Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p>Our base case valuation of Iljin Hysolus is implied market cap of 817.6 billion won or 22,517 won per share. This represents 26% lower than the low end of the IPO price range of 30,300 won. Given the lower target price versus the IPO price range, we would AVOID this deal. </p><div><p>Established in 2012, Iljin Hysolus is a hydrogen mobility-related parts company that provides hydrogen fuel tanks and modules based on hydrogen storage technology. The company supplied hydrogen fuel tanks for the first time in the industry to the Tucson hydrogen electric vehicle, which Hyundai Motors successfully commercialized in 2014. Since then, it has been supplying hydrogen fuel tanks to hydrogen fuel cell vehicles (FCEV) 'Nexo' and hydrogen buses. </p></div>

Our base case valuation of Iljin Hysolus is implied market cap of 817.6 billion won or 22,517 won per share. This represents 26% lower than the low end of the IPO price range of 30,300 won. Given the lower target price versus the IPO price range, we would AVOID this deal. Established in 2012, Iljin Hysolus is a hydrogen mobility-related parts company that provides hydrogen fuel tanks and modules based on hydrogen storage technology. The company supplied hydrogen fuel tanks for the first time in the industry to the Tucson hydrogen electric vehicle, which Hyundai Motors successfully commercialized in 2014. Since then, it has been supplying hydrogen fuel tanks to hydrogen fuel cell vehicles (FCEV) 'Nexo' and hydrogen buses. 

<p>Iljin Hysolus is getting ready to complete its IPO in Korea in August. Iljin Hysolus is a company specializing in eco-friendly hydrogen fuel storage solutions of the Iljin Group. The company is offering 10.89 million shares, of which 7.26 million is for new shares and 3.63 million is for the old shares. </p><p>The IPO price range is from 30,300 won to 37,300 won. The IPO base deal size is from $289 million to $356 million. According to the bankers' valuation, the expected market cap of the company is from 1.1 trillion won to 1.35 trillion won. The book building for the institutional investors starts on August 8th. Mirae Asset Securities and Samsung Securites are the lead bankers on this deal. </p><table class="table table-striped">
<colgroup>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="width: 240pt;"><div><strong>Deal Specifics of the Iljin Hysolus IPO:</strong></div></td>
<td style="width: 238pt;"> </td>
</tr>
<tr>
<td>Lead underwriters of the IPO: </td>
<td style="width: 238pt;">Mirae Asset Securities, Samsung Securities</td>
</tr>
<tr>
<td><strong>Expected IPO price per share: </strong></td>
<td style="width: 238pt;"><strong>30,300 won (low)/37,300 won (high)</strong></td>
</tr>
<tr>
<td>Number of Shares for IPO:</td>
<td style="width: 238pt;">10.89m shares (7.26m new shares and 3.63m old shares)</td>
</tr>
<tr>
<td>IPO base deal size: </td>
<td style="width: 238pt;">US$289 mn (low);  US$356 mn (high)</td>
</tr>
<tr>
<td>Expected common shares outstanding, fully diluted (post-IPO):  </td>
<td style="width: 238pt;">36.31m shares</td>
</tr>
<tr>
<td><strong>Expected market cap after IPO:</strong></td>
<td style="width: 238pt;"><strong>1,100 billion won (low)/1,354 billion won (high)</strong></td>
</tr>
<tr>
<td>Book open: </td>
<td style="text-align: left; width: 238pt;">8-Aug-21</td>
</tr>
<tr>
<td>Book closed:</td>
<td style="text-align: left; width: 238pt;">9-Aug-21</td>
</tr>
<tr>
<td>Listing date: </td>
<td style="text-align: left; width: 238pt;">TBD</td>
</tr>
<tr>
<td>Source: Company data</td>
<td style="width: 238pt;"> </td>
</tr>
</tbody>
</table>

Iljin Hysolus is getting ready to complete its IPO in Korea in August. Iljin Hysolus is a company specializing in eco-friendly hydrogen fuel storage solutions of the Iljin Group. The company is offering 10.89 million shares, of which 7.26 million is for new shares and 3.63 million is for the old shares. The IPO price range is from 30,300 won to 37,300 won. The IPO base deal size is from $289 million to $356 million. According to the bankers' valuation, the expected market cap of the company is from 1.1 trillion won to 1.35 trillion won. The book building for the institutional investors starts on August 8th. Mirae Asset Securities and Samsung Securites are the lead bankers on this deal. 






