Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 27 April, Bloomberg reported that KT Corp is considering a partial sale of its newly created cloud business unit.</li>
<li>It is estimated that a sale of about 20% stake in KT Cloud could raise approximately $400 million, which would value KT Cloud business at $2 billion.</li>
<li>A key reason why the major telcos' share prices were down today was because of reports that the incoming Yoon Seok-Yeol administration is pressuring telcos to lower 5G tariff rates.</li>
</ul>


On 27 April, Bloomberg reported that KT Corp is considering a partial sale of its newly created cloud business unit.
It is estimated that a sale of about 20% stake in KT Cloud could raise approximately $400 million, which would value KT Cloud business at $2 billion.
A key reason why the major telcos' share prices were down today was because of reports that the incoming Yoon Seok-Yeol administration is pressuring telcos to lower 5G tariff rates.


KT Considering a Partial Sale of Its Cloud Business & Concerns About Tariff Rate Cut for 5G Services

<ul>
<li>Kakao Pay's six months end of the lock-up period comes up on 3 May, which could further put negative pressure on its share price. </li>
<li>Other factors including heightened competition, lack of margin improvement in 2021, and lifting nearly all social distancing measures in Korea are likely to further negatively impact Kakao Pay. </li>
<li>We expect additional 20 to 30%+ downside risk for Kakao Pay from current levels over the next 6-12 months. </li>
</ul>


Kakao Pay's six months end of the lock-up period comes up on 3 May, which could further put negative pressure on its share price. 
Other factors including heightened competition, lack of margin improvement in 2021, and lifting nearly all social distancing measures in Korea are likely to further negatively impact Kakao Pay. 
We expect additional 20 to 30%+ downside risk for Kakao Pay from current levels over the next 6-12 months. 


Kakao Pay: End of 6 Months Lock-Up Period Could Further Put Negative Pressure on Share Price

Private Capital Markets

<ul>
<li>Viva Republica (Toss), one of the largest fintech companies in Korea, is expected to become the first decacorn in Korea in 2Q 2022. </li>
<li>Toss is expected to have a value range of 10 trillion won to 15 trillion won in the upcoming funding round in 2Q 2022. </li>
<li>Kakao Bank has P/S multiple of 20.2x in 2021. Applying this multiple on Viva Republica's sales of 781 billion won, this would imply a valuation of 15.8 trillion won. </li>
</ul>


Viva Republica (Toss), one of the largest fintech companies in Korea, is expected to become the first decacorn in Korea in 2Q 2022. 
Toss is expected to have a value range of 10 trillion won to 15 trillion won in the upcoming funding round in 2Q 2022. 
Kakao Bank has P/S multiple of 20.2x in 2021. Applying this multiple on Viva Republica's sales of 781 billion won, this would imply a valuation of 15.8 trillion won. 


Viva Republica (Toss): To Become the First Decacorn in Korea

Cross Asset Strategy

<ul>
<li>On 6 March, the Financial Services Commission (FSC) and the Korea Exchange (KRX) jointly announced revisions and guidelines to spin-offs and double listings in Korea.</li>
<li>The new guidelines of the FSC and KRX regarding the spin-offs/double listings is positive and a step in the right direction to improve the corporate governance of companies in Korea.</li>
<li>On the other hand, one of the consequences of these changes could be that the parent companies may take more time to complete IPOs of their promising affiliates.</li>
</ul>


On 6 March, the Financial Services Commission (FSC) and the Korea Exchange (KRX) jointly announced revisions and guidelines to spin-offs and double listings in Korea.
The new guidelines of the FSC and KRX regarding the spin-offs/double listings is positive and a step in the right direction to improve the corporate governance of companies in Korea.
On the other hand, one of the consequences of these changes could be that the parent companies may take more time to complete IPOs of their promising affiliates.


FSC and KRX Jointly Announce Revisions to Spinoffs and Double Listings in Korea

<ul>
<li>On 15 February, KT Corp (030200 KS) announced that it will spin off the cloud and IDC business. </li>
<li>KT will spin off the cloud and internet data center (IDC) business to set up subsidiary tentatively named KT Cloud starting 1 April.</li>
<li>KT's valuations remain attractive and the spin-off of KT Cloud Business is also likely to aid on the continued outperformance of KT shares in the coming months. </li>
</ul>


On 15 February, KT Corp (030200 KS) announced that it will spin off the cloud and IDC business. 
KT will spin off the cloud and internet data center (IDC) business to set up subsidiary tentatively named KT Cloud starting 1 April.
KT's valuations remain attractive and the spin-off of KT Cloud Business is also likely to aid on the continued outperformance of KT shares in the coming months. 


KT Corp: Announces a Spin-Off of the Cloud and IDC Business

South Korea

KT Corporation provides telecommunication services including local, long distance, and international calling, satellite communication, data transmission, and wireless telephone services in South Korea.  The Company also offers network portal and high-speed Internet access services using asymmetric digital subscriber lines (ADSLs).

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KT Corp (030200 KS)

KT Considering a Partial Sale of Its Cloud Business & Concerns About Tariff Rate Cut for 5G Services

On 27 April, Bloomberg reported that KT Corp is considering a partial sale of its newly created cloud business unit. A 20% stake sale in KT Cloud...

Douglas Kim

Viva Republica (Toss): To Become the First Decacorn in Korea

Viva Republica (Toss), one of the largest fintech companies in Korea, is expected to become the first decacorn in Korea in 2Q 2022 with valuation...

Douglas Kim

FSC and KRX Jointly Announce Revisions to Spinoffs and Double Listings in Korea

The new guidelines of the FSC and KRX regarding the spin-offs/double listings is positive and a step in the right direction to improve the...

Douglas Kim

KT Corp: Announces a Spin-Off of the Cloud and IDC Business

KT announced that it will spin off the cloud and IDC business which is likely to aid on the continued outperformance of KT shares in the coming...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)