Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

The top 10 events impacting the Korean stock market, economy, &amp; politics in February 2020 were as follows:1) COVID-19 2) M&amp;A FIGHT FOR HANJIN KAL3) 30% CAP RULE FOR SAMSUNG ELECTRONICS/KOSPI 2004) LOTTE SHOPPING RESTRUCTURING 5) DOOSAN HEAVY INDUSTRIES RESTRUCTURING 6) OCI DISCONTINUES SOLAR POLYSILICON PRODUCTION IN KOREA 7) LEMON IPO<a href="https://www.smartkarma.com/insights/trading-strategy-for-lemon-ipo-post-pricing" target="_blank" data-smartkarma-citation="insights:36767" rel="noopener"></a>8) STRONG OUTPERFORMANCE OF EV RECHARGEABLE BATTERY RELATED COMPANIES9) JNTC IPO Demand<a href="https://www.smartkarma.com/insights/trading-strategy-for-jntc-ipo-post-pricing" target="_blank" data-smartkarma-citation="insights:36844" rel="noopener"></a>10) SURGE IN E-COMMERCE DUE TO CORONAVIRUS<div class="content-highlight">Our model portfolio was up 0.7% on a net basis in February 2020 (cash was 60% of our model portfolio), outperforming KOSPI which was down 6.2% in the same period. We are increasing cash to 70% of the total model portfolio starting in March so we are very defensive in our portfolio. </div>

The top 10 events impacting the Korean stock market, economy, &amp; politics in February 2020 were as follows:1) COVID-19 2) M&amp;A FIGHT FOR HANJIN KAL3) 30% CAP RULE FOR SAMSUNG ELECTRONICS/KOSPI 2004) LOTTE SHOPPING RESTRUCTURING 5) DOOSAN HEAVY INDUSTRIES RESTRUCTURING 6) OCI DISCONTINUES SOLAR POLYSILICON PRODUCTION IN KOREA 7) LEMON IPO8) STRONG OUTPERFORMANCE OF EV RECHARGEABLE BATTERY RELATED COMPANIES9) JNTC IPO Demand10) SURGE IN E-COMMERCE DUE TO CORONAVIRUSOur model portfolio was up 0.7% on a net basis in February 2020 (cash was 60% of our model portfolio), outperforming KOSPI which was down 6.2% in the same period. We are increasing cash to 70% of the total model portfolio starting in March so we are very defensive in our portfolio. 

Korea Stock Market Monthly Recap #45 (February 2020)

Equity Bottom-Up

<div class="content-highlight">
Flitto is a leading AI-driven big data and translation services provider in Korea. It completed its IPO in the Korean stock market on July 17th. The current price of Flitto is 22,000 won, which is 15% below the IPO price of 26,000 won.
We believe that Flitto has an outstanding, long-term promising potential with a deep, competitive moat. Therefore, we are including Flitto in our model portfolio.  We also believe that this is an attractive take-out candidate by Naver, Kakao, and even tech giants such as Google. 
</div>We believe Flitto will be a very attractive stock over the next one to three years. Although forecasting a company such as Flitto which is experiencing an explosive growth in sales is difficult, if we make an assumption of the company's sales growing 73.3% CAGR from 2019 to 2024, this would suggest sales of 93 billion won. If we also assume a 20% operating margin in 2024, this would represent an operating profit of 18.6 billion won in 2024. If we assume a P/S multiple of 4x using our estimated sales of 93 billion won in 2024, this would suggest an implied market cap of 372 billion won. Taking the present value using a 15% annual discount rate suggests the current value of 185 billion won (35,700 won per share), which is 61% higher than the current market cap.


Flitto is a leading AI-driven big data and translation services provider in Korea. It completed its IPO in the Korean stock market on July 17th. The current price of Flitto is 22,000 won, which is 15% below the IPO price of 26,000 won.
We believe that Flitto has an outstanding, long-term promising potential with a deep, competitive moat. Therefore, we are including Flitto in our model portfolio.  We also believe that this is an attractive take-out candidate by Naver, Kakao, and even tech giants such as Google. 
We believe Flitto will be a very attractive stock over the next one to three years. Although forecasting a company such as Flitto which is experiencing an explosive growth in sales is difficult, if we make an assumption of the company's sales growing 73.3% CAGR from 2019 to 2024, this would suggest sales of 93 billion won. If we also assume a 20% operating margin in 2024, this would represent an operating profit of 18.6 billion won in 2024. If we assume a P/S multiple of 4x using our estimated sales of 93 billion won in 2024, this would suggest an implied market cap of 372 billion won. Taking the present value using a 15% annual discount rate suggests the current value of 185 billion won (35,700 won per share), which is 61% higher than the current market cap.

Flitto: AI-Driven, Big Data Langugage & Translation Services

South Korea

Flitto Inc. provides internet based services. The Company collects and sells language data to national research institutes. Flitto offers services throughout South Korea.

Flitto Inc. (300080 KS)

Korea Stock Market Monthly Recap #45 (February 2020)

The top 10 events impacting the Korean stock market, economy, & politics in February 2020 were as follows:1) COVID-19 2) M&A FIGHT FOR...

Douglas Kim

Flitto: AI-Driven, Big Data Langugage & Translation Services

Flitto is a leading AI-driven big data and translation services provider in Korea. It completed its IPO in the Korean stock market on July 17th....

Douglas Kim