Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>We provide a list of four companies including Fila Holdings, Kolmar BNH, KG Mobility, and Hanwha Galleria where the insiders have been buying shares of their own companies. </li>
<li>These four stocks are up on average 5.6% in the past one month, outperforming KOSPI which is down 1.6% in the same period.</li>
<li>Insiders at Fila Holdings are probably increasing their stakes to capitalize on the price discrepancy as Fila Holdings' 51% stake in Acushnet is 39% more than its current market cap. </li>
</ul>


We provide a list of four companies including Fila Holdings, Kolmar BNH, KG Mobility, and Hanwha Galleria where the insiders have been buying shares of their own companies. 
These four stocks are up on average 5.6% in the past one month, outperforming KOSPI which is down 1.6% in the same period.
Insiders at Fila Holdings are probably increasing their stakes to capitalize on the price discrepancy as Fila Holdings' 51% stake in Acushnet is 39% more than its current market cap. 


Insiders Are Buying Shares In These Korean Companies in January 2024

<ul>
<li>On 19 October, Kolmar Korea announced that it will conduct a merger share swap with Yonwoo early next year to make it into a 100% wholly owned subsidiary.</li>
<li>We believe the merger share swap agreement between Kolmar Korea and Yonwoo is likely to have positive impact on both Kolmar Korea and Yonwoo.</li>
<li>After this share swap is completed, Yonwoo will be delisted. This merger is aimed at improving the inefficient governance structure caused by duplicate listings and improve management efficiency.</li>
</ul>


On 19 October, Kolmar Korea announced that it will conduct a merger share swap with Yonwoo early next year to make it into a 100% wholly owned subsidiary.
We believe the merger share swap agreement between Kolmar Korea and Yonwoo is likely to have positive impact on both Kolmar Korea and Yonwoo.
After this share swap is completed, Yonwoo will be delisted. This merger is aimed at improving the inefficient governance structure caused by duplicate listings and improve management efficiency.


A Merger Share Swap Between Kolmar Korea and Yonwoo

<ul>
<li>On 10 January, Korea Kolmar Holdings (024720 KS) announced that it plans to cancel 1.1 million shares to be acquired through redemption of redeemable convertible preferred shares.</li>
<li>Korea Kolmar Holdings currently has a market cap of 314 billion won so this share cancellation represents nearly 17% of its market cap.</li>
<li>This large shares cancellation should have a positive impact on Korea Kolmar Holdings' share price. It is also trading at 40% discount to its NAV. </li>
</ul>


On 10 January, Korea Kolmar Holdings (024720 KS) announced that it plans to cancel 1.1 million shares to be acquired through redemption of redeemable convertible preferred shares.
Korea Kolmar Holdings currently has a market cap of 314 billion won so this share cancellation represents nearly 17% of its market cap.
This large shares cancellation should have a positive impact on Korea Kolmar Holdings' share price. It is also trading at 40% discount to its NAV. 


Korea Kolmar Holdings: Shares Cancellation of 17% of Market Cap + Deep Discount to NAV

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Equity Capital Markets

HK Inno.N's offering price got fixed at ₩59,000, the upper end of the indicative price band, implying a market cap of ₩1.7T. There is no change in the offering volume.







Indicative price band
Low
High (final)


Price
₩50,000
₩59,000


Base deal size
₩505.9B
₩596.9B


- Institutional allotment
₩278.2B
₩328.3B


Implied market cap
₩1,445.2B
₩1,705.4B


- Discount
29.54%
16.85%


EV/EBITDA
15.77x
18.02x

Source: DART

The institutional subscription competition rate is 1,871 to 1, nearly hitting the record holder SKIET's 1,883 to 1. In this bookbuilding, it seems that local institutions have been overbetting quite aggressively. In particular, it seems that local publicly raised funds with long-term holding tendencies have been active in securing the stocks. This proves that many local institutional investors felt that this IPO was price attractive enough for long-term holding.









