Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Bain+LY have come over the top of EQT+DG for <a href="https://www.smartkarma.com/entities/kakaku-com-inc" target="_blank" data-smartkarma-citation="entities:7408:1" rel="noopener">Kakaku.com (2371 JP)</a>. We may get another 5% out of this, but we're closer to the end than the beginning.</li>
<li>
<a href="https://www.smartkarma.com/entities/commonwealth-bank-of-australia" target="_blank" data-smartkarma-citation="entities:14:1" rel="noopener">Commonwealth Bank of Australia (CBA AU)</a> has knock <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto Ltd (RIO AU)</a> off its perch as the most shorted Aussie stock by $ value.</li>
<li>Murakami Group has, indeed, increased its stake in <a href="https://www.smartkarma.com/entities/yamada-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:641:1" rel="noopener">Yamada Holdings (9831 JP)</a>. They are now at 6.26%. They are not in it because Yamada is fairly-priced vs <a href="https://www.smartkarma.com/entities/edion-corp" target="_blank" data-smartkarma-citation="entities:14358:1" rel="noopener">Edion (2730 JP)</a>.</li>
</ul>


Bain+LY have come over the top of EQT+DG for Kakaku.com (2371 JP). We may get another 5% out of this, but we're closer to the end than the beginning.

Commonwealth Bank of Australia (CBA AU) has knock Rio Tinto Ltd (RIO AU) off its perch as the most shorted Aussie stock by $ value.
Murakami Group has, indeed, increased its stake in Yamada Holdings (9831 JP). They are now at 6.26%. They are not in it because Yamada is fairly-priced vs Edion (2730 JP).


Last Week In Event SPACE: Kakaku.com, Aussie Banks, Yamada, Muyuan Foods, IAG/Suncorp

<ul>
<li>On the 24th July, <a href="https://www.smartkarma.com/entities/sk-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:393:1" rel="noopener">SK Inc (034730 KS)</a> launched a voluntary public Tender Offer to acquire full control of ultra-fast EV charger play <a href="https://www.smartkarma.com/entities/sk-signet-inc" target="_blank" data-smartkarma-citation="entities:55377:1" rel="noopener">SK Signet (260870 KS)</a>.</li>
<li>SK Inc is offering ₩8,200/share, a 26.2% premium to undisturbed. SK Inc, which owns 74.9% of SK Signet, is making the Offer after SK Signet touched a multi-year low. </li>
<li>There is no minimum tendering condition. SK Inc is taking advantage of an illiquid KONEX stock, three years of losses, plus capital-impairment concerns. It is what it is.</li>
</ul>


On the 24th July, SK Inc (034730 KS) launched a voluntary public Tender Offer to acquire full control of ultra-fast EV charger play SK Signet (260870 KS).
SK Inc is offering ₩8,200/share, a 26.2% premium to undisturbed. SK Inc, which owns 74.9% of SK Signet, is making the Offer after SK Signet touched a multi-year low. 
There is no minimum tendering condition. SK Inc is taking advantage of an illiquid KONEX stock, three years of losses, plus capital-impairment concerns. It is what it is.


SK Signet (260870 KS): SK Inc (034730 KS)'s Low-Balled Offer

<ul>
<li>I tally 30 - mostly firm, mostly Asia-Pac - arb transactions currently being discussed and analysed on Smartkarma. Those arbs metrics and upcoming events are detailed below</li>
<li>Four new deal were discussed on Smartkarma this week: <a href="https://www.smartkarma.com/entities/ofx-group-ltd" target="_blank" data-smartkarma-citation="entities:8376:1" rel="noopener">OFX Group (OFX AU)</a>, <a href="https://www.smartkarma.com/entities/get-nice-holdings-limited" target="_blank" data-smartkarma-citation="entities:16415:1" rel="noopener">Get Nice (64 HK)</a>, <a href="https://www.smartkarma.com/entities/z-fin-limited" target="_blank" data-smartkarma-citation="entities:9999:1" rel="noopener">Z Fin (1168 HK)</a>, and <a href="https://www.smartkarma.com/entities/gabia-inc" target="_blank" data-smartkarma-citation="entities:13535:1" rel="noopener">Gabia Inc (079940 KS)</a>.</li>
<li>Key updates/news also took place on: <a href="https://www.smartkarma.com/entities/kakaku-com-inc" target="_blank" data-smartkarma-citation="entities:7408:1" rel="noopener">Kakaku.com Inc (2371 JP)</a>, <a href="https://www.smartkarma.com/entities/china-shengmu-organic-milk-ltd" target="_blank" data-smartkarma-citation="entities:12714:1" rel="noopener">China Shengmu Organic Milk (1432 HK)</a>, <a href="https://www.smartkarma.com/entities/ajinomoto-co-inc" target="_blank" data-smartkarma-citation="entities:8911:1" rel="noopener">Ajinomoto Co (2802 JP)</a>, and <a href="https://www.smartkarma.com/entities/changhong-jiahua-holdings-ltd" target="_blank" data-smartkarma-citation="entities:5849:1" rel="noopener">Changhong Jiahua (3991 HK)</a>.</li>
</ul>


I tally 30 - mostly firm, mostly Asia-Pac - arb transactions currently being discussed and analysed on Smartkarma. Those arbs metrics and upcoming events are detailed below
Four new deal were discussed on Smartkarma this week: OFX Group (OFX AU), Get Nice (64 HK), Z Fin (1168 HK), and Gabia Inc (079940 KS).
Key updates/news also took place on: Kakaku.com Inc (2371 JP), China Shengmu Organic Milk (1432 HK), Ajinomoto Co (2802 JP), and Changhong Jiahua (3991 HK).


