Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<div class="content-highlight">The <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> IPO has been one of the most successful IPOs for a company whose operations are mainly in Korea. There are likely to be a lot more Korean based companies (both public and private) that will consider listing their shares in the US market after a hugely successfully Coupang IPO. In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to reduce the infamous "Korea discount."</div>14 Korean Companies That May List Their Shares in the US Stock Exchange:<a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">1) Samsung Electronics (005930 KS)</a>2) Kurly (Private)3) SmartStudy (Private)4) Naver Webtoon (Private) 5) Krafton (Private) 6) LG Energy Solution (Private) 7) 11st (Private) 8) SSG.com (Private) 9) <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a>10) <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>11) Kakao Entertainment (Private)  12) <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>13) Tmon (Private) 14) Non private equity firm that acquires Ebay Korea

The Coupang (CPNG US) IPO has been one of the most successful IPOs for a company whose operations are mainly in Korea. There are likely to be a lot more Korean based companies (both public and private) that will consider listing their shares in the US market after a hugely successfully Coupang IPO. In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to reduce the infamous "Korea discount."14 Korean Companies That May List Their Shares in the US Stock Exchange:1) Samsung Electronics (005930 KS)2) Kurly (Private)3) SmartStudy (Private)4) Naver Webtoon (Private) 5) Krafton (Private) 6) LG Energy Solution (Private) 7) 11st (Private) 8) SSG.com (Private) 9) NCSOFT Corp (036570 KS)10) Naver Corp (035420 KS)11) Kakao Entertainment (Private)  12) Kakao Corp (035720 KS)13) Tmon (Private) 14) Non private equity firm that acquires Ebay Korea 

Top 14 Korean Companies That May List in the US Stock Exchanges - Close The "Korea Discount Gap"

Cross Asset Strategy

NPS has been selling big in Korea in recent weeks. It was reported that NPS and other local pension funds sold nearly 6.5 trillion won of Korean stocks this year (as of 21 January). The NPS has net sold for 18 consecutive trading days.The local retail investors and foreign investors have been increasing their stakes in the major Korean stocks this year driving the Korean stock market higher. However, there are some growing concerns that NPS has been selling big in Korea and may continue to do so in the near future, as many Korean stocks reach their all time highs. Furthermore, among the 50 top stocks in Korea, NPS added to its position on just 4 of these stocks and reduced its stake in 17 of them (of the ones that have shown changes in ownership stake in the dart system). These four stocks (including NCsoft, SK Innovation, Samsung F&amp;M Insurance, and POSCO Chemical) that NPS added to its positions are worth further reviews since it shows that NPS is especially more bullish on the outlook of these companies. These four stocks are up on average 20.7% YTD, outperforming KOSPI which is up 9.3% YTD.

NPS has been selling big in Korea in recent weeks. It was reported that NPS and other local pension funds sold nearly 6.5 trillion won of Korean stocks this year (as of 21 January). The NPS has net sold for 18 consecutive trading days.The local retail investors and foreign investors have been increasing their stakes in the major Korean stocks this year driving the Korean stock market higher. However, there are some growing concerns that NPS has been selling big in Korea and may continue to do so in the near future, as many Korean stocks reach their all time highs. Furthermore, among the 50 top stocks in Korea, NPS added to its position on just 4 of these stocks and reduced its stake in 17 of them (of the ones that have shown changes in ownership stake in the dart system). These four stocks (including NCsoft, SK Innovation, Samsung F&amp;M Insurance, and POSCO Chemical) that NPS added to its positions are worth further reviews since it shows that NPS is especially more bullish on the outlook of these companies. These four stocks are up on average 20.7% YTD, outperforming KOSPI which is up 9.3% YTD.