By investor type
Institution
%
Demand
%


Local publicly raised funds
713
43.82%
4,795,649,600
46.05%


Local brokerages/investment advisories
31
1.91%
202,086,750
1.94%


Local pensions, funds managing proprietary assets, banks, and insurance companies
220
13.52%
1,434,513,850
13.78%


Local others (mostly discretionary investment companies - local hedge funds))
392
24.09%
2,678,313,000
25.72%


Foreign (foreign IPO funds &amp; hedge funds)
74
4.55%
79,187,194
0.76%


Foreign others (mostly local hot money)
197
12.11%
1,223,144,000
11.75%


Total
1,627
100.00%
10,412,894,394
100.00%


Subscription rate
1,871.36

Source: DART

The "Unspecified" category usually indicates that they want the shares above the high end.With that in mind, about one-third have gone for the upper end or above. The remaining two-thirds selected 75-100% of the upper end. All of the orders are priced at 75-100% of the upper end or higher. So, yes, we can say the institutional pricing is quite aggressive.









By price
Institution
%
Demand
%


Above high end
536
32.94%
3,597,972,500
34.55%


75-100% of high end
1,061
65.21%
6,630,326,894
63.67%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
30
1.84%
184,595,000
1.77%


Total
1,627
100.00%
10,412,894,394
100.00%

Source: DART



HK Inno.N Bookbuilding Results: Subscription/Lockup Orders in Detail

<div><div><h2>Offering size</h2></div></div><div>
<p>HK inno.N offers 10.1M shares, which account for 43.75% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSDAQ.</p>
<div class="content-highlight">
<p><strong>Who is HK inno.N?</strong></p>
<p>HK inno.N was a subsidiary of CJ Group, established in April 2014 through a physical spin-off of CJ CheilJedang's pharmaceutical business.</p>
<p>However, HK inno.N was acquired by Kolmar Korea on April 18, 2018, and <strong>the corporate name was changed from CJ Healthcare Co., Ltd. to HK Innoen Co., Ltd. in February 2020</strong>.</p>
</div>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}' data-sheets-formula="=R[-44]C[0]">Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"195940"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-44]C[0]">195940</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}' data-sheets-formula="=R[-44]C[0]">Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSDAQ"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-44]C[0]">KOSDAQ</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'><strong>Offering</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10117000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-41]C[0]"><strong>10,117,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of pre-IPO SO"}'><strong>- % of pre-IPO SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.43752029050620755}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-39]C[0]"><strong>43.75%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Institutional allotment"}'><strong>Institutional allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"55.00~75.00%"}'><strong>55.00~75.00%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
<div><h2>Split</h2></div>
<div>
<p>This IPO is a split offering with a primary of 57.14% and a secondary of 42.86%. As a result, this offering will see a capital increase rate of 25% with a shareholding dilution of 20%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Split"}'>Split</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Primary %"}'><strong>Primary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.571414450924187}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-41]C[0]"><strong>57.14%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'><strong>Secondary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.428585549075813}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-40]C[0]"><strong>42.86%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'>Capital increase rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2500054165677954}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-38]C[0]">25.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.20000346658836743}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-38]C[0]">20.00%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><div><h2>Schedule</h2></div></div>
<div>
<p>The book opens on July 13 (for overseas investors) and runs until July 26. The allotment will be on July 28 as the offering price is finalized. The subscription falls on July 29.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'><strong>Book open</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44390}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 13</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'>Book close</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44403}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'><strong>Allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44405}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 28</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'><strong>Subscription</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44406}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 29</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44411}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 3</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"TBA"}'>TBA</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><h2>Pricing</h2></div>
<div>
<p>HK inno.N used EV/EBITDA. The corporate value was determined after selecting three local pharmaceutical companies: 1. Yuhan, 2. Chong Kun Dang Pharmaceutical, and 3. Daewoong Pharmaceutical. The respective EV/EBITDA multiples are 25.93x for Yuhan, 10.30x for Chong Kun Dang, and 26.8x for Daewoong Pharm.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Valuation peers: EV/EBITDA"}'>Valuation peers: EV/EBITDA</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yuhan Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Yuhan Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Chong Kun Dang Pharmaceutical Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Chong Kun Dang Pharmaceutical Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Daewoong Pharmaceutical Co., Ltd."}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Daewoong Pharmaceutical Co., Ltd.</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"000100"}' data-sheets-formula='="000100"'>000100</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"185750"}' data-sheets-formula='="185750"'>185750</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"069620"}' data-sheets-formula='="069620"'>069620</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":69972959}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>69,972,959</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11426099}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>11,426,099</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11586575}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>11,586,575</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference share price: MIN[1W Avg, 1M Avg, 1D Close] at June 22, 2021"}'>Reference share price: MIN[1W Avg, 1M Avg, 1D Close] on June 22, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":63300}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩63,300</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":130841}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩130,841</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":154000}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]'>₩154,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference market cap"}'>Reference market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4429.2883047}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$4,429.