Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 10 February (prior to market open), Seoul Economic Daily reported that HYBE will conduct a tender offer of SM Entertainment shares taking over the controlling ownership of the company.</li>
<li>HYBE agreed to acquire a 14.8% stake from SM Entertainment's founder Lee Soo-Man at 120,000 won per share, which represents a 21.8% premium to the closing price on 9 February.</li>
<li>HYBE is also conducting a tender offer to minority shareholders and it plans to acquire up to 25% additional shares at 120,000 won per share, representing 717 billion won.</li>
</ul>


On 10 February (prior to market open), Seoul Economic Daily reported that HYBE will conduct a tender offer of SM Entertainment shares taking over the controlling ownership of the company.
HYBE agreed to acquire a 14.8% stake from SM Entertainment's founder Lee Soo-Man at 120,000 won per share, which represents a 21.8% premium to the closing price on 9 February.
HYBE is also conducting a tender offer to minority shareholders and it plans to acquire up to 25% additional shares at 120,000 won per share, representing 717 billion won.


HYBE to Acquire a 39.8% Stake in SM Entertainment

<ul>
<li>On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia's Sovereign Fund (Public Investment Fund - PIF) and GIC (Singapore).</li>
<li>Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.</li>
<li>This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.</li>
</ul>


On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia's Sovereign Fund (Public Investment Fund - PIF) and GIC (Singapore).
Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.
This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.


PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

<ul>
<li>We discuss end of the mandatory lock-up periods for 58 stocks in Korea in December 2022, among which 9 are in KOSPI and 49 are in KOSDAQ.</li>
<li>These 58 stocks on average could be subject to further selling pressures in December and could underperform relative to the market. </li>
<li>Among these 58 stocks, the top 5 market cap stocks include HYBE, Kakao Games, WCP, Sillajen, and Duksan Neolux. </li>
</ul>


We discuss end of the mandatory lock-up periods for 58 stocks in Korea in December 2022, among which 9 are in KOSPI and 49 are in KOSDAQ.
These 58 stocks on average could be subject to further selling pressures in December and could underperform relative to the market. 
Among these 58 stocks, the top 5 market cap stocks include HYBE, Kakao Games, WCP, Sillajen, and Duksan Neolux. 


End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022

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.

<ul>
<li>Dunamu may not be in a financial situation that will allow it to hold HYBE shares. With FTX's liquidity crisis, Upbit's liquidity management risk will inevitably rise to the surface.</li>
<li>Doubts about whether the size of Upbit's assets is sufficiently absorbing the shock of a bank run are still strongly raised in the local market.</li>
<li>These concerns are likely to affect HYBE's share price as the December 9 release approaches, and yes, we need to design short position setups aimed at this.</li>
</ul>


Dunamu may not be in a financial situation that will allow it to hold HYBE shares. With FTX's liquidity crisis, Upbit's liquidity management risk will inevitably rise to the surface.
Doubts about whether the size of Upbit's assets is sufficiently absorbing the shock of a bank run are still strongly raised in the local market.
These concerns are likely to affect HYBE's share price as the December 9 release approaches, and yes, we need to design short position setups aimed at this.


HYBE Shorting Opportunity with a Lockup Release from Dunamu

<ul>
<li>Netmarble did a one-year rollover for the stock loan used for the SpinX acquisition. The maturity is again one year, and the principal amount is ₩1.5T.</li>
<li>The HYBE stake is newly included as collateral at an estimated LTV ratio of 50% because the value of NCsoft's stake further declined, and the LTV ratio was subsequently lowered.</li>
<li>Applying the 140% loss cut ratio to HYBE and NCsoft will lead to a margin call when each stock declines 30% from the current price.</li>
</ul>


Netmarble did a one-year rollover for the stock loan used for the SpinX acquisition. The maturity is again one year, and the principal amount is ₩1.5T.
The HYBE stake is newly included as collateral at an estimated LTV ratio of 50% because the value of NCsoft's stake further declined, and the LTV ratio was subsequently lowered.
Applying the 140% loss cut ratio to HYBE and NCsoft will lead to a margin call when each stock declines 30% from the current price.


Netmarble Debt Risk Victim: HYBE or NCsoft or Both?

South Korea

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

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HYBE (352820 KS)

HYBE to Acquire a 39.8% Stake in SM Entertainment

On 10 February (prior to market open), Seoul Economic Daily reported that HYBE will conduct a tender offer of SM Entertainment shares taking over...

Douglas Kim

PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

Maekyung Business Daily reported on 11 January that PIF (Saudi Arabia) and GIC combined invested about 1.2 trillion won in Kakao Entertainment,...

Douglas Kim

End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022

We discuss end of the mandatory lock-up periods for 58 stocks in Korea in December 2022, among which 9 are in KOSPI and 49 are in KOSDAQ.

Douglas Kim

HYBE Shorting Opportunity with a Lockup Release from Dunamu

This post details a significant lockup release of HYBE shares on December 9 and assesses the possibility of these released shares owed by Dunamu...

Sanghyun Park

Netmarble Debt Risk Victim: HYBE or NCsoft or Both?

This post details Netmarble's stock loan rollover for the SpinX acquisition and how this poses a margin call risk for HYBE and NCsoft.

Sanghyun Park

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