SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

SGX Asia Currencies and Commodities Insights

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<div class="content-highlight"><p>Our base case valuation of Aju Steel is implied market cap of 377 billion won or target price of 14,240 won per share, which would represent just 2% above the mid-point of the IPO price range (13,900 won). Given the lack of upside versus the IPO price range, we would AVOID this IPO. </p></div>

Our base case valuation of Aju Steel is implied market cap of 377 billion won or target price of 14,240 won per share, which would represent just 2% above the mid-point of the IPO price range (13,900 won). Given the lack of upside versus the IPO price range, we would AVOID this IPO. 

<p>Founded in 1995, Aju Steel specializes in producing color steel sheets. Color steel sheet is a high value-added material that has improved durability and functionality by processing the surface of steel to realize various colors and patterns. The company's color steel sheet products are mainly applied to premium home appliances and building interior and exterior materials where design is important. </p><p>The IPO price range of Aju Steel is from 12,700 won to 15,100 won. The IPO deal size is $78 million to $93 million. According to the bankers' valuation, the expected market cap after the IPO is from 336 billion won to 399 billion won. The book building for the institutional investors starts on 2 August 2021.</p><table class="table table-striped">
<colgroup>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="width: 238pt;"><div>Deal Specifics of the Aju Steel IPO:</div></td>
<td style="width: 282pt;"> </td>
</tr>
<tr>
<td>Lead underwriters of the IPO: </td>
<td style="width: 282pt;">Mirae Asset Securities</td>
</tr>
<tr>
<td>Expected IPO price per share: </td>
<td style="width: 282pt;">12,700 won (low)/15,100 won (high)</td>
</tr>
<tr>
<td>Number of Shares for IPO:</td>
<td style="width: 282pt;">6.94m shares (4m new shares and 2.94m old shares)</td>
</tr>
<tr>
<td>IPO base deal size: </td>
<td style="width: 282pt;">US$78 mn (low);  US$93 mn (high)</td>
</tr>
<tr>
<td>Expected common shares outstanding, fully diluted (post-IPO):  </td>
<td style="width: 282pt;">26.45m shares</td>
</tr>
<tr>
<td>Expected market cap after IPO:</td>
<td style="width: 282pt;">336 billion won (low)/399 billion won (high)</td>
</tr>
<tr>
<td>Book open: </td>
<td style="text-align: left; width: 282pt;">2-Aug-21</td>
</tr>
<tr>
<td>Book closed:</td>
<td style="text-align: left; width: 282pt;">3-Aug-21</td>
</tr>
<tr>
<td>Listing date: </td>
<td style="text-align: left; width: 282pt;">TBD</td>
</tr>
<tr>
<td>Source: Company data</td>
<td style="width: 282pt;"> </td>
</tr>
</tbody>
</table><p><strong>Major Shareholders</strong> - The major shareholders of the company include the founder Lee Hak-Yeon (35.9%), Yoon Mi-Sook (16.3%) - wife of the founder Lee Hak-Yeon. </p>

Founded in 1995, Aju Steel specializes in producing color steel sheets. Color steel sheet is a high value-added material that has improved durability and functionality by processing the surface of steel to realize various colors and patterns. The company's color steel sheet products are mainly applied to premium home appliances and building interior and exterior materials where design is important. The IPO price range of Aju Steel is from 12,700 won to 15,100 won. The IPO deal size is $78 million to $93 million. According to the bankers' valuation, the expected market cap after the IPO is from 336 billion won to 399 billion won. The book building for the institutional investors starts on 2 August 2021.