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1495.002219259}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$1,495.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1784.33255}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000">$1,784.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preferred share market cap"}'>Preferred share market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":71.683}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$71.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$0.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$0.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-440.398}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>-$440.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-7.554}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>-$7.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":225.79}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$225.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4060.5733046999994}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$4,060.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1487.4482192589999}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$1,487.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2010.12255}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]+R[-2]C[0]+R[-1]C[0]">$2,010.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EBITDA: 2Q20~1Q21"}'>EBITDA: 2Q20~1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":156.583}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$156.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":144.368}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$144.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":75.002}' data-sheets-numberformat='[null,2,"$#,##0.0B",1]'>$75.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EV/EBITDA"}'><strong>EV/EBITDA</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":25.93240201490583}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>25.93x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10.303171196241548}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>10.30x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":26.800919308818433}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>26.80x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average EV/EBITDA"}'><strong>Average EV/EBITDA</strong></td>
<td colspan="3" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":21.012164173321935}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=average(R[-1]C[0]:R[-1]C[2])"><strong>21.01x</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>
<div><div>The combined EV/EBITDA multiple of 21.01 times was applied to the EBITDA of ₩115.5B from the second quarter of last year to the first quarter of this year.</div></div>
<div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"HK inno.N: EV/EBITDA"}'>HK inno.N: EV/EBITDA</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EBITDA: 2Q20~1Q21"}'>EBITDA: 2Q20~1Q21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":115.526}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩115.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EV/EBITDA"}'>EV/EBITDA</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":21.012164173321935}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-5]C[0]">21.01x</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2427.194}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩2,427.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"C = A X B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>C = A X B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":376.158}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩376.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>D</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market cap"}'><strong>Market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2051.036}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]"><strong>₩2,051.0B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"E = C - D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>E = C - D</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Post-IPO total shares"}'>Post-IPO total shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":28904499}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=Terms!R[-2]C[0]">28,904,499</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>F</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price per share"}'><strong>Price per share</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":70959.05727340232}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]"><strong>₩70,959</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"G = E / F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>G = E / F</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div>
<div><p>The indicative price band is between ₩50,000 and ₩59,000. This is obtained by applying a discount rate of 16.85% to 29.54% to the market cap of ₩2,051.0B calculated through EV/EBITDA.</p></div>
<div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Indicative price band"}'>Indicative price band</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'><strong>Price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":50000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩50,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":59000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩59,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'>Base deal size</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":505.85}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩505.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":596.903}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩596.9B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment"}'>- Institutional allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":278.21750000000003}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩278.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":328.29665000000006}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩328.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'><strong>Implied market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1445.22495}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*Terms!R18C2/1000000000"><strong>₩1,445.2B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1705.365441}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*Terms!R18C2/1000000000"><strong>₩1,705.4B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Discount"}'><strong>- Discount</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2953683163045407}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R21C2-R[-4]C[0])/R21C2"><strong>29.54%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.16853461323935803}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R21C2-R[-4]C[0])/R21C2"><strong>16.85%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div>
</div>

Offering size
HK inno.N offers 10.1M shares, which account for 43.75% of the pre-IPO total shares, of which 55-75% are allocated to institutions. It will be listed on KOSDAQ.

