Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<ul>
<li>Among Korea's local metaverse ETFs, the Big Three have significant AUMs. At yesterday's closing prices, their AUMs are ₩0.41T, ₩0.40T, and ₩0.20T, respectively. Their total is now 1 trillion won.</li>
<li>Those on which we can perform stable momentum trading are the 14 stocks included in all three ETFs. Passive funds account for +3% of MC in half of these names.</li>
<li>Weighting adjustment uses keyword relevance. So, estimation is not easy. Nevertheless, since the absolute value does not change significantly, we can reduce the error by using the previous rebalancing weighting.</li>
</ul>


Among Korea's local metaverse ETFs, the Big Three have significant AUMs. At yesterday's closing prices, their AUMs are ₩0.41T, ₩0.40T, and ₩0.20T, respectively. Their total is now 1 trillion won.
Those on which we can perform stable momentum trading are the 14 stocks included in all three ETFs. Passive funds account for +3% of MC in half of these names.
Weighting adjustment uses keyword relevance. So, estimation is not easy. Nevertheless, since the absolute value does not change significantly, we can reduce the error by using the previous rebalancing weighting.


Korea Local Metaverse ETFs: Passive Flow Preview

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>According to a local media outlet called ETNews, CJ ENM is considering on selling about half of its stake in Netmarble to potentially acquire the controlling stake in S.M. Entertainment.</li>
<li>Although CJ ENM is the lead candidate to acquire SM Entertainment, other contenders including Kakao Corp and Naver are not totally out of the M&amp;A race. </li>
<li>Overall, we would wait on buying CJ ENM at current levels. We think that the market is still concerned about CJ ENM overpaying for SM Entertainment.</li>
</ul>


According to a local media outlet called ETNews, CJ ENM is considering on selling about half of its stake in Netmarble to potentially acquire the controlling stake in S.M. Entertainment.
Although CJ ENM is the lead candidate to acquire SM Entertainment, other contenders including Kakao Corp and Naver are not totally out of the M&amp;A race. 
Overall, we would wait on buying CJ ENM at current levels. We think that the market is still concerned about CJ ENM overpaying for SM Entertainment.


CJ ENM: Potential Block Sale of Its Stake In Netmarble & Concerns About Corporate Reorganization

Thematic (Sector/Industry)

<p>There were four new<a href="http://www.koreaherald.com/view.php?ud=20211013001007" target="_blank" rel="noopener"> metaverse related ETFs</a> were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:</p><p><strong>1) Tiger Fn Metaverse</strong> (managed by Mirae Asset Global Investment)</p><p><strong>2) KBSTAR iSelect Metaverse</strong> (managed by KB Asset Management)</p><p><strong>3) Hanaro Fn K-Metaverse MZ</strong> (managed by NH Amundi Asset Management)</p><p><strong>4) KODEX K-Metaverse Active</strong>  (managed by Samsung Asset Management)</p><p>The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. </p>

There were four new metaverse related ETFs were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:1) Tiger Fn Metaverse (managed by Mirae Asset Global Investment)2) KBSTAR iSelect Metaverse (managed by KB Asset Management)3) Hanaro Fn K-Metaverse MZ (managed by NH Amundi Asset Management)4) KODEX K-Metaverse Active  (managed by Samsung Asset Management)The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. 

Listing of 4 New Metaverse Related ETFs in Korea

<div class="content-highlight">
<p>In this insight, we provide 8 examples of how metaverse is revolutionizing numerous businesses in Korea. We also provide a list of Korean companies that are actively trying to expand their metaverse businesses. Because metaverse is in the initial stages of growth for many of these businesses, their contributions to their companies' sales and profits may not be meaningful right now. However, they are experiencing a significant popularity. Metaverse is certainly one of the key industry trends that is likely to have a multi-years impact on the companies mentioned in this insight.</p>
<p>The term "metaverse" was first coined by the writer Neal Stephenson in his 1992 science fiction novel <a href="https://digiday.com/marketing/wtf-is-the-metaverse/" target="_blank" rel="noopener"><em>Snow Crash </em></a>where metaverse refers to a popular virtual world where the main characters are equipped with augmented technologies. </p>
<p>Metaverse refers to a computerized domain where the users can share their virtual encounters. Still in the beginning phases of advancement, metaverse has become more important in key industries industries including technology, media, and telecom. In addition, metaverse is also impacting other major industries such as retail, gaming, and fashion. </p>
<p>Metaverse will empower its users to be more engaged in online shopping, web-based media, entertainment, and share virtual encounters. Metaverse is often considered as a "coming together" of numerous technologies including augmented reality (AR), virtual reality (VR), 5G, smartphones, and distributed computing. Up until recently, the gaming industry has been driving the demand for metaverse. However, greater improvements in technologies have allowed metaverse to flourish in other industries as well. </p>
<p>South Korea is one of the key countries driving the metaverse industry globally. This is one of the leaders in this area and there will be numerous, interesting opportunities involving metaverse in Korea. </p>
</div>


