Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<ul>
<li>It was reported in numerous local media that Viva Republica has sent several RFPs to several large domestic securities companies to be underwriters of a potential IPO in 2024. </li>
<li>Viva Republica is one of the largest Korean fintech companies. Market value of Viva Republica is estimated at more than 9 trillion won.</li>
<li>E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing of Viva Republica. </li>
</ul>


It was reported in numerous local media that Viva Republica has sent several RFPs to several large domestic securities companies to be underwriters of a potential IPO in 2024. 
Viva Republica is one of the largest Korean fintech companies. Market value of Viva Republica is estimated at more than 9 trillion won.
E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing of Viva Republica. 


Key Beneficiaries of a Potential Viva Republica IPO in 2024

Equity Capital Markets

KMH Shilla Leisure Co Ltd / Equity Capital Markets

<ul>
<li>
<strong>To value KMH Shilla Leisure, we used three comps including <a href="https://www.smartkarma.com/entities/27513" target="_blank" data-smartkarma-citation="entities:27513:1">Yong Pyong Resort Co Ltd (070960 KS)</a>, <a href="https://www.smartkarma.com/entities/6409" target="_blank" data-smartkarma-citation="entities:6409:1">E World (084680 KS)</a>, and Ananti (025980 KS).</strong> KMH Shilla Leisure has a stronger balance sheet than its peers with a net debt to equity ratio of 6.3% at end of 1H18, versus its peers which had an average ratio of 45.7% at end of 1H18. KMH Shilla Leisure also generates higher ROE than its peers who had an average ROE of 2.6% in 2017 and 4.9% in 2018. </li>
<li>
<strong>What are the appropriate valuation multiples for the company? </strong>We believe that 1.1-1.3x P/B valuation multiples are appropriate for KMH Shilla Leisure. Our base case valuation multiple is 1.2x P/B, which is 20% discount to the average P/B of our comps analysis and 8% lower than the bankers' average valuation multiple. We estimate the company's base case equity (controlling interest) to be 215.3 billion won at end of 2018. Applying a P/B valuation of 1.2x would suggest a market cap of 258.3 billion won or 16,269 won per share. This would represent a 38% higher implied price than the high end of the IPO price range (11,800 won). As such, we would take this deal since it offers an attractive upside potential. </li>
<li>When <a href="https://www.smartkarma.com/entities/27563" target="_blank" data-smartkarma-citation="entities:27563:1">KMH Shilla Leisure Co Ltd (275720 KS)</a> completes its IPO next month, it will become the first "pure play" operator of public golf courses that will be listed on the Korean stock market. Following close behind KMH Shilla Leisure is another company called Namwha Industrial which is also trying to complete its IPO in November. We think that KMH Shilla Leisure will receive greater interests among investors than Namwha Industrial. The overall sales and profits of KMH Shilla Leisure are higher than those of Namwha Industrial. </li>
</ul>



To value KMH Shilla Leisure, we used three comps including Yong Pyong Resort Co Ltd (070960 KS), E World (084680 KS), and Ananti (025980 KS). KMH Shilla Leisure has a stronger balance sheet than its peers with a net debt to equity ratio of 6.3% at end of 1H18, versus its peers which had an average ratio of 45.7% at end of 1H18. KMH Shilla Leisure also generates higher ROE than its peers who had an average ROE of 2.6% in 2017 and 4.9% in 2018. 

What are the appropriate valuation multiples for the company? We believe that 1.1-1.3x P/B valuation multiples are appropriate for KMH Shilla Leisure. Our base case valuation multiple is 1.2x P/B, which is 20% discount to the average P/B of our comps analysis and 8% lower than the bankers' average valuation multiple. We estimate the company's base case equity (controlling interest) to be 215.3 billion won at end of 2018. Applying a P/B valuation of 1.2x would suggest a market cap of 258.3 billion won or 16,269 won per share. This would represent a 38% higher implied price than the high end of the IPO price range (11,800 won). As such, we would take this deal since it offers an attractive upside potential. 
When KMH Shilla Leisure Co Ltd (275720 KS) completes its IPO next month, it will become the first "pure play" operator of public golf courses that will be listed on the Korean stock market. Following close behind KMH Shilla Leisure is another company called Namwha Industrial which is also trying to complete its IPO in November. We think that KMH Shilla Leisure will receive greater interests among investors than Namwha Industrial. The overall sales and profits of KMH Shilla Leisure are higher than those of Namwha Industrial. 


KMH Shilla Leisure IPO Preview (Part 2) - Valuation Analysis

South Korea

E-World owns and operates an amusement park.  The Company's services include theme park rides, movie theaters, concerts, and restaurants.

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E World (084680 KS)

Key Beneficiaries of a Potential Viva Republica IPO in 2024

E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing...

Douglas Kim

KMH Shilla Leisure IPO Preview (Part 2) - Valuation Analysis

To value KMH Shilla Leisure, we used three comps including Yong Pyong Resort Co Ltd (070960 KS), E World (084680 KS), and Ananti (025980 KS). KMH...

Douglas Kim

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