Who is HK inno.N?
HK inno.N was a subsidiary of CJ Group, established in April 2014 through a physical spin-off of CJ CheilJedang's pharmaceutical business.
However, HK inno.N was acquired by Kolmar Korea on April 18, 2018, and the corporate name was changed from CJ Healthcare Co., Ltd. to HK Innoen Co., Ltd. in February 2020.







Offering size

Ticker
195940


Bourse
KOSDAQ


Offering
10,117,000


- % of pre-IPO SO
43.75%


Institutional allotment
55.00~75.00%

Source: DART


Split

This IPO is a split offering with a primary of 57.14% and a secondary of 42.86%. As a result, this offering will see a capital increase rate of 25% with a shareholding dilution of 20%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.






Split

Primary %
57.14%


Secondary %
42.86%


Capital increase rate
25.00%


Dilution
20.00%

Source: DART



Schedule

The book opens on July 13 (for overseas investors) and runs until July 26. The allotment will be on July 28 as the offering price is finalized. The subscription falls on July 29.






Schedule

Book open
2021. 7. 13


Book close
2021. 7. 26


Allotment
2021. 7. 28


Subscription
2021. 7. 29


Payment
2021. 8. 3


Listing
TBA

Source: DART



Pricing

HK inno.N used EV/EBITDA. The corporate value was determined after selecting three local pharmaceutical companies: 1. Yuhan, 2. Chong Kun Dang Pharmaceutical, and 3. Daewoong Pharmaceutical. The respective EV/EBITDA multiples are 25.93x for Yuhan, 10.30x for Chong Kun Dang, and 26.8x for Daewoong Pharm.









Valuation peers: EV/EBITDA
Yuhan Corp
Chong Kun Dang Pharmaceutical Corp
Daewoong Pharmaceutical Co., Ltd.


Ticker
000100
185750
069620


Shares outstanding
69,972,959
11,426,099
11,586,575


Reference share price: MIN[1W Avg, 1M Avg, 1D Close] on June 22, 2021
₩63,300
₩130,841
₩154,000


Reference market cap
$4,429.3B
$1,495.0B
$1,784.3B


Preferred share market cap
$71.7B
$0.0B
$0.0B


Net debt
-$440.4B
-$7.6B
$225.8B


Enterprise value (EV)
$4,060.6B
$1,487.4B
$2,010.1B


EBITDA: 2Q20~1Q21
$156.6B
$144.4B
$75.0B


EV/EBITDA
25.93x
10.30x
26.80x


Average EV/EBITDA
21.01x

Source: DART



The combined EV/EBITDA multiple of 21.01 times was applied to the EBITDA of ₩115.5B from the second quarter of last year to the first quarter of this year.







HK inno.N: EV/EBITDA

EBITDA: 2Q20~1Q21
₩115.5B
A


EV/EBITDA
21.01x
B


Enterprise value (EV)
₩2,427.2B
C = A X B


Net debt
₩376.2B
D


Market cap
₩2,051.0B
E = C - D


Post-IPO total shares
28,904,499
F


Price per share
₩70,959
G = E / F

Source: DART


The indicative price band is between ₩50,000 and ₩59,000. This is obtained by applying a discount rate of 16.85% to 29.54% to the market cap of ₩2,051.0B calculated through EV/EBITDA.








Indicative price band
Low
High


Price
₩50,000
₩59,000


Base deal size
₩505.9B
₩596.9B


- Institutional allotment
₩278.2B
₩328.3B


Implied market cap
₩1,445.2B
₩1,705.4B


- Discount
29.54%
16.85%

Source: DART




HK Inno.N (Formerly CJ Healthcare) IPO: Offering Detail & Valuation Issues

South Korea

Kolmar Korea Holdings Co.,Ltd operates as a holding company. The Company through its subsidiaries, provide cosmetics manufacturing, health food manufacturing, pharmaceuticals development, and other services. Kolmar Korea Holdings offers services in Korea.

Kolmar Korea Holdings (024720 KS)

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This post contains information on HK inno.N's initial public offering and summarizes the local street's general view on the valuation.

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