Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The Korea Exchange (KRX) launched 5 indices last year following the New Deal initiative that the Government launched to digitalise social infrastructure and jumpstart the transition to green energy.</p><p>The KRX created 4 indices tracking the Secondary Battery, Biotech, Internet and Gaming sectors that are expected to benefit from the New Deal initiative plus an additional index (BBIG) that includes the top 3 stocks from each sector.</p><p>All indices have performed well since then. The KRX announced changes to the 5 indices late last week and the changes become effective post the close of trading on 25 February.</p><div><p><a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games Corp (293490 KS)</a> replaces <a href="https://www.smartkarma.com/entities/pearl-abyss-corp" target="_blank" data-smartkarma-citation="entities:24391:1" rel="noopener">Pearl Abyss (263750 KS)</a> in the BBIG Index.</p></div><div><p>In the Secondary Battery index, <a href="https://www.smartkarma.com/entities/soulbrain-co-ltd" target="_blank" data-smartkarma-citation="entities:16883:1" rel="noopener">Soulbrain (036830 KS)</a> and <a href="https://www.smartkarma.com/entities/l-f-co-ltd" target="_blank" data-smartkarma-citation="entities:14300:1" rel="noopener">L&amp;F Co Ltd (066970 KS)</a> replace <a href="https://www.smartkarma.com/entities/doosan-solus-co-ltd" target="_blank" data-smartkarma-citation="entities:28947:1" rel="noopener">Doosan Solus Co Ltd (336370 KS)</a> and <a href="https://www.smartkarma.com/entities/foosung-co-ltd" target="_blank" data-smartkarma-citation="entities:16811:1" rel="noopener">Foosung Co Ltd (093370 KS)</a>.</p></div><div><p>In the Biotech index, <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a> and <a href="https://www.smartkarma.com/entities/green-cross-corp" target="_blank" data-smartkarma-citation="entities:2969:1" rel="noopener">Green Cross (006280 KS)</a> replace <a href="https://www.smartkarma.com/entities/alteogen-inc" target="_blank" data-smartkarma-citation="entities:15886:1" rel="noopener">Alteogen Inc (196170 KS)</a> and <a href="https://www.smartkarma.com/entities/hanmi-pharm-co-ltd" target="_blank" data-smartkarma-citation="entities:12476:1" rel="noopener">Hanmi Pharm (128940 KS)</a>.</p></div><div><p>In the Internet index, <a href="https://www.smartkarma.com/entities/ace-technologies-corp" target="_blank" data-smartkarma-citation="entities:7868:1" rel="noopener">Ace Technologies (088800 KS)</a> and <a href="https://www.smartkarma.com/entities/rsupport-co-ltd" target="_blank" data-smartkarma-citation="entities:14783:1" rel="noopener">Rsupport Co Ltd (131370 KS)</a> replace <a href="https://www.smartkarma.com/entities/kg-inicis-co-ltd" target="_blank" data-smartkarma-citation="entities:5234:1" rel="noopener">KG Inicis Co Ltd (035600 KS)</a> and <a href="https://www.smartkarma.com/entities/ubiquoss-inc" target="_blank" data-smartkarma-citation="entities:14341:1" rel="noopener">Ubiquoss Holding (078070 KS)</a>.</p></div><div><p>In the Gaming index, <a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games Corp (293490 KS)</a> and <a href="https://www.smartkarma.com/entities/neptune-company" target="_blank" data-smartkarma-citation="entities:28826:1" rel="noopener">Neptune Company (217270 KS)</a> replace <a href="https://www.smartkarma.com/entities/neowiz-games-corp" target="_blank" data-smartkarma-citation="entities:12425:1" rel="noopener">Neowiz Games (095660 KS)</a> and Golfzon (215000 KS).</p></div>

