Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>In this insight, I discuss a pair trade idea (long Coway and short Netmarble) following Netmarble's announcement that it plans to acquire 2.083 million additional shares of Coway Co. </li>
<li>This acquisition would raise Netmarble's stake in Coway from 25.74% previously to 29.1%.</li>
<li>At the core of what's wrong behind Netmarble's acquisition of Coway has been that a game business has virtually no synergies with a home appliance business that provides air/water purifiers.</li>
</ul>


In this insight, I discuss a pair trade idea (long Coway and short Netmarble) following Netmarble's announcement that it plans to acquire 2.083 million additional shares of Coway Co. 
This acquisition would raise Netmarble's stake in Coway from 25.74% previously to 29.1%.
At the core of what's wrong behind Netmarble's acquisition of Coway has been that a game business has virtually no synergies with a home appliance business that provides air/water purifiers.


A Pair Trade Following Netmarble's Decision To Increase Its Stake in Coway

Cross Asset Strategy

<ul>
<li>Now that Lee Jae-Myung has become new South Korean President, the uncertainty revolving who will lead South Korea in the next five years is now over.</li>
<li>In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the market for the remainder of 2025.</li>
<li>The four investment themes include Korean Holdcos/Quasi Holdcos, Korean Cultural Contents, Securities, and SK Group Companies.</li>
</ul>


Now that Lee Jae-Myung has become new South Korean President, the uncertainty revolving who will lead South Korea in the next five years is now over.
In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the market for the remainder of 2025.
The four investment themes include Korean Holdcos/Quasi Holdcos, Korean Cultural Contents, Securities, and SK Group Companies.


Lee Jae-Myung Becomes the New South Korean President - Four Investment Themes That Could Outperform

Equity Capital Markets

<ul>
<li>On 5 June, Shift Up announced that it will be postponing its IPO to July. The original book building period for the institutional investors was from 3 to 13 June.  </li>
<li>The final book building date has been postponed to 27 June. The subsequent public offering subscription for general investors was also postponed to 2 to 3 July.</li>
<li>A major investment positive of Shift Up is enormous initial success of Stellar Blade which was the best selling game in the U.S. and numerous other countries in April 2024. </li>
</ul>


On 5 June, Shift Up announced that it will be postponing its IPO to July. The original book building period for the institutional investors was from 3 to 13 June.  
The final book building date has been postponed to 27 June. The subsequent public offering subscription for general investors was also postponed to 2 to 3 July.
A major investment positive of Shift Up is enormous initial success of Stellar Blade which was the best selling game in the U.S. and numerous other countries in April 2024. 


Shift Up Delays the IPO and Stellar Blade Tops Number One Game in the US in April

Event-Driven

<ul>
<li>According to the local media, Netmarble is considering on issuing exchangeable bonds (EB) worth about 250 billion won backed by its stake in HYBE.</li>
<li>The potential EB issue is likely to be slightly positive on Netmarble and slightly negative on HYBE (mainly due to additional shares that could be sold in the market). </li>
<li>We are Negative on BOTH Netmarble and HYBE. Their valuations are not attractive. Plus, HYBE could face a major negative issue of its founder Bang Si-hyuk who could be jailed. </li>
</ul>


According to the local media, Netmarble is considering on issuing exchangeable bonds (EB) worth about 250 billion won backed by its stake in HYBE.
The potential EB issue is likely to be slightly positive on Netmarble and slightly negative on HYBE (mainly due to additional shares that could be sold in the market). 
We are Negative on BOTH Netmarble and HYBE. Their valuations are not attractive. Plus, HYBE could face a major negative issue of its founder Bang Si-hyuk who could be jailed. 


Netmarble Is Considering on Issuing EB Worth 250 Billion Won Backed by Its Stake in HYBE

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We discussed in last week's June 19 report how bullish price and RS trends on Israel's TA-125 was our tell that global equities were looking past Israel-Iran tensions.</li>
<li>Now completely in the rear-view mirror.  We also discussed how we were expecting short-term support on ACWI-US at $123-$123.50 (6.5-month base support), and ACWI-US bottomed at $123.20 on Monday.</li>
<li>As a result, we remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass).</li>
</ul>


We discussed in last week's June 19 report how bullish price and RS trends on Israel's TA-125 was our tell that global equities were looking past Israel-Iran tensions.
Now completely in the rear-view mirror.  We also discussed how we were expecting short-term support on ACWI-US at $123-$123.50 (6.5-month base support), and ACWI-US bottomed at $123.20 on Monday.
As a result, we remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass).


Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding

South Korea

Netmarble Corporation develops and publishes mobile games. The Company develops and publishes casual games, action, sports games, strategy, simulation games, and social casino games. Netmarble offers services worldwide.

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Netmarble (251270 KS)

A Pair Trade Following Netmarble's Decision To Increase Its Stake in Coway

In this insight, I discuss a pair trade idea (long Coway and short Netmarble) following Netmarble's announcement that it plans to acquire 2.083...

Douglas Kim

Lee Jae-Myung Becomes the New South Korean President - Four Investment Themes That Could Outperform

In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the...

Douglas Kim

Shift Up Delays the IPO and Stellar Blade Tops Number One Game in the US in April

Shift Up announced that it will be postponing its IPO to July. A major investment positive is the enormous initial success of Stellar Blade which...

Douglas Kim

Netmarble Is Considering on Issuing EB Worth 250 Billion Won Backed by Its Stake in HYBE

According to the local media, Netmarble is considering on issuing exchangeable bonds (EB) worth about 250 billion won backed by its stake in HYBE.

Douglas Kim

Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding

Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding on $ACWI ($123-123.50), $EEM ($46)

Vermilion Research

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