Asia-Pac Weekly Wrap: Kakaku.com, OFX, Get Nice, Z Fin, Gabia Inc, China Shengmu, Ajinomoto

<ul>
<li>EQT/DG lifted their Offer Price for <a href="https://www.smartkarma.com/entities/kakaku-com-inc" target="_blank" data-smartkarma-citation="entities:7408:1" rel="noopener">Kakaku.com (2371 JP)</a> to ¥3,450/share. This "obstructs" the Bain/LY deal, slightly, temporarily, but there are nuances within. Expect Bain/LY to come over the top.</li>
<li>
<a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus NV (PRX NA)</a> is cheap"  vs. <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>. And <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> "rich" to Prosus. Look to long Prosus here, short Tencent here. Or long Prosus, short Naspers</li>
<li>Be comfortable medium-long-term with <a href="https://www.smartkarma.com/entities/mitsui-matsushima-co-ltd" target="_blank" data-smartkarma-citation="entities:13569:1" rel="noopener">Mitsui Matsushima (1518 JP)</a>'s super-cheap asset. And they have niche businesses in semiconductor/tech to spruce things up if people decide they want to run with it.</li>
</ul>


EQT/DG lifted their Offer Price for Kakaku.com (2371 JP) to ¥3,450/share. This "obstructs" the Bain/LY deal, slightly, temporarily, but there are nuances within. Expect Bain/LY to come over the top.

Prosus NV (PRX NA) is cheap"  vs. Tencent (700 HK). And Naspers (NPN SJ) "rich" to Prosus. Look to long Prosus here, short Tencent here. Or long Prosus, short Naspers
Be comfortable medium-long-term with Mitsui Matsushima (1518 JP)'s super-cheap asset. And they have niche businesses in semiconductor/tech to spruce things up if people decide they want to run with it.


Last Week In Event SPACE: Mitsui Matsushima, Prosus/Tencent/Naspers, Legend/Lenovo

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>Our valuation analysis of Koreacenter IPO suggests that this is a bad deal. As such, we would avoid participating in this IPO.</li>
<li>The comps are trading at average EV/EBITDA valuation multiples of 20.1x (2018) and 18.2x (2019E). This latter valuation multiple (18.2x) was derived using the peers' annualized EBITDA in 1H19. We then took our estimated EBITDA estimate of 28.3 billion won for Koreacenter in 2020 and applied the average EV/EBITDA multiple in 2018 (18.2x) which resulted in an implied EV of 517 billion won. This results in an implied market cap of 492 billion won, adjusting for net cash and an implied price per share of 19,166 won per share. The IPO valuation range for this deal is from 24,000 won to 27,200 won.
</li>
<li>In addition, it appears that the bankers are piling the Korean IPOs in 4Q19 with some other, potentially attractive IPOs such as Lotte REIT and Hanwha Systems and it appears that many institutional investors may opt to skip on the Koreacenter IPO and focus on other IPOs with more attractive valuations unless the bankers and the company lower the IPO price range of Koreacenter substantially. </li>
</ul>


Our valuation analysis of Koreacenter IPO suggests that this is a bad deal. As such, we would avoid participating in this IPO.
The comps are trading at average EV/EBITDA valuation multiples of 20.1x (2018) and 18.2x (2019E). This latter valuation multiple (18.2x) was derived using the peers' annualized EBITDA in 1H19. We then took our estimated EBITDA estimate of 28.3 billion won for Koreacenter in 2020 and applied the average EV/EBITDA multiple in 2018 (18.2x) which resulted in an implied EV of 517 billion won. This results in an implied market cap of 492 billion won, adjusting for net cash and an implied price per share of 19,166 won per share. The IPO valuation range for this deal is from 24,000 won to 27,200 won.

In addition, it appears that the bankers are piling the Korean IPOs in 4Q19 with some other, potentially attractive IPOs such as Lotte REIT and Hanwha Systems and it appears that many institutional investors may opt to skip on the Koreacenter IPO and focus on other IPOs with more attractive valuations unless the bankers and the company lower the IPO price range of Koreacenter substantially. 


South Korea

Gabia Inc. provides Internet domain registration services.  The Company offers customer support and services such as Web hosting, domain registration and management, and Web agency.  Gabia also provides solution for Internet shopping mall and e-learning business.

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Gabia Inc (079940 KS)

Last Week In Event SPACE: Kakaku.com, Aussie Banks, Yamada, Muyuan Foods, IAG/Suncorp

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

SK Signet (260870 KS): SK Inc (034730 KS)'s Low-Balled Offer

Trading at a 0.8%/112% gross/annualised spread, inclusive of a 0.35% tendering fee. If illiquid arbs are your bag, and not it, I might get exposure...

David Blennerhassett

Asia-Pac Weekly Wrap: Kakaku.com, OFX, Get Nice, Z Fin, Gabia Inc, China Shengmu, Ajinomoto

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Last Week In Event SPACE: Mitsui Matsushima, Prosus/Tencent/Naspers, Legend/Lenovo

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Koreacenter IPO Valuation Analysis

Our valuation analysis of Koreacenter IPO suggests that this is a bad deal. As such, we would avoid participating in this IPO. The comps are...

Douglas Kim

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