The Korea Exchange (KRX) launched 5 indices last year following the New Deal initiative that the Government launched to digitalise social infrastructure and jumpstart the transition to green energy.The KRX created 4 indices tracking the Secondary Battery, Biotech, Internet and Gaming sectors that are expected to benefit from the New Deal initiative plus an additional index (BBIG) that includes the top 3 stocks from each sector.All indices have performed well since then. The KRX announced changes to the 5 indices late last week and the changes become effective post the close of trading on 25 February.Kakao Games Corp (293490 KS) replaces Pearl Abyss (263750 KS) in the BBIG Index.In the Secondary Battery index, Soulbrain (036830 KS) and L&amp;F Co Ltd (066970 KS) replace Doosan Solus Co Ltd (336370 KS) and Foosung Co Ltd (093370 KS).In the Biotech index, Shinpoong Pharmaceutical (019170 KS) and Green Cross (006280 KS) replace Alteogen Inc (196170 KS) and Hanmi Pharm (128940 KS).In the Internet index, Ace Technologies (088800 KS) and Rsupport Co Ltd (131370 KS) replace KG Inicis Co Ltd (035600 KS) and Ubiquoss Holding (078070 KS).In the Gaming index, Kakao Games Corp (293490 KS) and Neptune Company (217270 KS) replace Neowiz Games (095660 KS) and Golfzon (215000 KS).

KRX BBIG K-NewDeal Index Rebalance: First Set of Changes Announced

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

<p>We highlight 14 stocks in Asia that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Asian markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.</p>

We highlight 14 stocks in Asia that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Asian markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

MiCo BioMed Co Ltd / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/mico-biomed-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:29240:1">MiCo BioMed Co Ltd (214610 KS)</a> is an interesting IPO, capitalizing on the price discount of the KONEX exchange. The IPO price range of this company is from 12,000 won to 15,000 won. This stock is already trading on the KONEX exchange at 24,550 won. As a result, if the IPO is priced at the high end of the IPO price range of 15,000 won, the investors may be able to take immediate profits of nearly 64% (assuming no lock-up period).</p><p>The IPO is scheduled to take place on October 6th and the institutional investors bookbuilding closes on September 4th so one of the risks include uncertainty in how the stock would perform for about a month prior to the actual IPO date.</p><p>Our base case valuation of the company suggests an implied market cap of 413 billion won or 22,564 won per share. Our base case valution of 22,564 won per share is 50% higher than the high end of the IPO price range of 15,000 won.</p>

MiCo BioMed Co Ltd (214610 KS) is an interesting IPO, capitalizing on the price discount of the KONEX exchange. The IPO price range of this company is from 12,000 won to 15,000 won. This stock is already trading on the KONEX exchange at 24,550 won. As a result, if the IPO is priced at the high end of the IPO price range of 15,000 won, the investors may be able to take immediate profits of nearly 64% (assuming no lock-up period).The IPO is scheduled to take place on October 6th and the institutional investors bookbuilding closes on September 4th so one of the risks include uncertainty in how the stock would perform for about a month prior to the actual IPO date.Our base case valuation of the company suggests an implied market cap of 413 billion won or 22,564 won per share. Our base case valution of 22,564 won per share is 50% higher than the high end of the IPO price range of 15,000 won.

Mico Biomed IPO Valuation Analysis - Capitalize on the KONEX Exchange Discount

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Event-Driven

<p>It is now official that Korea's shorting restrictions will get a six-month extension until March 15, 2021.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/155/975/original/1.png?1598824455" class="editor-image img-responsive" data-smartkarma-image-id="155975"></figure><p>But the KSC is stressing that the shorting ban is a temporary measure. It says that it will try to resume short trading after this six-month extension.</p><p>The KSC also says that it will review the cons/pros of the current market maker system, which is one of the exceptions that can short trade under the ongoing shorting restrictions.</p>

It is now official that Korea's shorting restrictions will get a six-month extension until March 15, 2021.But the KSC is stressing that the shorting ban is a temporary measure. It says that it will try to resume short trading after this six-month extension.The KSC also says that it will review the cons/pros of the current market maker system, which is one of the exceptions that can short trade under the ongoing shorting restrictions.