Deal Specifics of the Aju Steel IPO:
 


Lead underwriters of the IPO: 
Mirae Asset Securities


Expected IPO price per share: 
12,700 won (low)/15,100 won (high)


Number of Shares for IPO:
6.94m shares (4m new shares and 2.94m old shares)


IPO base deal size: 
US$78 mn (low);  US$93 mn (high)


Expected common shares outstanding, fully diluted (post-IPO):  
26.45m shares


Expected market cap after IPO:
336 billion won (low)/399 billion won (high)


Book open: 
2-Aug-21


Book closed:
3-Aug-21


Listing date: 
TBD


Source: Company data
 


Major Shareholders - The major shareholders of the company include the founder Lee Hak-Yeon (35.9%), Yoon Mi-Sook (16.3%) - wife of the founder Lee Hak-Yeon. 

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<p>This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. </p><p>The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. </p><p>This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for &gt;12 months), has a solid real-world performance track record, which I set out in the detail below. </p><p>Notable new entrants to the top decile this month include Russian energy plays <a href="https://www.smartkarma.com/entities/gazprom-pjsc-6a7231a9-d5e4-4da4-bf21-aa1b9d50fbf8" target="_blank" data-smartkarma-citation="entities:27578:1" rel="noopener">Gazprom PJSC (GAZP RM)</a> and <a href="https://www.smartkarma.com/entities/lukoil-pjsc" target="_blank" data-smartkarma-citation="entities:24141:1" rel="noopener">Lukoil PJSC (LKOD LI)</a>, Brazilian securities exchange <a href="https://www.smartkarma.com/entities/b3-sa-brasil-bolsa-balcao" target="_blank" data-smartkarma-citation="entities:24580:1" rel="noopener">B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ)</a>, and <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>.</p><table class="table table-striped">
<colgroup>
<col>
<col>
<col>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="text-align: center; width: 74.7344px;">rank</td>
<td style="width: 263.203px;">Name</td>
<td style="width: 185.312px;">Sector</td>
<td style="width: 147.938px;">Location</td>
<td style="text-align: center; width: 74.8125px;">prev.</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">1</td>
<td style="width: 263.203px;">
<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> </td>
<td style="width: 185.312px;">Information Technology</td>
<td style="width: 147.938px;">Korea (South)</td>
<td style="text-align: center; width: 74.8125px;">3</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">2</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> </td>
<td style="width: 185.312px;">Communication</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">9</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">3</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> </td>
<td style="width: 185.312px;">Energy</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">1</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">4</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/posco" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">Posco (005490 KS)</a> </td>
<td style="width: 185.312px;">Materials</td>
<td style="width: 147.938px;">Korea (South)</td>
<td style="text-align: center; width: 74.8125px;">21</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">5</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/kia-motors-corp" target="_blank" data-smartkarma-citation="entities:156:1" rel="noopener">Kia Motors Corp (000270 KS)</a> </td>
<td style="width: 185.312px;">Consumer Discretionary</td>
<td style="width: 147.938px;">Korea (South)</td>
<td style="text-align: center; width: 74.8125px;">4</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">6</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/bank-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:656:1" rel="noopener">Bank Of China Ltd (H) (3988 HK)</a> </td>
<td style="width: 185.312px;">Financials</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">5</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">7</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/gazprom-pjsc-6a7231a9-d5e4-4da4-bf21-aa1b9d50fbf8" target="_blank" data-smartkarma-citation="entities:27578:1" rel="noopener">Gazprom PJSC (GAZP RM)</a> </td>
<td style="width: 185.312px;">Energy</td>
<td style="width: 147.938px;">Russian Federation</td>
<td style="text-align: center; width: 74.8125px;">14</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">8</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/lukoil-pjsc" target="_blank" data-smartkarma-citation="entities:24141:1" rel="noopener">Lukoil PJSC (LKOD LI)</a> </td>
<td style="width: 185.312px;">Energy</td>
<td style="width: 147.938px;">Russian Federation</td>
<td style="text-align: center; width: 74.8125px;">32</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">9</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/b3-sa-brasil-bolsa-balcao" target="_blank" data-smartkarma-citation="entities:24580:1" rel="noopener">B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ)</a> </td>
<td style="width: 185.312px;">Financials</td>
<td style="width: 147.938px;">Brazil</td>
<td style="text-align: center; width: 74.8125px;">70</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">10</td>
<td style="width: 263.203px;">
<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> </td>
<td style="width: 185.312px;">Financials</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">41</td>
</tr>
<tr><td colspan="5" style="text-align: left; width: 746px;"><em>Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas</em></td></tr>
</tbody>
</table><p><em>As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.</em></p>

