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.

Event-Driven

<p>Kakao merges with Kakao Commerce again. Kakao Commerce was spun off from Kakao three years ago. Kakao internally notified its employees of the merger with Kakao Commerce yesterday. Both companies plan to hold a board meeting next week (likely June 22) to approve the merger. They are reportedly discussing a plan to merge in the third quarter at the earliest.</p><p>Kakao Commerce has been in charge of operating Kakao's shopping-related services, such as Kakao Talk Gift. However, Kakao Commerce recently boosted its operating operation by merging Kakao Makers, the next-generation ordering platform. Through this merger, Kakao plans to shift its main business from advertising to online commerce. In particular, this merger is intended to prevent a situation in which the local online commerce market leads to an oligopoly between Coupang and Naver.</p><hr><h2>Regulatory filing</h2><p>Kakao Corp said in a regulatory filing that nothing had been finalized yet. Therefore, it now has to provide a follow-up filing within a month or at the time of finalization. The local market generally considers this type of not-denying response in a regulatory filing an acknowledgment. So, it'd be safe to assume that this merger will proceed.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/011/original/Screen+Shot+2021-06-14+at+2.51.47+PM.png?1623696739" class="editor-image img-responsive" data-smartkarma-image-id="213011"></figure></section>

Kakao merges with Kakao Commerce again. Kakao Commerce was spun off from Kakao three years ago. Kakao internally notified its employees of the merger with Kakao Commerce yesterday. Both companies plan to hold a board meeting next week (likely June 22) to approve the merger. They are reportedly discussing a plan to merge in the third quarter at the earliest.Kakao Commerce has been in charge of operating Kakao's shopping-related services, such as Kakao Talk Gift. However, Kakao Commerce recently boosted its operating operation by merging Kakao Makers, the next-generation ordering platform. Through this merger, Kakao plans to shift its main business from advertising to online commerce. In particular, this merger is intended to prevent a situation in which the local online commerce market leads to an oligopoly between Coupang and Naver.Regulatory filingKakao Corp said in a regulatory filing that nothing had been finalized yet. Therefore, it now has to provide a follow-up filing within a month or at the time of finalization. The local market generally considers this type of not-denying response in a regulatory filing an acknowledgment. So, it'd be safe to assume that this merger will proceed.

Kakao's Timely Trick to Defend Its Inflated Share Price: Merger with Kakao Commerce

Equity Capital Markets

<p>Kakao Japan, a subsidiary of <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, appears to be accelerating its IPO process.</p><p>The local news outlet, Seoul Economic Daily, exclusively reports that Kakao Japan has sent a request for a proposal (RFP) to the local brokerages in Japan to recruit additional bankers for an IPO. So far, it has chosen Nomura as a lead underwriter.</p><p>An unnamed Kakao official said that Kakao Japan is seeking additional underwriters as it now anticipates a larger offering size amid the rapid growth of Piccoma (ピッコマ).</p><div class="content-highlight"><p><em>Piccoma (ピッコマ) is a Japanese manga subscription service that is available on smartphones, tablets, and personal computers developed and released by Kakao Japan.</em></p></div><p>But as for the timing of an IPO, this Kakao official didn't give any specific detail.</p><div class="content-highlight"><p><a href="https://signalm.sedaily.com/NewsView/22NHS3OKO9/GX1102" target="_blank" rel="noopener">Here is the link to the news report by Seoul Economic Daily</a></p></div>

Kakao Japan, a subsidiary of Kakao Corp (035720 KS), appears to be accelerating its IPO process.The local news outlet, Seoul Economic Daily, exclusively reports that Kakao Japan has sent a request for a proposal (RFP) to the local brokerages in Japan to recruit additional bankers for an IPO. So far, it has chosen Nomura as a lead underwriter.An unnamed Kakao official said that Kakao Japan is seeking additional underwriters as it now anticipates a larger offering size amid the rapid growth of Piccoma (ピッコマ).Piccoma (ピッコマ) is a Japanese manga subscription service that is available on smartphones, tablets, and personal computers developed and released by Kakao Japan.But as for the timing of an IPO, this Kakao official didn't give any specific detail.Here is the link to the news report by Seoul Economic Daily

