes in 25 Korean companies in 3Q 2023. In 3Q 2023, NPS reduced its stakes in the IT,...

Douglas Kim

Focus on 5 Korean Small Cap, Cosmetics Stocks With Significant Growth in Operating Profit in 1Q 2023

We would focus on the top five Korean small cap cosmetics stocks with the highest growth in operating profit in 1Q 2023 including Cosmecca Korea...

Douglas Kim

Manyo Factory IPO Valuation Analysis

Our base case valuation of Manyo Factory is target price of 29,555 won per share, which represents 111% higher than the high end of the IPO price...

Douglas Kim

Manyo Factory IPO Preview

Given the company's superior sales growth and operating margins than its peers combined with the large IPO discount, there is likely to be a strong...

Douglas Kim

KOSDAQ150 Index Rebalance: 16 Changes & Large Turnover

There are 16 changes to the KOSDAQ150 index resulting in a one-way turnover of 7.04%. The impact on the exclusions is a lot higher than on the...

Brian Freitas

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