Deal Specifics of the Iljin Hysolus IPO:
 


Lead underwriters of the IPO: 
Mirae Asset Securities, Samsung Securities


Expected IPO price per share: 
30,300 won (low)/37,300 won (high)


Number of Shares for IPO:
10.89m shares (7.26m new shares and 3.63m old shares)


IPO base deal size: 
US$289 mn (low);  US$356 mn (high)


Expected common shares outstanding, fully diluted (post-IPO):  
36.31m shares


Expected market cap after IPO:
1,100 billion won (low)/1,354 billion won (high)


Book open: 
8-Aug-21


Book closed:
9-Aug-21


Listing date: 
TBD


Source: Company data
 




Event-Driven

<p>It was reported after the market close today that <a href="https://finance.naver.com/item/news_read.nhn?article_id=0004593532&amp;office_id=008&amp;code=003920&amp;page=&amp;sm=title_entity_id.basic" target="_blank" rel="noopener">Hahn &amp; Co</a> (a large private equity firm in Korea) has acquired the controlling stake of <a href="https://www.smartkarma.com/entities/namyang-dairy-products-co" target="_blank" data-smartkarma-citation="entities:16249:1" rel="noopener">Namyang Dairy Products Co (003920 KS) </a>from the founder and related parties. Hahn &amp; Co paid 310.7 billion won for a 52.63% (0.379 million shares) of Namyang Dairy, which currently has a market cap of 316 billion won. Prior to the sale, Namyang Dairy Chairman Hong Won-Sik had a 51.68% stake in the company. </p><div class="content-highlight">
<p><strong>Over the next 2-3 years, we believe Namyang Dairy Products' shares could rise nearly 100%+ from current levels, which would suggest market cap of 632 billion won or 878,000 won. This represents a P/B multiple of 0.7x, which is at the high end of the P/B multiple for the company in the past four years. </strong></p>
<p><strong>With Hahn &amp; Co getting rid of the bad corporate governance problems and infusing the company with better professional managers, we believe Namyang Dairy Products could be an excellent turn-around story and the valuation multiples could rise to the historical high levels. </strong></p>
</div>

It was reported after the market close today that Hahn &amp; Co (a large private equity firm in Korea) has acquired the controlling stake of Namyang Dairy Products Co (003920 KS) from the founder and related parties. Hahn &amp; Co paid 310.7 billion won for a 52.63% (0.379 million shares) of Namyang Dairy, which currently has a market cap of 316 billion won. Prior to the sale, Namyang Dairy Chairman Hong Won-Sik had a 51.68% stake in the company. 
Over the next 2-3 years, we believe Namyang Dairy Products' shares could rise nearly 100%+ from current levels, which would suggest market cap of 632 billion won or 878,000 won. This represents a P/B multiple of 0.7x, which is at the high end of the P/B multiple for the company in the past four years. 
With Hahn &amp; Co getting rid of the bad corporate governance problems and infusing the company with better professional managers, we believe Namyang Dairy Products could be an excellent turn-around story and the valuation multiples could rise to the historical high levels. 


Korea Small Cap Gem #9: Namyang Dairy Products - Chairman Sells & Minority Shareholders Cheer

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<p>Short selling has finally resumed in Korea and it has been a busy couple of days on that front with foreign investors piling into stocks that have run up more than their peers over the last year and are potentially overvalued.</p><p>Long/short pairs could be implemented in Korea during the short sell ban if you had long inventory or if there were listed single stock futures on the short leg.</p><p>With short selling permitted on constituents of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a>, we take a look at long/short pairs where both stocks are members of the index. These pairs belong to the same GICS sub-industry, are correlated and exhibit mean-reversion. We also use short sale data from the last couple of trading sessions to see which stocks are being targeted by short sellers.</p>

Short selling has finally resumed in Korea and it has been a busy couple of days on that front with foreign investors piling into stocks that have run up more than their peers over the last year and are potentially overvalued.Long/short pairs could be implemented in Korea during the short sell ban if you had long inventory or if there were listed single stock futures on the short leg.With short selling permitted on constituents of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX), we take a look at long/short pairs where both stocks are members of the index. These pairs belong to the same GICS sub-industry, are correlated and exhibit mean-reversion. We also use short sale data from the last couple of trading sessions to see which stocks are being targeted by short sellers.

Korea Pair Trades: High Risk/Reward Names with Short Sell Screen

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

The last day to be eligible to receive the first quarter dividends is March 29, next Monday.The div payment is May 20.









Quarterly div schedule for FY2021
1Q
2Q
3Q
4Q


The last day to be eligible
3/29
6/28
9/28
12/28


Ex-div
3/30
6/29
9/29
12/29


Div record
3/31
6/30
9/30
12/30


Div payment (tentative)
5/20
8/20
11/18
4/20 (2022)

Source: KRX

We have four quarterly div stocks on KOSPI 200: POSCO, Samsung Electronics, Ssangyong Cement Industry, and Hanon Systems.The quarterly div yields range from 0.37% (Hanon Systems) to 1.60% (Ssangyong Cement Industry) based on the FnGuide consensus, which is pretty much in line with the previous year.