Kakao Japan ¥1T IPO: Latest Update on Progress

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The Korea Exchange (KRX) launched 5 indices last year following the New Deal initiative that the Government launched to digitalise social infrastructure and jumpstart the transition to green energy.</p><p>The KRX created 4 indices tracking the Secondary Battery, Biotech, Internet and Gaming sectors that are expected to benefit from the New Deal initiative plus an additional index (BBIG) that includes the top 3 stocks from each sector.</p><p>All indices have performed well since then. The KRX announced changes to the 5 indices late last week and the changes become effective post the close of trading on 25 February.</p><div><p><a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games Corp (293490 KS)</a> replaces <a href="https://www.smartkarma.com/entities/pearl-abyss-corp" target="_blank" data-smartkarma-citation="entities:24391:1" rel="noopener">Pearl Abyss (263750 KS)</a> in the BBIG Index.</p></div><div><p>In the Secondary Battery index, <a href="https://www.smartkarma.com/entities/soulbrain-co-ltd" target="_blank" data-smartkarma-citation="entities:16883:1" rel="noopener">Soulbrain (036830 KS)</a> and <a href="https://www.smartkarma.com/entities/l-f-co-ltd" target="_blank" data-smartkarma-citation="entities:14300:1" rel="noopener">L&amp;F Co Ltd (066970 KS)</a> replace <a href="https://www.smartkarma.com/entities/doosan-solus-co-ltd" target="_blank" data-smartkarma-citation="entities:28947:1" rel="noopener">Doosan Solus Co Ltd (336370 KS)</a> and <a href="https://www.smartkarma.com/entities/foosung-co-ltd" target="_blank" data-smartkarma-citation="entities:16811:1" rel="noopener">Foosung Co Ltd (093370 KS)</a>.</p></div><div><p>In the Biotech index, <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a> and <a href="https://www.smartkarma.com/entities/green-cross-corp" target="_blank" data-smartkarma-citation="entities:2969:1" rel="noopener">Green Cross (006280 KS)</a> replace <a href="https://www.smartkarma.com/entities/alteogen-inc" target="_blank" data-smartkarma-citation="entities:15886:1" rel="noopener">Alteogen Inc (196170 KS)</a> and <a href="https://www.smartkarma.com/entities/hanmi-pharm-co-ltd" target="_blank" data-smartkarma-citation="entities:12476:1" rel="noopener">Hanmi Pharm (128940 KS)</a>.</p></div><div><p>In the Internet index, <a href="https://www.smartkarma.com/entities/ace-technologies-corp" target="_blank" data-smartkarma-citation="entities:7868:1" rel="noopener">Ace Technologies (088800 KS)</a> and <a href="https://www.smartkarma.com/entities/rsupport-co-ltd" target="_blank" data-smartkarma-citation="entities:14783:1" rel="noopener">Rsupport Co Ltd (131370 KS)</a> replace <a href="https://www.smartkarma.com/entities/kg-inicis-co-ltd" target="_blank" data-smartkarma-citation="entities:5234:1" rel="noopener">KG Inicis Co Ltd (035600 KS)</a> and <a href="https://www.smartkarma.com/entities/ubiquoss-inc" target="_blank" data-smartkarma-citation="entities:14341:1" rel="noopener">Ubiquoss Holding (078070 KS)</a>.</p></div><div><p>In the Gaming index, <a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games Corp (293490 KS)</a> and <a href="https://www.smartkarma.com/entities/neptune-company" target="_blank" data-smartkarma-citation="entities:28826:1" rel="noopener">Neptune Company (217270 KS)</a> replace <a href="https://www.smartkarma.com/entities/neowiz-games-corp" target="_blank" data-smartkarma-citation="entities:12425:1" rel="noopener">Neowiz Games (095660 KS)</a> and Golfzon (215000 KS).</p></div>

The Korea Exchange (KRX) launched 5 indices last year following the New Deal initiative that the Government launched to digitalise social infrastructure and jumpstart the transition to green energy.The KRX created 4 indices tracking the Secondary Battery, Biotech, Internet and Gaming sectors that are expected to benefit from the New Deal initiative plus an additional index (BBIG) that includes the top 3 stocks from each sector.All indices have performed well since then. The KRX announced changes to the 5 indices late last week and the changes become effective post the close of trading on 25 February.Kakao Games Corp (293490 KS) replaces Pearl Abyss (263750 KS) in the BBIG Index.In the Secondary Battery index, Soulbrain (036830 KS) and L&amp;F Co Ltd (066970 KS) replace Doosan Solus Co Ltd (336370 KS) and Foosung Co Ltd (093370 KS).In the Biotech index, Shinpoong Pharmaceutical (019170 KS) and Green Cross (006280 KS) replace Alteogen Inc (196170 KS) and Hanmi Pharm (128940 KS).In the Internet index, Ace Technologies (088800 KS) and Rsupport Co Ltd (131370 KS) replace KG Inicis Co Ltd (035600 KS) and Ubiquoss Holding (078070 KS).In the Gaming index, Kakao Games Corp (293490 KS) and Neptune Company (217270 KS) replace Neowiz Games (095660 KS) and Golfzon (215000 KS).

