Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>After the market close, it was announced that HYBE (352820 KS) acquired a 3.7% stake (868,948 shares) in SM Entertainment Co (041510 KS) for 104.3 billion won.</li>
<li>HYBE's acquisition of shares was accomplished through the exercise of a put option by SM Entertainment's founder Lee Soo-Man. After this purchase, HYBE will own 12.6% stake in SM Entertainment. </li>
<li>We like SM Entertainment at current levels. Valuations are attractive and there is a strong pipeline of new music/songs to be launched by its artists in 2Q 2024. </li>
</ul>


After the market close, it was announced that HYBE (352820 KS) acquired a 3.7% stake (868,948 shares) in SM Entertainment Co (041510 KS) for 104.3 billion won.
HYBE's acquisition of shares was accomplished through the exercise of a put option by SM Entertainment's founder Lee Soo-Man. After this purchase, HYBE will own 12.6% stake in SM Entertainment. 
We like SM Entertainment at current levels. Valuations are attractive and there is a strong pipeline of new music/songs to be launched by its artists in 2Q 2024. 


HYBE Invests Additional 104 Billion Won in SM Entertainment - Why?

<ul>
<li>We review the major tender offers of Korean companies in 2023. Some of the major M&amp;A tender offers that have closed this year include Osstem Implant and SM Entertainment.</li>
<li>Among the 15 companies targeted for tender offers, there are 5 companies including Osstem Implant, SM Entertainment, Lutronic Corp where the purpose of the tender offers is for M&amp;A. </li>
<li>There were a total of 18 companies that submitted tender offer results announcements in 2023 (as of 11 December), up 157% YoY.</li>
</ul>


We review the major tender offers of Korean companies in 2023. Some of the major M&amp;A tender offers that have closed this year include Osstem Implant and SM Entertainment.
Among the 15 companies targeted for tender offers, there are 5 companies including Osstem Implant, SM Entertainment, Lutronic Corp where the purpose of the tender offers is for M&amp;A. 
There were a total of 18 companies that submitted tender offer results announcements in 2023 (as of 11 December), up 157% YoY.


A Review of Tender Offers of Korean Companies in 2023

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>A nasty power struggle between ADOR CEO Min Hee-Jin and HYBE has erupted which is likely to continue to negatively impact HYBE's share price in the next several months.</li>
<li>ADOR CEO Min Hee-Jin owns an 18% stake in ADOR which was founded in 2021. HYBE owns the controlling 80% stake in ADOR.</li>
<li>Given the nasty fight between ADOR and HYBE, it is likely that the two companies (including ADOR's CEO Min Hee-Jin) are likely to part their ways.</li>
</ul>


A nasty power struggle between ADOR CEO Min Hee-Jin and HYBE has erupted which is likely to continue to negatively impact HYBE's share price in the next several months.
ADOR CEO Min Hee-Jin owns an 18% stake in ADOR which was founded in 2021. HYBE owns the controlling 80% stake in ADOR.
Given the nasty fight between ADOR and HYBE, it is likely that the two companies (including ADOR's CEO Min Hee-Jin) are likely to part their ways.


A Nasty Power Struggle Between ADOR CEO and HYBE

Managing Director, Who's Good

Jungmin(Charlotte) Hong

Managing Director

ASIA’S FIRST AI-DRIVEN ESG INSIGHT PROVIDER

Who's Good

Using AI technologies and public data, Who’s Good provides objective and up-to-date corporate ESG insights on Asian companies.

WHY WHO'S GOOD

* Time-sensitive: Time is the essence in finance. Artificial Intelligence (AI) can process vast amount of information in a short span of time. Our powerful algorithm offers real-time in-depth corporate ESG analysis with out compromising its quality.
* Objective: We turned to public big data and news big data as source to base our analysis on and to preserve impartiality. We leverage 350 public big data sources and 93 news data sources in Korea to uncover insights.
* Insightful: Who’s Good ESG analysis coverage extends to all listed and non-listed companies in Korea. This allows us to provide a comprehensive insight into the Korean market.
* Global approach to ESG: Our ESG research framework is built on international standards and principles including UN Global Compact, ISO 26000, ICGN and CFA Guidelines on Corporate Governance to meet the global standards.