Equity Bottom-Up

Although NCsoft's stock price  has performed well in the past year, we believe the stock is well poised to outperform the market again this year. NCsoft, similar to many other leading global game companies, have benefited from COVID-19 as millions of people in Korea and around the world have been forced to various forms of lockdown and spend more time at home.Currently, millions of people in countries such as are starting to take new vaccines for COVID-19. However, there are new mutated COVID-19 strains that have found to be 50%+ more contagious than the existing COVID-19 virus. These events suggest that the first half of 2021 will continue to be quite restrictive in major governments around the world including South Korea and U.K. continuing to impose various kinds of lockdowns and social distancing measures which mean that people in these countries will continue to spend a lot of time at home. This would continue to benefit leading global game companies such as NCsoft. We believe NCsoft has numerous, notable investment merits.<ul>
<li>First, it has an outstanding line-up of new games in different geographies around the world in 2021.</li>
<li>Second, its ROE is improving materially.</li>
<li>Third, NCsoft's stock price is trading at a discount to historical valuations and there could be further valuation multiples re-rating on this stock in the coming months.</li>
<li>Fourth, China has started to approve new Korean games again.</li>
<li>Fifth, NCsoft and CJ ENM have agreed to form a new JV to roll out new digital contents aimed at the global market.</li>
</ul>

Although NCsoft's stock price  has performed well in the past year, we believe the stock is well poised to outperform the market again this year. NCsoft, similar to many other leading global game companies, have benefited from COVID-19 as millions of people in Korea and around the world have been forced to various forms of lockdown and spend more time at home.Currently, millions of people in countries such as are starting to take new vaccines for COVID-19. However, there are new mutated COVID-19 strains that have found to be 50%+ more contagious than the existing COVID-19 virus. These events suggest that the first half of 2021 will continue to be quite restrictive in major governments around the world including South Korea and U.K. continuing to impose various kinds of lockdowns and social distancing measures which mean that people in these countries will continue to spend a lot of time at home. This would continue to benefit leading global game companies such as NCsoft. We believe NCsoft has numerous, notable investment merits.
First, it has an outstanding line-up of new games in different geographies around the world in 2021.
Second, its ROE is improving materially.
Third, NCsoft's stock price is trading at a discount to historical valuations and there could be further valuation multiples re-rating on this stock in the coming months.
Fourth, China has started to approve new Korean games again.
Fifth, NCsoft and CJ ENM have agreed to form a new JV to roll out new digital contents aimed at the global market.


NCsoft: Key Catalysts and Valuation Sensitivity Analysis

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</div><div>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a>, <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a>, <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank H (939 HK)</a> and <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>. Shorts increased in Communication Services, Consumer Staples and Financials stocks and decreased in Consumer Discretionary names.</div><div>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/nexon-co-ltd" target="_blank" data-smartkarma-citation="entities:16032:1" rel="noopener">Nexon (3659 JP)</a>, <a href="https://www.smartkarma.com/entities/ana-holdings-inc" target="_blank" data-smartkarma-citation="entities:5308:1" rel="noopener">Ana Holdings (9202 JP)</a>, <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> and <a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">Sbi Holdings (8473 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/familymart-co-ltd" target="_blank" data-smartkarma-citation="entities:320:1" rel="noopener">FamilyMart Co Ltd (8028 JP)</a>, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-group-inc" target="_blank" data-smartkarma-citation="entities:217:1" rel="noopener">Sumitomo Mitsui Financial Group (8316 JP)</a> and <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp (6857 JP)</a>. Sectorally, shorts increased on Communication Services, while shorts were covered on Information Technology and Consumer Staples names.</div><div>Shorts increased in Korea for the week. Biggest increase in shorts were on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>. </div><div>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">Au Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a> and <a href="https://www.smartkarma.com/entities/catcher-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:4957:1" rel="noopener">Catcher Technology (2474 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/walsin-technology-corp" target="_blank" data-smartkarma-citation="entities:11084:1" rel="noopener">Walsin Technology (2492 TT)</a>, <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a>, <a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a> and <a href="https://www.smartkarma.com/entities/ta-chen-stainless-pipe-co" target="_blank" data-smartkarma-citation="entities:2519:1" rel="noopener">Ta Chen Stainless Pipe Co (2027 TT)</a>. </div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on ICBC (H) (1398 HK), PCCW Ltd (8 HK), China Construction Bank H (939 HK) and Ping An Insurance (H) (2318 HK) while there was short covering on Meituan (3690 HK), Alibaba Group (9988 HK), HKEX (388 HK) and HSBC Holdings (5 HK). Shorts increased in Communication Services, Consumer Staples and Financials stocks and decreased in Consumer Discretionary names.In Japan, stocks that saw the most shorts were Nexon (3659 JP), Ana Holdings (9202 JP), Fast Retailing (9983 JP) and Sbi Holdings (8473 JP) while shorts decreased on FamilyMart Co Ltd (8028 JP), Toshiba Corp (6502 JP), Sumitomo Mitsui Financial Group (8316 JP) and Advantest Corp (6857 JP). Sectorally, shorts increased on Communication Services, while shorts were covered on Information Technology and Consumer Staples names.Shorts increased in Korea for the week. Biggest increase in shorts were on Samsung Electronics (005930 KS), SK Hynix (000660 KS), LG Household &amp; Health Care (051900 KS), LG Chem Ltd (051910 KS) and Naver Corp (035420 KS). Stocks in Taiwan that saw the highest increase in shorts were TSMC (2330 TT), Au Optronics (2409 TT), Acer Inc (2353 TT) and Catcher Technology (2474 TT) while shorts were covered on Walsin Technology (2492 TT), Nanya Technology (2408 TT), Novatek Microelectronics Corp (3034 TT) and Ta Chen Stainless Pipe Co (2027 TT). 

