Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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<li>Asiana IDT is getting ready for an IPO on the Korean stock market in November. There have been a lot of delays in this IPO process and the company has waited more than a year to get finally complete its IPO. The bookbuilding for the institutional investors start on November 7th, 2018. The IPO deal size is from US$56 million to US$70 million. </li>
<li>Established in 1991, Asiana IDT provides IT services to the Kumho Asiana Group companies such as Asiana Airlines. Asiana IDT provides various system integration (SI), ERP (Enterprise Resource Planning), and other IT services. </li>
<li>For our valuation, we estimate that Asiana IDT will generate 19.7 billion won in net profit in 2018 and take this as our base case. We then applied a discount of 35% of the average P/E of Shinsegae I&amp;C and Lotte Data Communications which resulted in the base case P/E ratio of 13.4x. This resulted in an implied market cap of 264.3 billion won (base case) and implied price of 23,808 won. As such, we would avoid this deal since it does not offer much upside. However, there is a chance that that this IPO gets priced near the bottom or even lower than the bottom end of the IPO range. Our base case target price of 23,808 won would be 23% higher than 19,300 won (low end of IPO range), which would then become more attractive. </li>
</ul>


Asiana IDT is getting ready for an IPO on the Korean stock market in November. There have been a lot of delays in this IPO process and the company has waited more than a year to get finally complete its IPO. The bookbuilding for the institutional investors start on November 7th, 2018. The IPO deal size is from US$56 million to US$70 million. 
Established in 1991, Asiana IDT provides IT services to the Kumho Asiana Group companies such as Asiana Airlines. Asiana IDT provides various system integration (SI), ERP (Enterprise Resource Planning), and other IT services. 
For our valuation, we estimate that Asiana IDT will generate 19.7 billion won in net profit in 2018 and take this as our base case. We then applied a discount of 35% of the average P/E of Shinsegae I&amp;C and Lotte Data Communications which resulted in the base case P/E ratio of 13.4x. This resulted in an implied market cap of 264.3 billion won (base case) and implied price of 23,808 won. As such, we would avoid this deal since it does not offer much upside. However, there is a chance that that this IPO gets priced near the bottom or even lower than the bottom end of the IPO range. Our base case target price of 23,808 won would be 23% higher than 19,300 won (low end of IPO range), which would then become more attractive. 


Asiana IDT IPO Preview (Part 2) - Valuation Analysis

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

<p><a href="https://www.smartkarma.com/entities/24384" target="_blank" data-smartkarma-citation="entities:24384:1">Datasolution (263800 KS)</a> is a micro cap (₩55bil market cap) company that is to be listed this week on Aug 3. It is <a href="https://www.smartkarma.com/entities/11657" target="_blank" data-smartkarma-citation="entities:11657:1">Openbase Inc (049480 KS)</a>'s wholly-owned subsidiary. Openbase acquired Datasolution in 2001. Datasolution was founded in 1990, and its corporate name was SPSS Korea since it began its business as a reseller of SPSS software. At the time it was acquired by Openbase in 2001, it changed its name to Datasolution. Since the acquisition, Datasolution has been managed/operated by Openbase executives. For instance, Datasolution's current CEO, Bae Bok-tae, is one of Openbase's three founders. In 2010, Openbase was split up into two business units through physical division. Basically, Openbase was divided into network solution unit and platform/service solution unit. The new entity that was spun off from Openbase was called "Open SNS", which was responsible for platform/service solution unit. Bae Bok-tae, Datasolution's current CEO, became the head of Open SNS. In 2016, Open SNS merged with Datasolution, and this merged entity kept the corporate name "Datasolution". At the time of merger, Open SNS was responsible for 80+% of the total sales of the merged entity, whereas the former Datasolution was responsible for less than 20%. </p><p>A majority of Datasolution's sales are still coming from its "not-so-exciting" businesses such as Dell EMC storage resale and SI (system integration) projects, both of which belonged to Open SNS. But Open SNS is focusing on big data analytics business and actually developed its own proprietary analytic solutions even though this big data thing isn't really making any meaningful contribution to its top line growth yet. <em><strong>Nonetheless, what is interesting is that Open SNS' big data analytics business is exactly why Datasolution is being viewed as a growth stock rather than a dull SI (system integration) company in this IPO.</strong></em></p><table class="table table-striped"><tbody><tr><td style="width: 212.6px;">Item</td><td style="width: 440.4px;">Detail</td></tr><tr><td style="width: 212.6px;">Company name</td><td style="width: 440.4px;"><p><a href="https://www.smartkarma.com/entities/24384" target="_blank" data-smartkarma-citation="entities:24384:1">Datasolution (263800 KS)</a></p></td></tr><tr><td style="width: 212.6px;">CEO</td><td style="width: 440.4px;">Bae Bok-tae</td></tr><tr><td style="width: 212.6px;">Established</td><td style="width: 440.4px;">1990</td></tr><tr><td style="width: 212.6px;">Business area</td><td style="width: 440.4px;"><p>Software development and consulting services</p></td></tr><tr><td style="width: 212.6px;">Address</td><td style="width: 440.4px;">Eonju 620 Intelrekseu modern bldg., Gangnam-gu, Seoul, South Korea</td></tr><tr><td style="width: 212.6px;">Phone number</td><td style="width: 440.4px;">+82 2-3467-7200</td></tr><tr><td style="width: 212.6px;">Company website</td><td style="width: 440.4px;"><a href="http://www.datasolution.kr/" target="_blank">www.datasolution.kr</a></td></tr><tr><td colspan="2" style="width: 653px;"><em>Source: Company website, Bloomberg</em></td></tr></tbody></table><table class="table table-striped"><tbody><tr><td style="width: 212.2px;">Major shareholder</td><td style="width: 217.8px;">Pre IPO shareholding %</td><td style="width: 225px;">Post IPO shareholding %</td></tr><tr><td style="width: 212.2px;"><a href="https://www.smartkarma.com/entities/11657" target="_blank" data-smartkarma-citation="entities:11657:1">Openbase Inc (049480 KS)</a></td><td style="width: 217.8px;">100.00%</td><td style="width: 225px;">69.20%</td></tr><tr><td colspan="3" style="width: 655px;"><em>Source: DART</em></td></tr></tbody></table><p><em>Alright, let's find out more about this IPO stock.</em></p>

