Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>Nexteel reported disappointing IPO book building results from institutional investors. The IPO price has been confirmed at 11,500 won which is at the low end of the IPO valuation range.</li>
<li>A total of 700 institutions participated, with a demand ratio of 236 to 1. It is scheduled to be listed on the KOSPI exchange on 21 August. </li>
<li>Despite the weak IPO book building results, we maintain our positive view of the Nexteel IPO. Our base case valuation of Nexteel is implied market cap of 485.8 billion won.</li>
</ul>


Nexteel reported disappointing IPO book building results from institutional investors. The IPO price has been confirmed at 11,500 won which is at the low end of the IPO valuation range.
A total of 700 institutions participated, with a demand ratio of 236 to 1. It is scheduled to be listed on the KOSPI exchange on 21 August. 
Despite the weak IPO book building results, we maintain our positive view of the Nexteel IPO. Our base case valuation of Nexteel is implied market cap of 485.8 billion won.


Nexteel IPO Book Building Results Analysis

<ul>
<li>Our base case valuation of Nexteel is target price of 18,671 won per share, which represents 49% higher than the high end of the IPO price range of 12,500 won. </li>
<li>We estimate Nexteel to generate sales of 883.6 billion won (up 32.2% YoY) and operating profit of 257.4 billion won (up 42% YoY) in 2023.</li>
<li>Nexteel's main products include pipes used to extract oil and gas from oil wells. It also makes steel pipes for transporting oil &amp; steam, construction, shipbuilding, and machinery industries.</li>
</ul>


Our base case valuation of Nexteel is target price of 18,671 won per share, which represents 49% higher than the high end of the IPO price range of 12,500 won. 
We estimate Nexteel to generate sales of 883.6 billion won (up 32.2% YoY) and operating profit of 257.4 billion won (up 42% YoY) in 2023.
Nexteel's main products include pipes used to extract oil and gas from oil wells. It also makes steel pipes for transporting oil &amp; steam, construction, shipbuilding, and machinery industries.


<ul>
<li>Nexteel is getting ready to complete its IPO in Korea in August. Nexteel is a steel pipe manufacturing company. The IPO price range is from 11,500 won to 12,500 won. </li>
<li>The IPO offering size is from 80.5 billion won to 87.5 billion won. The expected market cap is from 299 billion won to 325 billion won.</li>
<li>Nexteel's sales increased at a CAGR of 76.4% from 2020 to 2022. The company's operating profit surged from 1.5 billion won in 2020 to 181.3 billion won in 2022. </li>
</ul>


Nexteel is getting ready to complete its IPO in Korea in August. Nexteel is a steel pipe manufacturing company. The IPO price range is from 11,500 won to 12,500 won. 
The IPO offering size is from 80.5 billion won to 87.5 billion won. The expected market cap is from 299 billion won to 325 billion won.
Nexteel's sales increased at a CAGR of 76.4% from 2020 to 2022. The company's operating profit surged from 1.5 billion won in 2020 to 181.3 billion won in 2022. 


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.</li>
<li>The <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.</li>
<li>Another week of inflows for the <a href="https://www.smartkarma.com/entities/ishares-msci-emerging-markets-223f5da3-7054-4e4f-bc55-b7f0852c2581" target="_blank" data-smartkarma-citation="entities:31998:1" rel="noopener">iShares Emerging Markets ex-China (EMXC US)</a> ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!</li>
</ul>


The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!


Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

<ul>
<li>The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.</li>
<li>We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.</li>
<li>On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.</li>
</ul>


The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.


KOSPI Size Indices - Potential Migrations as Focus Is on Price to Book

South Korea

Nexteel.Co.Ltd operates steel manufacturing businesses. The Company produces round pipes, square pipes, painting square pipes, and other products. Nexteel conducts businesses in South Korea.

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Nexteel (092790 KS)

Nexteel IPO Book Building Results Analysis

Nexteel reported disappointing IPO book building results from institutional investors. The IPO price has been confirmed at 11,500 won which is at...

Douglas Kim

Nexteel IPO Valuation Analysis

Our base case valuation of Nexteel is target price of 18,671 won per share, which represents 49% higher than the high end of the IPO price range of...

Douglas Kim

Nexteel IPO Preview

Nexteel is getting ready to complete its IPO in August. Its sales increased at a CAGR of 76.4% from 2020 to 2022. Its operating profit surged from...

Douglas Kim

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

KOSPI Size Indices - Potential Migrations as Focus Is on Price to Book

We see 35 migrations and 7 new inclusions for the KOSPI Size indices. Stocks migrating higher have outperformed stocks migrating lower. Some stocks...

Brian Freitas

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