This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for &gt;12 months), has a solid real-world performance track record, which I set out in the detail below. Notable new entrants to the top decile this month include Russian energy plays Gazprom PJSC (GAZP RM) and Lukoil PJSC (LKOD LI), Brazilian securities exchange B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ), and China Construction Bank H (939 HK).









rank
Name
Sector
Location
prev.


1

SK Hynix (000660 KS) 
Information Technology
Korea (South)
3


2

China Mobile (941 HK) 
Communication
China
9


3

CNOOC Ltd (883 HK) 
Energy
China
1


4

Posco (005490 KS) 
Materials
Korea (South)
21


5

Kia Motors Corp (000270 KS) 
Consumer Discretionary
Korea (South)
4


6

Bank Of China Ltd (H) (3988 HK) 
Financials
China
5


7

Gazprom PJSC (GAZP RM) 
Energy
Russian Federation
14


8

Lukoil PJSC (LKOD LI) 
Energy
Russian Federation
32


9

B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ) 
Financials
Brazil
70


10

China Construction Bank H (939 HK) 
Financials
China
41

Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas

As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<p>Surging fund inflows have pushed average holding weights in Metals and Mining stocks to their highest allocation in over 7 years.</p><p>Changes in stock ownership have been overwhelmingly positive.  The percentage of funds invested in <a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a> , <a href="https://www.smartkarma.com/entities/posco" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">Posco (005490 KS)</a>, <a href="https://www.smartkarma.com/entities/cap-sa" target="_blank" data-smartkarma-citation="entities:24551:1" rel="noopener">CAP SA (CAP CI)</a> and <a href="https://www.smartkarma.com/entities/china-molybdenum-co-ltd-d9c46a67-e31f-431f-9f5f-02222265d701" target="_blank" data-smartkarma-citation="entities:8585:1" rel="noopener">China Molybdenum Co Ltd H (3993 HK)</a> increased by over 4% in the last 6-months.  EM investors scaled back exposures in <a href="https://www.smartkarma.com/entities/gold-fields-ltd" target="_blank" data-smartkarma-citation="entities:25109:1" rel="noopener">Gold Fields Ltd (GFI SJ)</a> and Koza Altin Isletmeleri.</p><p>Despite the recent squeeze in exposure, there is plenty of room for EM funds to increase positioning further, with the potential to keep prices well supported.</p><p>We highlight <a href="https://www.smartkarma.com/entities/baoshan-iron-steel-co-a" target="_blank" data-smartkarma-citation="entities:3891:1" rel="noopener">Baoshan Iron &amp; Steel Co A (600019 CH)</a> , <a href="https://www.smartkarma.com/entities/cap-sa" target="_blank" data-smartkarma-citation="entities:24551:1" rel="noopener">CAP SA (CAP CI)</a> , <a href="https://www.smartkarma.com/entities/polymetal-international-plc" target="_blank" data-smartkarma-citation="entities:22095:1" rel="noopener">Polymetal International (POLY LN)</a> , <a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a> and <a href="https://www.smartkarma.com/entities/sibanye-stillwater" target="_blank" data-smartkarma-citation="entities:982:1" rel="noopener">Sibanye-Stillwater (SGL SJ)</a> as stocks towards the higher end of their ownership ranges whilst also seeing ownership levels increase among active EM investors.  </p><p>Previously well held Stocks such as <a href="https://www.smartkarma.com/entities/posco" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">Posco (005490 KS)</a> , <a href="https://www.smartkarma.com/entities/grupo-mexico-sab-de-cv" target="_blank" data-smartkarma-citation="entities:24685:1" rel="noopener">Grupo Mexico Sab De Cv (GMEXICOB MM)</a> , <a href="https://www.smartkarma.com/entities/kghm-polska-miedz-sa" target="_blank" data-smartkarma-citation="entities:25186:1" rel="noopener">Kghm Polska Miedz Sa (KGH PW)</a> , <a href="https://www.smartkarma.com/entities/gerdau-sa" target="_blank" data-smartkarma-citation="entities:24538:1" rel="noopener">Gerdau SA (GGBR4 BZ)</a> , <a href="https://www.smartkarma.com/entities/china-steel-corp" target="_blank" data-smartkarma-citation="entities:962:1" rel="noopener">China Steel (2002 TT)</a> and <a href="https://www.smartkarma.com/entities/hyundai-steel-company" target="_blank" data-smartkarma-citation="entities:963:1" rel="noopener">Hyundai Steel (004020 KS)</a> are starting to attract growing interest from EM active managers.</p><p>From a performance perspective, the EM Metals and Mining index has outperformed the broader market index by 40% over the last 12 months, but there has been some consolidation in June.  Could this be an opportunity to scale up exposure?</p><p><em>Analysis taken from our Emerging Markets research, covering 242 active EM strategies with combined AUM of $500bn</em></p>