1Q dividend stocks
Ticker
1Q div (est.)
Yearly div (est.)
Quarterly div yield


POSCO
005490
₩2,000
₩9,500
0.65%


Samsung Electronics Co Ltd
005930
₩361
₩1,443
0.44%


Ssangyong Cement Industry Co Ltd
003410
₩110
₩440
1.60%


Hanon Systems
018880
₩68
₩320
0.37%


Source: FnGuide



Now, let's check potential short recovering for these div stocks.For this, it is crucial to check the loaned stock balance and 52W performance.On KOSPI, Doosan Infracore is leading at 19.51% of SO.The four div stocks do not carry a lot in their balance: 1.95% POSCO, 1.16% SamE, 0.95% Ssangyong Cement Ind, and 0.89% Hanon Systems.









Loaned stock balance (KOSPI)
Ticker
Balance
% of SO
MC (₩B)


Doosan Infracore Co Ltd
042670
42,246,502
19.51%
2,053.0


Cosmax Inc
192820
1,837,956
18.29%
1,216.0


DL Holdings Co Ltd
000210
2,798,553
18.12%
1,336.8


Lotte Tour Development Co., Ltd.
032350
10,031,962
14.48%
1,305.8


LG HAUSYS, LTD.
108670
1,080,271
12.05%
722.8


LG Display Co Ltd
034220
32,306,260
9.03%
7,961.4


Hotel Shilla Co Ltd
008770
3,527,067
8.99%
3,441.6


Kyeryong Construction Industrial Co.
013580
719,601
8.06%
275.5


Samsung Heavy Industries Co., Ltd
010140
47,943,664
7.61%
4,263.6


Celltrion, Inc.
068270
9,330,378
7.49%
39,968.2


HMM Co Ltd
011200
23,377,269
7.07%
9,724.4


Hana Tour Service Inc
039130
947,217
6.80%
939.5


NS Shopping Co Ltd
138250
2,221,727
6.59%
394.2


Inscobee Inc
006490
6,225,990
6.07%
364.9


Wooridul Pharmaceutical Ltd
004720
838,212
5.70%
134.2


CJ Logistics Corp
000120
1,240,086
5.44%
3,992.2


Netmarble Corp
251270
4,580,308
5.33%
10,656.6


Jahwa Electronics Co Ltd
033240
939,220
5.25%
308.8


GS Retail Co Ltd
007070
3,969,424
5.16%
2,979.9



POSCO
005490
1,699,950
1.95%
26,722.8


Samsung Electronics Co Ltd
005930
69,482,398
1.16%
545,145.9


Ssangyong Cement Industry Co Ltd
003410
4,762,928
0.95%
3,466.6


Hanon Systems
018880
4,751,149
0.89%
9,741.9

Source: KOFIA

Similarly, all of them stay near 52WH. There is no sign of being oversold.









Name
Ticker
MC (₩B)
x 52WH
52WH date


Ssangyong Cement Industry Co Ltd
003410
3,466.6
0.93
12/11/20


POSCO
005490
26,722.8
0.92
3/9/21


Hanon Systems
018880
9,795.2
0.91
1/8/21


Samsung Electronics Co Ltd
005930
485,940.3
0.84
1/11/21

Source: KRX



KOSPI 200 1Q Quarterly Div Stocks: Status Check

South Korea

Hanon Systems manufactures a variety of automotive air control equipment.  The Company's products include air conditioners, heaters, cooling modules, compressors, radiators, fans, evaporators, and condensers. Hanon Systems distributes its products on an original equipment manufacturing (OEM) basis.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Hanon Systems (018880 KS)

Iljin Hysolus IPO Valuation Analysis

Our base case valuation of Iljin Hysolus is implied market cap of 817.6 billion won or 22,517 won per share. Given the lower target price versus...

Douglas Kim

Iljin Hysolus IPO Preview

Iljin Hysolus is getting ready to complete its IPO in Korea in August. The IPO base deal size is from $289 million to $356 million.

Douglas Kim

Korea Small Cap Gem #9: Namyang Dairy Products - Chairman Sells & Minority Shareholders Cheer

Chairman Hong sold the controlling stake of Namyang Dairy to Hahn & Co. Over the next 2-3 years, we believe Namyang Dairy Products' shares could...

Douglas Kim

Korea Pair Trades: High Risk/Reward Names with Short Sell Screen

With the resumption of short selling in Korea, we highlight correlated pairs from the same GICS sub-industry that are near reversion points and...

Brian Freitas

KOSPI 200 1Q Quarterly Div Stocks: Status Check

This post examines potential short recovering and spot/futures arb entry points of the four 1Q dividend stocks on KOSPI 200.

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)