Datasolution (263800 KS) is a micro cap (₩55bil market cap) company that is to be listed this week on Aug 3. It is Openbase Inc (049480 KS)'s wholly-owned subsidiary. Openbase acquired Datasolution in 2001. Datasolution was founded in 1990, and its corporate name was SPSS Korea since it began its business as a reseller of SPSS software. At the time it was acquired by Openbase in 2001, it changed its name to Datasolution. Since the acquisition, Datasolution has been managed/operated by Openbase executives. For instance, Datasolution's current CEO, Bae Bok-tae, is one of Openbase's three founders. In 2010, Openbase was split up into two business units through physical division. Basically, Openbase was divided into network solution unit and platform/service solution unit. The new entity that was spun off from Openbase was called "Open SNS", which was responsible for platform/service solution unit. Bae Bok-tae, Datasolution's current CEO, became the head of Open SNS. In 2016, Open SNS merged with Datasolution, and this merged entity kept the corporate name "Datasolution". At the time of merger, Open SNS was responsible for 80+% of the total sales of the merged entity, whereas the former Datasolution was responsible for less than 20%. A majority of Datasolution's sales are still coming from its "not-so-exciting" businesses such as Dell EMC storage resale and SI (system integration) projects, both of which belonged to Open SNS. But Open SNS is focusing on big data analytics business and actually developed its own proprietary analytic solutions even though this big data thing isn't really making any meaningful contribution to its top line growth yet. Nonetheless, what is interesting is that Open SNS' big data analytics business is exactly why Datasolution is being viewed as a growth stock rather than a dull SI (system integration) company in this IPO.ItemDetailCompany nameDatasolution (263800 KS)CEOBae Bok-taeEstablished1990Business areaSoftware development and consulting servicesAddressEonju 620 Intelrekseu modern bldg., Gangnam-gu, Seoul, South KoreaPhone number+82 2-3467-7200Company websitewww.datasolution.krSource: Company website, BloombergMajor shareholderPre IPO shareholding %Post IPO shareholding %Openbase Inc (049480 KS)100.00%69.20%Source: DARTAlright, let's find out more about this IPO stock.

Datasolution IPO Summary - Questions Remain on Growth, but Market Seems Excited

South Korea

RingNet Co., Ltd. designs, installs, and maintains network integration (NI). The Company provides NI service to public sector, corporations, and schools. RingNet also provides system solution and consulting service.

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Ringnet Co Ltd (042500 KS)

Asiana IDT IPO Preview (Part 2) - Valuation Analysis

Asiana IDT is getting ready for an IPO on the Korean stock market in November. There have been a lot of delays in this IPO process and the company...

Douglas Kim

Datasolution IPO Summary - Questions Remain on Growth, but Market Seems Excited

Datasolution (263800 KS) is a micro cap (₩55bil market cap) company that is to be listed this week on Aug 3. It is Openbase Inc (049480 KS)'s...

Sanghyun Park

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