Asia Short Interest Weekly: ICBC, PCCW, Meituan, HKEX, Nexon, FamilyMart, Samsung, TSMC, Acer

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Event-Driven

The Korean government unveiled the specifics of the Korean version of the New Deal initiative.First, we will have a government-backed ₩20tril (US$17bil) fund, ₩3tril of which will come directly from the government (tax money) with an additional ₩4tril from state-run financial institutions. The remaining ₩13tril will come from the private sector and the public.Now, what's noteworthy is that we will see a set of new indices (designed by the KRX) specifically tracking the companies directly related to the New Deal Initiative.

The Korean government unveiled the specifics of the Korean version of the New Deal initiative.First, we will have a government-backed ₩20tril (US$17bil) fund, ₩3tril of which will come directly from the government (tax money) with an additional ₩4tril from state-run financial institutions. The remaining ₩13tril will come from the private sector and the public.Now, what's noteworthy is that we will see a set of new indices (designed by the KRX) specifically tracking the companies directly related to the New Deal Initiative.

Korea-New Deal Index: Constituents, Weights, & Market Reaction

South Korea

NCSOFT Corporation develops and markets on-line games that enable users to play over the Internet and computer software, such as web editing software.  The Company also designs and constructs databases, Intranet, and commercial Internet access systems.

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NCSOFT Corp (036570 KS)

Top 14 Korean Companies That May List in the US Stock Exchanges - Close The "Korea Discount Gap"

In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to...

Douglas Kim

NPS Is Selling Big in Korea - Why?

NPS has been selling big in Korea in recent weeks. It was reported that NPS and other local pension funds sold nearly 6.5 trillion won of Korean...

Douglas Kim

NCsoft: Key Catalysts and Valuation Sensitivity Analysis

We believe NCsoft has numerous, notable investment merits, including an outstanding line-up of new games in different geographies around the world...

Douglas Kim

Asia Short Interest Weekly: ICBC, PCCW, Meituan, HKEX, Nexon, FamilyMart, Samsung, TSMC, Acer

We highlight the largest changes in short interest on stocks across Hong Kong, Japan, Korea and Taiwan to provide insight into the positions being...

Brian Freitas

Korea-New Deal Index: Constituents, Weights, & Market Reaction

The Korean government unveiled the specifics of the Korean version of the New Deal initiative.

Sanghyun Park

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