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.

Event-Driven

<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

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.

Equity Capital Markets

<ul>
<li>SOCAR's institutional subscription rate was 56.97 to 1. It is highly unusual for an institutional competition rate to be this low among IPOs worth more than ₩1T.</li>
<li>SOCAR eventually set the price at ₩28,000 and reduced the offering volume from 4.55M to 3.64M, resulting in deal size of ₩100B at an implied market cap of ₩970B.</li>
<li>Since Lotte Rental's buying flow may be triggered earlier than expected, we may need to consider a swing trade if the price enters an oversold territory after listing.</li>
</ul>


SOCAR's institutional subscription rate was 56.97 to 1. It is highly unusual for an institutional competition rate to be this low among IPOs worth more than ₩1T.
SOCAR eventually set the price at ₩28,000 and reduced the offering volume from 4.55M to 3.64M, resulting in deal size of ₩100B at an implied market cap of ₩970B.
Since Lotte Rental's buying flow may be triggered earlier than expected, we may need to consider a swing trade if the price enters an oversold territory after listing.


SOCAR IPO: Order Table, Revised Terms, & Thinking Points

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In the past several days, there have been numerous news accounts about the Indian government cracking down on Krafton's Battlegrounds Mobile India (BGMI) game.</li>
<li>We believe there are several reasons why Indian government is cracking down on BGMI including concerns about this game potentially leading to greater violence among children and ties to Tencent.</li>
<li>At current valuation levels, we like a pair trade between Krafton (go short) and NCSOFT Corp (036570 KS) (go long).</li>
</ul>


In the past several days, there have been numerous news accounts about the Indian government cracking down on Krafton's Battlegrounds Mobile India (BGMI) game.
We believe there are several reasons why Indian government is cracking down on BGMI including concerns about this game potentially leading to greater violence among children and ties to Tencent.
At current valuation levels, we like a pair trade between Krafton (go short) and NCSOFT Corp (036570 KS) (go long).


A Pair Trade Between Krafton & NCsoft (India's Crackdown on Krafton's BGMI)

<ul>
<li>WCP announced today that it will delay its IPO. The book building for the institutional investors will start on 14 September (from 1 August previously).</li>
<li>Our guess for the delay is because the company may have tapped some major institutions and they may not have been so bullish on the IPO at current IPO valuation.</li>
<li>Our base case valuation of WCP is price of 87,805 won. Given the lack of upside relative to the IPO price range, we would PASS on this IPO deal.</li>
</ul>


WCP announced today that it will delay its IPO. The book building for the institutional investors will start on 14 September (from 1 August previously).
Our guess for the delay is because the company may have tapped some major institutions and they may not have been so bullish on the IPO at current IPO valuation.
Our base case valuation of WCP is price of 87,805 won. Given the lack of upside relative to the IPO price range, we would PASS on this IPO deal.


<ul>
<li>Many employees of both companies must have participated in the ESOP subscription with stock-backed loans.</li>
<li>At the last close, the Kakao Bank ESOP must pay 14.34% of the initial total investment as additional withholdings. Krafton is much worse at 30.25%.</li>
<li>It seems highly likely that this situation will lead to a short-term flow distortion, substantial enough for us to consider setting up a position aimed at this.</li>
</ul>


Many employees of both companies must have participated in the ESOP subscription with stock-backed loans.
At the last close, the Kakao Bank ESOP must pay 14.34% of the initial total investment as additional withholdings. Krafton is much worse at 30.25%.
It seems highly likely that this situation will lead to a short-term flow distortion, substantial enough for us to consider setting up a position aimed at this.


Explaining ESOP Margin Call Situation for Kakao Bank & Krafton

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.

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Krafton (259960 KS)

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

SOCAR IPO: Order Table, Revised Terms, & Thinking Points

This post investigates SOCAR's order table in the bookbuilding and discusses the thinking points for post-listing trade.

Sanghyun Park

A Pair Trade Between Krafton & NCsoft (India's Crackdown on Krafton's BGMI)

We believe there are several reasons why Indian government is cracking down on Krafton's BGMI including concerns about this game leading to greater...

Douglas Kim

WCP Delays IPO

WCP announced today that it will delay its IPO. The book building for the institutional investors will start on 14 September (from 1 August...

Douglas Kim

Explaining ESOP Margin Call Situation for Kakao Bank & Krafton

This post investigates the ESOP margin call situation for Kakao Bank and Krafton, which are about to face the ESOP lockup releases on August 6 and...

Sanghyun Park

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