In this insight, we provide 8 examples of how metaverse is revolutionizing numerous businesses in Korea. We also provide a list of Korean companies that are actively trying to expand their metaverse businesses. Because metaverse is in the initial stages of growth for many of these businesses, their contributions to their companies' sales and profits may not be meaningful right now. However, they are experiencing a significant popularity. Metaverse is certainly one of the key industry trends that is likely to have a multi-years impact on the companies mentioned in this insight.
The term "metaverse" was first coined by the writer Neal Stephenson in his 1992 science fiction novel Snow Crash where metaverse refers to a popular virtual world where the main characters are equipped with augmented technologies. 
Metaverse refers to a computerized domain where the users can share their virtual encounters. Still in the beginning phases of advancement, metaverse has become more important in key industries industries including technology, media, and telecom. In addition, metaverse is also impacting other major industries such as retail, gaming, and fashion. 
Metaverse will empower its users to be more engaged in online shopping, web-based media, entertainment, and share virtual encounters. Metaverse is often considered as a "coming together" of numerous technologies including augmented reality (AR), virtual reality (VR), 5G, smartphones, and distributed computing. Up until recently, the gaming industry has been driving the demand for metaverse. However, greater improvements in technologies have allowed metaverse to flourish in other industries as well. 
South Korea is one of the key countries driving the metaverse industry globally. This is one of the leaders in this area and there will be numerous, interesting opportunities involving metaverse in Korea. 


How Is Metaverse Revolutionizing Businesses in Korea? Virtual Humans Rozy & Lucy Are Just a Start

Equity Capital Markets

<h2>Offering terms</h2><p>Dear U, a fan messenger company invested by SM Entertainment and JPY Entertainment, will be listed on the KOSDAQ market in November. The total offering is 3.3 million, representing 17.92% of the current number of shares. The institutional allotment is 60% of the offering.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"DEAR U Co.,Ltd."}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[0]C[-3]">DEAR U Co., Ltd.</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}'>Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSPI"}'>KOSPI</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Pre-IPO SO"}'>Pre-IPO SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18412769}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[-3]">18,412,769</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'><strong>Offering</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3300000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[3]C[-3]"><strong>3,300,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of SO"}'><strong>- % of SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1792234508563052}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[5]C[-3]"><strong>17.92%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- Institutional allotment"}'>- Institutional allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6}' data-sheets-numberformat='{"1":3,"2":"0%","3":1}' data-sheets-formula="=Terms!R[5]C[-3]">60%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>It is a 100% primary offering, so the capital increase rate is 17.92%, and the share dilution is 15.20%.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Split"}'>Split</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Primary %"}'><strong>Primary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[3]C[-3]"><strong>100.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Post-IPO shares outstanding"}'>Post-IPO shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":21712769}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-9]C[0]+Terms!R[2]C[-3]">21,712,769</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1792234508563052}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-3]"><strong>17.92%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.15198430011390993}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-3]">15.20%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The indicative price band is ₩18,000~₩24,000. So, based on this band, the IPO valuation is between ₩390B and ₩520B. The company plans to raise ₩79.2B based on the upper end of the price band.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'><strong>Price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18000}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>₩18,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":24000}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>₩24,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'><strong>Base deal size</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":59.4}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000"><strong>₩59.4B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":79.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000"><strong>₩79.2B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment"}'>- Institutional allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":35.64}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[-1]C[0]*Terms!R7C5">₩35.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":47.52}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[-1]C[0]*Terms!R7C5">₩47.5B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'><strong>Implied market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":390.829842}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[-3]C[0]*Terms!R13C5/1000000000"><strong>₩390.8B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":521.106456}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[-3]C[0]*Terms!R13C5/1000000000"><strong>₩521.1B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Discount"}'>- Discount</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3414312893311869}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(27332-R[-4]C[0])/27332">34.14%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.12190838577491585}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(27332-R[-4]C[0])/27332">12.19%</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The company selected four valuation peers: JYP Entertainment, Cube Entertainment, Kakao, and YG Plus.</p><p>They came up with an IPO valuation of ₩600B by multiplying a 1H21-based annualized net profit of ₩11.24B by the average PER of the four valuation peers (53.46x). The price per share arrived at ₩27,332, and they applied a discount rate of 12.19~34.14% to derive the price band.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"PER valuation"}'>PER valuation</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"JYP Entertainment Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>JYP Entertainment Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Cube Entertainment Inc"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Cube Entertainment Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Kakao Corp"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Kakao Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"YG Plus Inc"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>YG Plus Inc</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"035900"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='="035900"'>035900</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"182360"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='="182360"'>182360</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"035720"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='="035720"'>035720</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"037270"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='="037270"'>037270</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Annualized net profit based on 1H21"}'>Annualized net profit based on 1H21</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33.736403}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B","3":1}'>₩33.74B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3.145899}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B","3":1}'>₩3.15B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1072.392165}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B","3":1}'>₩1,072.39B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7.080872}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B","3":1}'>₩7.08B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":35497492}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>35,497,492</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13804687}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>13,804,687</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":444992180}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>444,992,180</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":63429410}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>63,429,410</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EPS"}'>EPS</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":950.388354196967}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]">₩950</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":227.88629687873402}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]">₩228</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2409.9123831794077}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]">₩2,410</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":111.63389348884058}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]">₩112</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Reference share price"}'>Reference share price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":40050}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩40,050</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13116}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩13,116</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":122500}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩122,500</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7070}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩7,070</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PER"}'><strong>PER</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":42.140667889223394}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x"}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]"><strong>42.14x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":57.55501835627908}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x"}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]"><strong>57.56x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":50.831723532780565}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x"}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]"><strong>50.83x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":63.332020222933}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x"}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]"><strong>63.33x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average PER"}'><strong>Average PER</strong></td>
<td colspan="4" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":53.46485750030401}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x"}' data-sheets-formula="=average(R[-1]C[0]:R[-1]C[3])"><strong>53.46x</strong></td>
</tr>
<tr><td colspan="5" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"PER valuation"}'>PER valuation</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Annualized net profit based on 1H21"}'><strong>Annualized net profit based on 1H21</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11.244}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B","3":1}'><strong>₩11.24B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":21994260}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>21,994,260</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EPS"}'>EPS</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":511}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩511</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PER"}'>PER</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":53.46485750030401}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x"}' data-sheets-formula="=R[-7]C[0]">53.46x</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price per share"}'><strong>Price per share</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":27332}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'><strong>₩27,332</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The book opens on October 25, and the allotment will be unveiled on October 28. The subscription follows on November 1, followed by the payment on November 4. The listing date will be announced later.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'><strong>Book open</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44494}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 10. 25</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'><strong>Book close</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44495}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 10. 26</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'>Allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44497}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 10. 28</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'>Subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44501}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 01</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'><strong>Payment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44504}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 04</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"TBA"}'>TBA</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