Shorting Restriction Extension: Prolonged Arb Trade Opportunity on KOSDAQ 150 ETFs

<p><strong>Mico Biomed Co is getting ready for an IPO on the KOSDAQ exchange in the next few weeks. Established in 2009, Mico Biomed is a developer of in-vitro diagnostic medical devices. Mico Biomed was listed on the KONEX microcap exchange in 2015. Mico Biomed is one of the developers of in-vitro diagnostic medical testing devices for COVID-19 in Korea. </strong></p><p>In February 2020, <a href="http://www.koreaherald.com/view.php?ud=20200205000408" target="_blank" rel="noopener">Mico Biomed</a> announced that has developed a rapid molecular diagnostic system to detect COVID-19 with high sensitivity within an hour. The company generated 21.7 billion won in sales and 2.4 billion won in operating profit in 1H 2020. These results are much better than the recent historical figures from 2017 to 2019. The company had sales of 4.1 billion won and an operating loss of 11.7 billion won in 2019.</p><div class="content-highlight"><p>The bankers used three companies including <a href="https://www.smartkarma.com/entities/seegene-inc" target="_blank" data-smartkarma-citation="entities:11483:1" rel="noopener">Seegene Inc (096530 KS)</a>, Lab Genomics, and Boditech Med as comparable companies to Mico Biomed. Using their annualized controlling interest net profit in 1Q 2020 and recent prices, the average P/E of the comps is 36.3x. The bankers then estimated Mico Biomed's net profit to be 12.3 billion won in 2022 and discounted to the present using a 15% cost of capital. Applying a P/E of 36.3x to 9.3 billion won and 18.3 million shares outstanding results in an implied price of 18,342 won. Applying an IPO discount range of 18.2% - 34.6% results in an IPO range of 12,000 won to 15,000 won. </p></div>

Mico Biomed Co is getting ready for an IPO on the KOSDAQ exchange in the next few weeks. Established in 2009, Mico Biomed is a developer of in-vitro diagnostic medical devices. Mico Biomed was listed on the KONEX microcap exchange in 2015. Mico Biomed is one of the developers of in-vitro diagnostic medical testing devices for COVID-19 in Korea. In February 2020, Mico Biomed announced that has developed a rapid molecular diagnostic system to detect COVID-19 with high sensitivity within an hour. The company generated 21.7 billion won in sales and 2.4 billion won in operating profit in 1H 2020. These results are much better than the recent historical figures from 2017 to 2019. The company had sales of 4.1 billion won and an operating loss of 11.7 billion won in 2019.The bankers used three companies including Seegene Inc (096530 KS), Lab Genomics, and Boditech Med as comparable companies to Mico Biomed. Using their annualized controlling interest net profit in 1Q 2020 and recent prices, the average P/E of the comps is 36.3x. The bankers then estimated Mico Biomed's net profit to be 12.3 billion won in 2022 and discounted to the present using a 15% cost of capital. Applying a P/E of 36.3x to 9.3 billion won and 18.3 million shares outstanding results in an implied price of 18,342 won. Applying an IPO discount range of 18.2% - 34.6% results in an IPO range of 12,000 won to 15,000 won. 

South Korea

Seegene, Inc. manufactures In Vitro Diagnostic (IVD) products mainly through molecular diagnostic method.  The Company provides diagnostic & screening products for cancer, sepsis, influenza and virus infection.

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Seegene Inc (096530 KS)

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Brian Freitas

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A. Stotz Investment Research

Mico Biomed IPO Valuation Analysis - Capitalize on the KONEX Exchange Discount

MiCo BioMed Co Ltd (214610 KS) is an interesting IPO, capitalizing on the price discount of the KONEX exchange. The IPO price range of this company...

Douglas Kim

Shorting Restriction Extension: Prolonged Arb Trade Opportunity on KOSDAQ 150 ETFs

It is now official that Korea's shorting restrictions will get a six-month extension until March 15, 2021.But the KSC is stressing that the...

Sanghyun Park

Mico Biomed IPO Preview

Mico Biomed Co is getting ready for an IPO on the KOSDAQ exchange in the next few weeks. Established in 2009, Mico Biomed is a developer of...

Douglas Kim

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