Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>The major K-Pop stocks had the biggest up day so far this year on 23 May, driven by potential easing of Korean cultural contents restrictions by the Chinese government. </li>
<li>In the past nine years, there has been a ban on Korean singers' performances in China.</li>
<li>Among the major K-Pop stocks, we continue to have a Positive View on S.M.Entertainment Co (041510 KS) but bearish on HYBE (352820 KS) and YG Entertainment (122870 KS).</li>
</ul>


The major K-Pop stocks had the biggest up day so far this year on 23 May, driven by potential easing of Korean cultural contents restrictions by the Chinese government. 
In the past nine years, there has been a ban on Korean singers' performances in China.
Among the major K-Pop stocks, we continue to have a Positive View on S.M.Entertainment Co (041510 KS) but bearish on HYBE (352820 KS) and YG Entertainment (122870 KS).


A Pop in Major K-Pop Stocks Driven by Potential Easing of Korean Contents Restrictions by China

<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

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 discuss the surging share cancellations in Korea in 2024. As of 8 February 2024, Korean companies have announced 3.3 trillion won worth of shares to be completed this year. </li>
<li>At current blistering pace, it is likely that the share cancellations in Korea could jump at least 100% YoY to jump more than 10 trillion won in 2024. </li>
<li>Some of the leading Korean companies including Samsung C&amp;T and KT&amp;G that have announced share cancellations this year continue to outperform the market on average. </li>
</ul>


We discuss the surging share cancellations in Korea in 2024. As of 8 February 2024, Korean companies have announced 3.3 trillion won worth of shares to be completed this year. 
At current blistering pace, it is likely that the share cancellations in Korea could jump at least 100% YoY to jump more than 10 trillion won in 2024. 
Some of the leading Korean companies including Samsung C&amp;T and KT&amp;G that have announced share cancellations this year continue to outperform the market on average. 


Korea: Surging Share Cancellations in 2024

<ul>
<li>After market close on 15 December, MBK Partners raised the tender offer price of Hankook &amp; Company by 20% to 24,000 won, which is now 51.4% higher than current price. </li>
<li>With Cho Yang-Rae's recent acquisition of shares, Cho Hyun-beom, Cho Yang-rae, and related parties now own about 45.6% of Hankook &amp; Co, up from 42.9% previously. </li>
<li>MBK Partners has requested an official investigation by the FSS, claiming that Cho Yang-rae and HY have violated the Capital Markets Act by recently purchasing shares of Hankook &amp; Co.</li>
</ul>


After market close on 15 December, MBK Partners raised the tender offer price of Hankook &amp; Company by 20% to 24,000 won, which is now 51.4% higher than current price. 
With Cho Yang-Rae's recent acquisition of shares, Cho Hyun-beom, Cho Yang-rae, and related parties now own about 45.6% of Hankook &amp; Co, up from 42.9% previously. 
MBK Partners has requested an official investigation by the FSS, claiming that Cho Yang-rae and HY have violated the Capital Markets Act by recently purchasing shares of Hankook &amp; Co.


MBK Partners Raises Tender Offer Price of Hankook and Co to 24,000 Won

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)

A Pop in Major K-Pop Stocks Driven by Potential Easing of Korean Contents Restrictions by China

The major K-Pop stocks had the biggest up day so far this year on 23 May, driven by potential easing of Korean cultural contents restrictions by...

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

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

MBK Partners Raises Tender Offer Price of Hankook and Co to 24,000 Won

MBK Partners raised the tender offer price of Hankook & Company by 20% to 24,000 won, which is now 51.4% higher than current price.

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

A Pop in Major K-Pop Stocks Driven by Potential Easing of Korean Contents Restrictions by China

The major K-Pop stocks had the biggest up day so far this year on 23 May, driven by potential easing of Korean cultural contents restrictions by...

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

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

Korea: Surging Share Cancellations in 2024

We discuss the surging share cancellations in Korea in 2024. As of 8 February 2024, Korean companies have announced 3.3 trillion won worth of...

Douglas Kim

MBK Partners Raises Tender Offer Price of Hankook and Co to 24,000 Won

MBK Partners raised the tender offer price of Hankook & Company by 20% to 24,000 won, which is now 51.4% higher than current price.

Douglas Kim