Offering termsDear U, a fan messenger company invested by SM Entertainment and JPY Entertainment, will be listed on the KOSDAQ market in November. The total offering is 3.3 million, representing 17.92% of the current number of shares. The institutional allotment is 60% of the offering.





Offering size

Ticker
DEAR U Co., Ltd.


Bourse
KOSPI


Pre-IPO SO
18,412,769


Offering
3,300,000


- % of SO
17.92%


- Institutional allotment
60%

Source: DART

It is a 100% primary offering, so the capital increase rate is 17.92%, and the share dilution is 15.20%.





Split

Primary %
100.00%


Post-IPO shares outstanding
21,712,769


Capital increase rate
17.92%


Dilution
15.20%

Source: DART

The indicative price band is ₩18,000~₩24,000. So, based on this band, the IPO valuation is between ₩390B and ₩520B. The company plans to raise ₩79.2B based on the upper end of the price band.







Pricing
Low
High


Price
₩18,000
₩24,000


Base deal size
₩59.4B
₩79.2B


- Institutional allotment
₩35.6B
₩47.5B


Implied market cap
₩390.8B
₩521.1B


- Discount
34.14%
12.19%

Source: DART

The company selected four valuation peers: JYP Entertainment, Cube Entertainment, Kakao, and YG Plus.They came up with an IPO valuation of ₩600B by multiplying a 1H21-based annualized net profit of ₩11.24B by the average PER of the four valuation peers (53.46x). The price per share arrived at ₩27,332, and they applied a discount rate of 12.19~34.14% to derive the price band.









PER valuation
JYP Entertainment Corp
Cube Entertainment Inc
Kakao Corp
YG Plus Inc


Ticker
035900
182360
035720
037270


Annualized net profit based on 1H21
₩33.74B
₩3.15B
₩1,072.39B
₩7.08B


Shares outstanding
35,497,492
13,804,687
444,992,180
63,429,410


EPS
₩950
₩228
₩2,410
₩112


Reference share price
₩40,050
₩13,116
₩122,500
₩7,070


PER
42.14x
57.56x
50.83x
63.33x


Average PER
53.46x

Source: DART







PER valuation

Annualized net profit based on 1H21
₩11.24B


Shares outstanding
21,994,260


EPS
₩511


PER
53.46x


Price per share
₩27,332

Source: DART

The book opens on October 25, and the allotment will be unveiled on October 28. The subscription follows on November 1, followed by the payment on November 4. The listing date will be announced later.





Schedule

Book open
2021. 10. 25


Book close
2021. 10. 26


Allotment
2021. 10. 28


Subscription
2021. 11. 01


Payment
2021. 11. 04


Listing
TBA

Source: DART



Dear U Offering Terms, Feat. Put-Back Options at 90% of the Offering Price

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.

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S.M.Entertainment Co (041510 KS)

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