<ul>
<li>EXO’s Chen, Baekhyun, and Xiumin filed a complaint to the Fair Trade Commission (FTC) on June 4 against SM Entertainment for “abuse of superior bargaining position.”</li>
<li>SM Entertainment repeatedly faced sanctions by the FTC for disputes, including controversy and conflicts with another boy band 'Dong Bang Shin Ki' (TVXQ) </li>
<li>The risk to their working conditions continues to increase, with SM Entertainment’s corporate risk currently standing at 4.2, reaching an extreme level.</li>
</ul>


EXO’s Chen, Baekhyun, and Xiumin filed a complaint to the Fair Trade Commission (FTC) on June 4 against SM Entertainment for “abuse of superior bargaining position.”
SM Entertainment repeatedly faced sanctions by the FTC for disputes, including controversy and conflicts with another boy band 'Dong Bang Shin Ki' (TVXQ) 
The risk to their working conditions continues to increase, with SM Entertainment’s corporate risk currently standing at 4.2, reaching an extreme level.


SM Entertainment: EXO's Contract Controversy and Repeated Working Condition Issues

<ul>
<li>In this insight, we provided the most recent ranking of the top 100 most popular YouTube channels in Korea (according to Socialblade website).</li>
<li>The top 100 YouTube channels in Korea have received 390.7 billion in total views as of June 2023. Of these total views, K-Pop channels views accounted for 46.4% share.</li>
<li>YouTube has been meaningfully taking away market share from Kakao and Naver in the past three years. KakaoTalk's MAU was 41.5 million in May 2023. YouTube was a close second.</li>
</ul>


In this insight, we provided the most recent ranking of the top 100 most popular YouTube channels in Korea (according to Socialblade website).
The top 100 YouTube channels in Korea have received 390.7 billion in total views as of June 2023. Of these total views, K-Pop channels views accounted for 46.4% share.
YouTube has been meaningfully taking away market share from Kakao and Naver in the past three years. KakaoTalk's MAU was 41.5 million in May 2023. YouTube was a close second.


Analysis of Top 100 Korean YouTube Channels + Significant Market Share Gains for YouTube in Korea

South Korea

S.M.Entertainment Co. plans, produces, promotes, and markets Korean rock and roll music in several formats, such as compact discs (CD), concert tours, television productions, and music videos.  The Company also operates artist management business as well as licensing and copyright business from the company's music records.

S.M.Entertainment Co (041510 KS)

HYBE Invests Additional 104 Billion Won in SM Entertainment - Why?

After the market close, it was announced that HYBE acquired a 3.7% stake in SM Entertainment Co for 104.3 billion won. After this purchase, HYBE...

Douglas Kim

A Review of Tender Offers of Korean Companies in 2023

We review the major tender offers of Korean companies in 2023. There were a total of 18 companies that submitted tender offer results announcements...

Douglas Kim

A Nasty Power Struggle Between ADOR CEO and HYBE

Given the nasty fight between ADOR and HYBE, it is likely that they (including ADOR's CEO Min Hee-Jin) are likely to part their ways, although the...

Douglas Kim

SM Entertainment: EXO's Contract Controversy and Repeated Working Condition Issues

Let's take a look at the recent ESG issue surrounding SM Entertainment's contract with boy band EXO and similar cases from the past.

Jungmin(Charlotte) Hong

HYBE Invests Additional 104 Billion Won in SM Entertainment - Why?

After the market close, it was announced that HYBE acquired a 3.7% stake in SM Entertainment Co for 104.3 billion won. After this purchase, HYBE...

Douglas Kim

A Review of Tender Offers of Korean Companies in 2023

We review the major tender offers of Korean companies in 2023. There were a total of 18 companies that submitted tender offer results announcements...

Douglas Kim

A Nasty Power Struggle Between ADOR CEO and HYBE

Given the nasty fight between ADOR and HYBE, it is likely that they (including ADOR's CEO Min Hee-Jin) are likely to part their ways, although the...

Douglas Kim

SM Entertainment: EXO's Contract Controversy and Repeated Working Condition Issues

Let's take a look at the recent ESG issue surrounding SM Entertainment's contract with boy band EXO and similar cases from the past.

Jungmin(Charlotte) Hong

Analysis of Top 100 Korean YouTube Channels + Significant Market Share Gains for YouTube in Korea

In this insight, we analyze the most recent ranking of the top 100 most popular YouTube channels in Korea (according to Socialblade website).

Douglas Kim