Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<div class="content-highlight">According to <a href="https://www.bloomberg.com/news/articles/2021-01-06/softbank-s-son-is-poised-for-another-ipo-windfall-in-2021" target="_blank" rel="noopener">Bloomberg, </a>it reported that Coupang, the largest e-commerce company in Korea, is getting ready to complete its IPO as soon as 2Q 2021. The estimated valuation of Coupang could be at least $30 billion. Softbank invested $2.7 billion in Coupang and <a href="https://biz.chosun.com/site/data/html_dir/2021/01/07/2021010702121.html?utm_source=naver&amp;utm_medium=original&amp;utm_campaign=biz" target="_blank" rel="noopener">Softbank (Vision Fund)</a> currently has a 37% stake in the company. If Mr. Market is willing to place a $30 billion valuation on Coupang, Softbank would reap a cool $8 billion+ gain on its investments in Coupang.</div>

According to Bloomberg, it reported that Coupang, the largest e-commerce company in Korea, is getting ready to complete its IPO as soon as 2Q 2021. The estimated valuation of Coupang could be at least $30 billion. Softbank invested $2.7 billion in Coupang and Softbank (Vision Fund) currently has a 37% stake in the company. If Mr. Market is willing to place a $30 billion valuation on Coupang, Softbank would reap a cool $8 billion+ gain on its investments in Coupang.

Initial Thoughts on the Coupang IPO & Impact on SK Telecom (11st) Vs. Naver

Equity Capital Markets

<div class="content-highlight">
With only three weeks remaining in 2020, we now look forward to the major IPOs in Korea in 2021. This is our 6th "Annual Edition of the Major Korean IPOs Pipeline Preview" already at Smartkarma! In this report, we have identified 50 companies that are expected to complete their IPOs in the Korean Stock Market in 2021. This year has been a big year for IPOs in Korea with many IPOs that have done really well including <a href="https://www.smartkarma.com/entities/sk-biopharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:28966:1" rel="noopener">SK Biopharmaceuticals (326030 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games (293490 KS)</a>.  
In 2020, there were only three IPOs in Korea that were more than US$1 billion in market cap including SK Biopharm, Kakao Games, and Big Hit Entertainment. However, in 2021, we believe there could be more than 10 IPOs in Korea that are more than US$1 billion in market cap including the following:
<ol>
<li>LG Energy Solutions</li>
<li>Krafton</li>
<li>SK Bioscience</li>
<li>Kakao Bank</li>
<li>Kakao Page</li>
<li>Kakao Pay</li>
<li>SK IET</li>
<li>One Store</li>
<li>HK inno.N </li>
<li>Coupang</li>
</ol>
</div>


With only three weeks remaining in 2020, we now look forward to the major IPOs in Korea in 2021. This is our 6th "Annual Edition of the Major Korean IPOs Pipeline Preview" already at Smartkarma! In this report, we have identified 50 companies that are expected to complete their IPOs in the Korean Stock Market in 2021. This year has been a big year for IPOs in Korea with many IPOs that have done really well including SK Biopharmaceuticals (326030 KS) and Kakao Games (293490 KS).  
In 2020, there were only three IPOs in Korea that were more than US$1 billion in market cap including SK Biopharm, Kakao Games, and Big Hit Entertainment. However, in 2021, we believe there could be more than 10 IPOs in Korea that are more than US$1 billion in market cap including the following:

LG Energy Solutions
Krafton
SK Bioscience
Kakao Bank
Kakao Page
Kakao Pay
SK IET
One Store
HK inno.N 
Coupang



Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

<div>While the details are scarce, local press is reporting that SKT and AMZN has been in talks for more than a year and would allow really an export/import biz on both of their channels (ie Korean products to be bought by US consumers and US products to be bought thru 11th St (SK's ecommerce portal) for Koreans. </div><div></div><div>This can't be good for the ecommerce players in Korea.  In the US, if you hear that AMZN is coming in whatever business, the whole sector falls.   Is Naver next? </div>

While the details are scarce, local press is reporting that SKT and AMZN has been in talks for more than a year and would allow really an export/import biz on both of their channels (ie Korean products to be bought by US consumers and US products to be bought thru 11th St (SK's ecommerce portal) for Koreans. This can't be good for the ecommerce players in Korea.  In the US, if you hear that AMZN is coming in whatever business, the whole sector falls.   Is Naver next? 

AMZN into Korea - "We Are Not Here to Take Part, We're Here to Take Over!"