Surging fund inflows have pushed average holding weights in Metals and Mining stocks to their highest allocation in over 7 years.Changes in stock ownership have been overwhelmingly positive.  The percentage of funds invested in China Hongqiao (1378 HK) , Posco (005490 KS), CAP SA (CAP CI) and China Molybdenum Co Ltd H (3993 HK) increased by over 4% in the last 6-months.  EM investors scaled back exposures in Gold Fields Ltd (GFI SJ) and Koza Altin Isletmeleri.Despite the recent squeeze in exposure, there is plenty of room for EM funds to increase positioning further, with the potential to keep prices well supported.We highlight Baoshan Iron &amp; Steel Co A (600019 CH) , CAP SA (CAP CI) , Polymetal International (POLY LN) , China Hongqiao (1378 HK) and Sibanye-Stillwater (SGL SJ) as stocks towards the higher end of their ownership ranges whilst also seeing ownership levels increase among active EM investors.  Previously well held Stocks such as Posco (005490 KS) , Grupo Mexico Sab De Cv (GMEXICOB MM) , Kghm Polska Miedz Sa (KGH PW) , Gerdau SA (GGBR4 BZ) , China Steel (2002 TT) and Hyundai Steel (004020 KS) are starting to attract growing interest from EM active managers.From a performance perspective, the EM Metals and Mining index has outperformed the broader market index by 40% over the last 12 months, but there has been some consolidation in June.  Could this be an opportunity to scale up exposure?Analysis taken from our Emerging Markets research, covering 242 active EM strategies with combined AUM of $500bn

EM Metals and Mining:  Active Fund Ownership Surges to 7-Year High

South Korea

POSCO manufactures various types of steel products.  The Company produces hot rolled steel, cold rolled steel, stainless steel, and other forms of steel. The products are mainly used for automobile, construction, and shipbuilding industries.

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Posco ADR (PKX US)

SGX Asia Currencies and Commodities Insights

By Macro Hive SGX Asia Currencies Insights Yuan risks escalate with China’s ongoing regulatory overhaul. Indian tech IPOs expected to...

Singapore Exchange Ltd (SGX)

Aju Steel IPO Valuation Analysis

Our base case valuation of Aju Steel is target price of 14,240 won per share, which would represent just 2% above the mid-point of the IPO price...

Douglas Kim

Aju Steel IPO Preview

The IPO price range of Aju Steel is from 12,700 won to 15,100 won. The IPO deal size is $78 million to $93 million. The expected market cap after...

Douglas Kim

Screening for GEMs: July 2021

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

EM Metals and Mining: Active Fund Ownership Surges to 7-Year High

Surging fund inflows have pushed average holding weights in Metals and Mining stocks to their highest allocation in over 7 years.

Steven Holden

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