Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Doosan Robotics  / Equity Capital Markets

<ul>
<li>Our base case valuation per share of Doosan Robotics is 42,826 won, which is 65% higher than the high end of the IPO valuation range. </li>
<li>We estimate Doosan Robotics to generate sales of 61.7 billion won (up 37.2% YoY) in 2023 and 97.7 billion won (up 58.2% YoY) in 2024. </li>
<li>If Doosan Robotics is compared to Fanuc, Doosan Robotics' valuation would be much lower. However, one could argue that Doosan Robotics should have higher valuation than Rainbow Robotics.</li>
</ul>


Our base case valuation per share of Doosan Robotics is 42,826 won, which is 65% higher than the high end of the IPO valuation range. 
We estimate Doosan Robotics to generate sales of 61.7 billion won (up 37.2% YoY) in 2023 and 97.7 billion won (up 58.2% YoY) in 2024. 
If Doosan Robotics is compared to Fanuc, Doosan Robotics' valuation would be much lower. However, one could argue that Doosan Robotics should have higher valuation than Rainbow Robotics.


<ul>
<li>Doosan Robotics is getting ready to complete its IPO in Korea in September. The expected IPO price range is 21,000 won to 26,000 won.</li>
<li>The company estimates its sales to surge from 67 billion won in 2023 to 766.3 billion won in 2027, representing 83.9% CAGR from 2023 to 2027.</li>
<li>One of the major reasons why local investors will have a positive view of Doosan Robotics is due to Samsung's investment in Rainbow Robotics whose share price increased 232% YTD. </li>
</ul>


Doosan Robotics is getting ready to complete its IPO in Korea in September. The expected IPO price range is 21,000 won to 26,000 won.
The company estimates its sales to surge from 67 billion won in 2023 to 766.3 billion won in 2027, representing 83.9% CAGR from 2023 to 2027.
One of the major reasons why local investors will have a positive view of Doosan Robotics is due to Samsung's investment in Rainbow Robotics whose share price increased 232% YTD. 


Event-Driven

<ul>
<li>Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. </li>
<li>Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.</li>
<li>We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on <em>"buy on rumor, sell on news"</em> strategy.</li>
</ul>


Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. 
Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.
We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on "buy on rumor, sell on news" strategy.


Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150

<ul>
<li>In this insight, we discuss the potential inclusions and exclusions that the locals are highlighting for the KOSPI 200 and KOSDAQ 150 rebalance in May 2023. </li>
<li>The top five best performing stocks YTD that are expected to be included in either KOSPI200 and KOSDAQ150 include Rainbow Robotics, Kumyang, Cosmo Chemical, Yunsung F&amp;C, and Posco M Tech.</li>
<li>In the coming weeks, there is a higher probability these five stocks underperform the market on average as many investors sell the news on them getting included in these indices. </li>
</ul>


In this insight, we discuss the potential inclusions and exclusions that the locals are highlighting for the KOSPI 200 and KOSDAQ 150 rebalance in May 2023. 
The top five best performing stocks YTD that are expected to be included in either KOSPI200 and KOSDAQ150 include Rainbow Robotics, Kumyang, Cosmo Chemical, Yunsung F&amp;C, and Posco M Tech.
In the coming weeks, there is a higher probability these five stocks underperform the market on average as many investors sell the news on them getting included in these indices. 


Potential Inclusions & Exclusions for KOSPI 200 and KOSDAQ 150 in May 2023 Highlighted by Locals

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

Index Rebalance

<ul>
<li>With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a>. </li>
<li>There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.</li>
<li>Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.</li>
</ul>


With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the KOSDAQ 150 Index (KOSDQ150 INDEX). 
There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.
Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.


KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)

South Korea

Rainbow Robotics operates robots manufacturing businesses. The Company develops and produces industrial robots and other robots. Rainbow Robotics conducts businesses in South Korea.

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Rainbow Robotics (277810 KS)

Doosan Robotics IPO Valuation Analysis

Our base case valuation per share of Doosan Robotics is 42,826 won, which is 65% higher than the high end of the IPO valuation range.

Douglas Kim

Doosan Robotics IPO Preview

Doosan Robotics is getting ready to complete its IPO in Korea in September.The expected IPO price range is 21,000 won to 26,000 won.

Douglas Kim

Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150

Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. We expect continued underperformance of Kumyang and Cosmo...

Douglas Kim

Potential Inclusions & Exclusions for KOSPI 200 and KOSDAQ 150 in May 2023 Highlighted by Locals

In this insight, we discuss the potential inclusions and exclusions that the locals are highlighting for the KOSPI 200 and KOSDAQ 150 rebalance in...

Douglas Kim

KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)

There could be 8 changes at the regular rebalance plus a couple of ad hoc changes. The potential adds ran up a lot and have started to head lower....

Brian Freitas

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