KRX BBIG K-NewDeal Index Rebalance: First Set of Changes Announced

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>In this report, we review our IPO investment research in 2020, including the performance of our calls and how we plan to change our process of selection for IPO research in 2021. For those who follow Smartkarma's IPO research, this platform provides one of the most extensive, independent IPO related research (especially in Asian markets). </p><div class="content-highlight"><p><strong>We made 40 investment calls on IPOs this year, of which 34 had positive ratings on the IPOs and 6 had negative ratings. The 36 stocks (with positive ratings) had share price performances that were up 74.5% on average from their IPO prices. The 6 stocks (with negative ratings) had share price performances that were up only 8% on average from their IPO prices. </strong></p></div>

In this report, we review our IPO investment research in 2020, including the performance of our calls and how we plan to change our process of selection for IPO research in 2021. For those who follow Smartkarma's IPO research, this platform provides one of the most extensive, independent IPO related research (especially in Asian markets). We made 40 investment calls on IPOs this year, of which 34 had positive ratings on the IPOs and 6 had negative ratings. The 36 stocks (with positive ratings) had share price performances that were up 74.5% on average from their IPO prices. The 6 stocks (with negative ratings) had share price performances that were up only 8% on average from their IPO prices. 

Review of Our IPO Research in 2020 & Change in Our IPO Research Process for 2021

<div class="content-highlight">
<p>With only three weeks remaining in 2020, we now look forward to the major IPOs in Korea in 2021. This is our <em><strong>6th "Annual Edition of the Major Korean IPOs Pipeline Preview"</strong></em> 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>.  </p>
<p>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:</p>
<ol>
<li><strong>LG Energy Solutions</strong></li>
<li><strong>Krafton</strong></li>
<li><strong>SK Bioscience</strong></li>
<li><strong>Kakao Bank</strong></li>
<li><strong>Kakao Page</strong></li>
<li><strong>Kakao Pay</strong></li>
<li><strong>SK IET</strong></li>
<li><strong>One Store</strong></li>
<li><strong>HK inno.N </strong></li>
<li><strong>Coupang</strong></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



South Korea

Kakao Games Corp. operates as a multiply platform gaming company. The Company provides mobile games, computer games, virtual reality games, and other related products. Kakao Games markets its products worldwide.

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Kakao Games (293490 KS)

Kakao Japan ¥1T IPO: Latest Update on Progress

This post provides an update on Kakao Japan's IPO progress, which reportedly aims at a target IPO valuation of 1 trillion yen.

Sanghyun Park

KRX BBIG K-NewDeal Index Rebalance: First Set of Changes Announced

The KRX has announced changes to the KRX New Deal indices that will be effective after the close of trading on 25 February. Pearl Abyss is...

Brian Freitas

Review of Our IPO Research in 2020 & Change in Our IPO Research Process for 2021

In this report, we review our IPO investment research in 2020, including the performance of our calls and how we plan to change our process of...

Douglas Kim

2021 Major IPOs Pipeline in Korea

This is our 6th "Annual Edition of the Major Korean IPOs Pipeline Preview" already at Smartkarma! In this report, we have identified 50 companies...

Douglas Kim

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Kakao's Timely Trick to Defend Its Inflated Share Price: Merger with Kakao Commerce

This post looks at Kakao's timely attempt to support its inflate share price by merging with Kakao Commerce to get an even higher valuation premium.

Sanghyun Park

Kakao Japan ¥1T IPO: Latest Update on Progress

This post provides an update on Kakao Japan's IPO progress, which reportedly aims at a target IPO valuation of 1 trillion yen.

Sanghyun Park

KRX BBIG K-NewDeal Index Rebalance: First Set of Changes Announced

The KRX has announced changes to the KRX New Deal indices that will be effective after the close of trading on 25 February. Pearl Abyss is...

Brian Freitas

Review of Our IPO Research in 2020 & Change in Our IPO Research Process for 2021

In this report, we review our IPO investment research in 2020, including the performance of our calls and how we plan to change our process of...

Douglas Kim

2021 Major IPOs Pipeline in Korea

This is our 6th "Annual Edition of the Major Korean IPOs Pipeline Preview" already at Smartkarma! In this report, we have identified 50 companies...

Douglas Kim