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>Extending bookbuilding period to seven days (and test-the-waters) is unlikely to make any real difference. Leaving the financial capacity check to underwriters will likely cause sharp confusion in the market.</li>
<li>The purpose of penalizing so-called hot money, like flippers and non-pricing institutions, is understandable. However, whether FSC has fully considered the side effects caused by uniformly applying this is questionable.</li>
<li>Expanding the allowable price range on a listing day is the most crucial point we should pay attention to, and we must design a post-IPO trading strategy accordingly.</li>
</ul>


Extending bookbuilding period to seven days (and test-the-waters) is unlikely to make any real difference. Leaving the financial capacity check to underwriters will likely cause sharp confusion in the market.
The purpose of penalizing so-called hot money, like flippers and non-pricing institutions, is understandable. However, whether FSC has fully considered the side effects caused by uniformly applying this is questionable.
Expanding the allowable price range on a listing day is the most crucial point we should pay attention to, and we must design a post-IPO trading strategy accordingly.


Korea FSC's Official Rule Changes for Local IPOs & Key Takeaways

<ul>
<li>Hyundai Oilbank, this year's biggest fish, dropped the IPO. Another big fish, CJ Olive Young, also officially announced that it would give up its listing.</li>
<li>The bookbuilding results of SOCAR turned out to be disastrous, suggesting an increased possibility that a higher-than-typical flow level will likely be seen in WCP and K Bank. </li>
<li>In particular, despite the valuation issues, we should pay attention to the possibility of an unexpected level of local institutional flows flocking to WCP, which has less schedule risk.</li>
</ul>


Hyundai Oilbank, this year's biggest fish, dropped the IPO. Another big fish, CJ Olive Young, also officially announced that it would give up its listing.
The bookbuilding results of SOCAR turned out to be disastrous, suggesting an increased possibility that a higher-than-typical flow level will likely be seen in WCP and K Bank. 
In particular, despite the valuation issues, we should pay attention to the possibility of an unexpected level of local institutional flows flocking to WCP, which has less schedule risk.


Messed up Korea IPO Pipeline and Unexpected Beneficiaries

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we discuss a pair trade between E Mart Inc (long) and Coupang (short). At current valuations and business outlook, we like the risk/reward of this pair trade.</li>
<li>The end of the mandatory shut down rules on major hypermarkets is likely to have a major positive impact on Emart and negative impact on Coupang and Kurly.</li>
<li>Although this has not been made into law, we think there is relatively high probability that this will eventually be made into law sometime this year. </li>
</ul>


In this insight, we discuss a pair trade between E Mart Inc (long) and Coupang (short). At current valuations and business outlook, we like the risk/reward of this pair trade.
The end of the mandatory shut down rules on major hypermarkets is likely to have a major positive impact on Emart and negative impact on Coupang and Kurly.
Although this has not been made into law, we think there is relatively high probability that this will eventually be made into law sometime this year. 


A Pair Trade Between Emart & Coupang (Potential End of Mandatory Shut Down Rules for Hypermarkets)

Private Capital Markets

<ul>
<li>Kurly is the number one player in Korea focusing on e-commerce of fresh foods. Kurly's most recent valuation was about 4 trillion won in December 2021.</li>
<li>Coupang is trading at P/S and P/GP multiples of 1.2x and 7.4x (2021), respectively. Using these valuation multiples, Kurly's valuation would be from 1.9 trillion won to 2.2 trillion won.</li>
<li>These valuations would represent nearly half of the 4 trillion won in private market valuation it received in December 2021.</li>
</ul>


Kurly is the number one player in Korea focusing on e-commerce of fresh foods. Kurly's most recent valuation was about 4 trillion won in December 2021.
Coupang is trading at P/S and P/GP multiples of 1.2x and 7.4x (2021), respectively. Using these valuation multiples, Kurly's valuation would be from 1.9 trillion won to 2.2 trillion won.
These valuations would represent nearly half of the 4 trillion won in private market valuation it received in December 2021.


Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea

<ul>
<li>Kurly's management team needs to drastically lower its valuation expectation in this difficult market environment.</li>
<li>Due to weak market conditions, it is likely to have a difficult time completing this IPO if its valuation is stretched to about 6 trillion won to 7 trillion won. </li>
<li>In our view, the company could complete its IPO if the valuation is close to about 3.5 trillion won to 4.5 trillion won. </li>
</ul>


Kurly's management team needs to drastically lower its valuation expectation in this difficult market environment.
Due to weak market conditions, it is likely to have a difficult time completing this IPO if its valuation is stretched to about 6 trillion won to 7 trillion won. 
In our view, the company could complete its IPO if the valuation is close to about 3.5 trillion won to 4.5 trillion won. 


Kurly's Mgmt Needs to Drastically Lower Valuation Expectations to Complete IPO in Next 6 Months

South Korea

Kurly Inc. wholesales and distributes food products. The Company wholesales and distributes fresh food, processed food, and other related products. Kurly markets its products throughout South Korea.

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Kurly Inc (1653187D KS)

Korea FSC's Official Rule Changes for Local IPOs & Key Takeaways

This post details the rule changes for Korea's local IPOs, officially unveiled by Korea FSC, and provides key takeaways.

Sanghyun Park

Messed up Korea IPO Pipeline and Unexpected Beneficiaries

This post investigates Korea's messed-up IPO pipeline situation and discusses who will be unexpected beneficiaries after the SOCAR bookbuilding...

Sanghyun Park

A Pair Trade Between Emart & Coupang (Potential End of Mandatory Shut Down Rules for Hypermarkets)

The end of the mandatory shut down rules on major hypermarkets is likely to have a major positive impact on Emart and negative impact on Coupang...

Douglas Kim

Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea

Kurly is the number one player in Korea focusing on e-commerce of fresh foods in Korea. Kurly's most recent valuation was about 4 trillion won in...

Douglas Kim

Kurly's Mgmt Needs to Drastically Lower Valuation Expectations to Complete IPO in Next 6 Months

Kurly's management team needs to drastically lower its valuation expectation in this difficult market environment if it wants to complete its IPO...

Douglas Kim

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