Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>After the market close on 22 April, it was reported that SK Square plans to sell 2.2% stake in Krafton in a block deal sale worth about 270 billion won. </li>
<li>The estimated block deal sales price range is from 243,000 won to 251,000 won, representing a 3.1% to 6.2% discount to the closing price of 259,000 won on 22 April.</li>
<li>We would take the deal. The company's valuations remain attractive and it has been successful in expanding its sales and profits.  </li>
</ul>


After the market close on 22 April, it was reported that SK Square plans to sell 2.2% stake in Krafton in a block deal sale worth about 270 billion won. 
The estimated block deal sales price range is from 243,000 won to 251,000 won, representing a 3.1% to 6.2% discount to the closing price of 259,000 won on 22 April.
We would take the deal. The company's valuations remain attractive and it has been successful in expanding its sales and profits.  


Krafton: Block Deal Sale of About 270 Billion Won

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>SK Square is looking to raise around US$198m via selling 2.1% of <a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener">Krafton (259960 KS).</a>
</li>
<li>The stock has been doing well over the past few months and its earnings and price momentum remain strong.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>


SK Square is looking to raise around US$198m via selling 2.1% of Krafton (259960 KS).

The stock has been doing well over the past few months and its earnings and price momentum remain strong.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


Krafton Placement - Stock Has Been Doing Well, Momentum Remains Strong

Equity Bottom-Up

<ul>
<li>There is a high likelihood of the Indian authorities fully approving the BGMI game after three months of trial. Plus, it has a solid pipeline of new games under development. </li>
<li>Krafton is improving its shareholder return policy. In addition, the consensus is likely to raise the company's earnings estimates post its excellent results in 1Q 2023. </li>
<li>We maintain our Positive view of Krafton and its shares are likely to continue to outperform the market this year. </li>
</ul>


There is a high likelihood of the Indian authorities fully approving the BGMI game after three months of trial. Plus, it has a solid pipeline of new games under development. 
Krafton is improving its shareholder return policy. In addition, the consensus is likely to raise the company's earnings estimates post its excellent results in 1Q 2023. 
We maintain our Positive view of Krafton and its shares are likely to continue to outperform the market this year. 


Krafton: India & Improving Shareholder Return Policy Likely to Lead to Further Outperformance

<ul>
<li>Multiple new agencies have been reporting that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> plans to trim its investment portfolio over the remainder of the year. </li>
<li>The reports have been coming in since the second half of the year and the company has been duly denying these rumors.</li>
<li>In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.</li>
</ul>


Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. 
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.


Tencent Investee Selldown - The US$120bn Global Overhang

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

We previously discussed our thoughts on Krafton’s valuation in <a href="https://www.smartkarma.com/insights/krafton-ipo-valuation" target="_blank" rel="noopener">Krafton IPO - Valuation | Smartkarma</a>. Since then, Krafton has lowered its asking range from KRW458,00-557,000 to KRW400,000-498,000 while reducing the number of new share offered from 7,030,000 to 5,624,000. They didn’t reduce the number of existing shares offered though, no. Somewhat fitting perhaps for a company that is over-reliant on a game whose battlefield you enter by parachute. They should colour the parachutes golden if they manage to pull this off.

We previously discussed our thoughts on Krafton’s valuation in Krafton IPO - Valuation | Smartkarma. Since then, Krafton has lowered its asking range from KRW458,00-557,000 to KRW400,000-498,000 while reducing the number of new share offered from 7,030,000 to 5,624,000. They didn’t reduce the number of existing shares offered though, no. Somewhat fitting perhaps for a company that is over-reliant on a game whose battlefield you enter by parachute. They should colour the parachutes golden if they manage to pull this off.

South Korea

Krafton, Inc. operates as a game development company. The Company develops console games, mobile games, computer games, and other related products. Krafton markets its products throughout South Korea.

Krafton (259960 KS)

Krafton: Block Deal Sale of About 270 Billion Won

After the market close on 22 April, it was reported that SK Square plans to sell 2.2% stake in Krafton in a block deal sale worth about 270 billion...

Douglas Kim

Krafton Placement - Stock Has Been Doing Well, Momentum Remains Strong

SK Square is looking to raise around US$198m via selling 2.1% of Krafton (259960 KS). In this note, we talk about the deal dyanmics and run it...

Sumeet Singh

Krafton: India & Improving Shareholder Return Policy Likely to Lead to Further Outperformance

Krafton's share price is up 11% today after better than expected results in 3Q 2023. It had sales of 450 billion won (up 3.8% YoY) and operating...

Douglas Kim

Tencent Investee Selldown - The US$120bn Global Overhang

There have been multiple reports that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. We look at Tencent's...

Sumeet Singh

Krafton IPO – This Should Be Pulled

In case you are looking for ideas that are bearish China but perhaps not directly in the firing line if positioning gets too stretched to the...

Mio Kato