In this insight, we provide an updated valuation of <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>. We believe now is the time to go Underweight on Naver Corp, which is up 51% YTD versus KOSPI which is up 16% in the same period.There are three major reasons why we believe investors should Underweight Naver Corp now.<ul>
<li>
First, our valuation analysis suggests that Naver Corp shares are overvalued.</li>
<li>
Second, we believe there could be a major shift in capital allocations away from some of the biggest beneficiaries of COVID-19 this year.</li>
<li>
Third, we believe the new partnership between Amazon &amp; 11st could pose a greater competitive threat to the entire e-commerce industry, negatively impacting Naver's e-commerce business.</li>
</ul>

In this insight, we provide an updated valuation of Naver Corp (035420 KS). We believe now is the time to go Underweight on Naver Corp, which is up 51% YTD versus KOSPI which is up 16% in the same period.There are three major reasons why we believe investors should Underweight Naver Corp now.

First, our valuation analysis suggests that Naver Corp shares are overvalued.

Second, we believe there could be a major shift in capital allocations away from some of the biggest beneficiaries of COVID-19 this year.

Third, we believe the new partnership between Amazon &amp; 11st could pose a greater competitive threat to the entire e-commerce industry, negatively impacting Naver's e-commerce business.


Naver - Time to Go Underweight (Covid Recovery + Amazon)

We believe now is the time to go Underweight on Kakao Corp, which has been one of the best-performing stocks in KOSPI this year.There are two major reasons why we believe investors should Underweight Kakao Corp now. First, our SoTP valuation analysis suggests Kakao Corp shares are overvalued. Second, the fact that there are now two credible vaccines against COVID-19 including those developed by Moderna and Pfizer which suggests that COVID-19 could become more manageable and less deadly around the world in 2021. One of the key reasons why Kakao Corp's shares soared this year has been due to the continued concerns about COVID-19 and the company's strengths in digital, "non-contact" business areas including online games, fintech, and other digital services. COVID-19 has actually accelerated the numerous businesses of Kakao Corp and its affiliates and pushed up its share price this year. Our base case valuation of Kakao Corp suggests an implied value of 296,066 won per share, representing an 18.2% downside risk from current levels. The SoTP valuation is broken down into the company's investments in a) public companies, b) private companies, c) Kakao Corp's core business, d) net cash and e) holdco discount.

We believe now is the time to go Underweight on Kakao Corp, which has been one of the best-performing stocks in KOSPI this year.There are two major reasons why we believe investors should Underweight Kakao Corp now. First, our SoTP valuation analysis suggests Kakao Corp shares are overvalued. Second, the fact that there are now two credible vaccines against COVID-19 including those developed by Moderna and Pfizer which suggests that COVID-19 could become more manageable and less deadly around the world in 2021. One of the key reasons why Kakao Corp's shares soared this year has been due to the continued concerns about COVID-19 and the company's strengths in digital, "non-contact" business areas including online games, fintech, and other digital services. COVID-19 has actually accelerated the numerous businesses of Kakao Corp and its affiliates and pushed up its share price this year. Our base case valuation of Kakao Corp suggests an implied value of 296,066 won per share, representing an 18.2% downside risk from current levels. The SoTP valuation is broken down into the company's investments in a) public companies, b) private companies, c) Kakao Corp's core business, d) net cash and e) holdco discount. 

Kakao Corp SoTP Valuation - Time To Go Underweight

South Korea

Kakao Corp. provides Internet portal services such as news, free e-mail, and leisure information.  The Company also offers cross-platform mobile messaging application that allows users to exchange messages.

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Kakao Corp (035720 KS)

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According to Bloomberg, it reported that Coupang is getting ready to complete its IPO as soon as 2Q 2021. The estimated valuation of Coupang could...

Douglas Kim

2021 Major IPOs Pipeline in Korea

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Douglas Kim

AMZN into Korea - "We Are Not Here to Take Part, We're Here to Take Over!"

I guess the Koreans aren't scared of Amazon's entry into the ecommerce space! I'm a seller of Naver here on the news that Amazon will come into...

Ken S. Kim

Naver - Time to Go Underweight (Covid Recovery + Amazon)

In this insight, we provide an updated valuation of Naver Corp (035420 KS). We believe now is the time to go Underweight on Naver Corp, which is up...

Douglas Kim

Kakao Corp SoTP Valuation - Time To Go Underweight

We believe now is the time to go Underweight on Kakao Corp. Our base case valuation suggests an implied value of 296,066 won per share,...

Douglas Kim

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