Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<ul>
<li>In our view, the Korean government could allow a fourth major telco in Korea in the next 1-2 years. </li>
<li>The launch of the fourth major telco in Korea would have a significant negative impact on the three existing Korean telcos. </li>
<li>In the local media, the following companies have been mentioned as potential candidates to inject capital into the 4th telecom operator in Korea: Coupang, Naver, Kakao, Viva Republica, and Shinsegae.</li>
</ul>


In our view, the Korean government could allow a fourth major telco in Korea in the next 1-2 years. 
The launch of the fourth major telco in Korea would have a significant negative impact on the three existing Korean telcos. 
In the local media, the following companies have been mentioned as potential candidates to inject capital into the 4th telecom operator in Korea: Coupang, Naver, Kakao, Viva Republica, and Shinsegae.


When Will the Korean Government Allow the Fourth Telco in Korea?

Equity Bottom-Up

<ul>
<li>Amid sharply rising interest rates and greater economic uncertainty, the subject of loan guarantees to affiliates among Korean companies has become more important. </li>
<li>In this insight, we discuss a pair trade between Shinsegae (long) and Hyundai Dept Store Co (short).</li>
<li>Four major reasons why we prefer Shinsegae vs Hyundai Dept Store include negative impact from equity spin-off, increasing leverage (including loan guarantees), valuations, and economies of scale. </li>
</ul>


Amid sharply rising interest rates and greater economic uncertainty, the subject of loan guarantees to affiliates among Korean companies has become more important. 
In this insight, we discuss a pair trade between Shinsegae (long) and Hyundai Dept Store Co (short).
Four major reasons why we prefer Shinsegae vs Hyundai Dept Store include negative impact from equity spin-off, increasing leverage (including loan guarantees), valuations, and economies of scale. 


Korea Loan Guarantees: A Pair Trade Between Shinsegae & Hyundai Dept Store

Event-Driven

<ul>
<li>On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50 years.</li>
<li>The spin-off of the Hanwha Galleria is a good move. Clearly, having both the renewable energy and a luxury department store business under one roof does not make much sense.</li>
<li>We also like the company's move expand its U.S. solar module production capacity. The total amount of potential benefit could be nearly US$2 billion over the next decade. </li>
</ul>


On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50 years.
The spin-off of the Hanwha Galleria is a good move. Clearly, having both the renewable energy and a luxury department store business under one roof does not make much sense.
We also like the company's move expand its U.S. solar module production capacity. The total amount of potential benefit could be nearly US$2 billion over the next decade. 


Hanwha Solutions: Biggest Restructuring Measures in 50 Years

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

China Tourism Group Duty Free / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corporation-limited" target="_blank" data-smartkarma-citation="entities:36229:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (1880 HK)</a>/CTGDF priced its H Share at HK$158.00 per share to raise net proceeds of US$2.0 billion. The H Share starts trading tomorrow.</li>
<li>The H Share listing price implies an AH discount of 27.2% at A Share price of RMB189.80. This compares to an average AH discount of 46.6% of listed AH shares.</li>
<li>The <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> A Shares are trading close to fair value. The H Shares valuation is unattractive compared to peers. </li>
</ul>



China Tourism Group Duty Free Corp Ltd (1880 HK)/CTGDF priced its H Share at HK$158.00 per share to raise net proceeds of US$2.0 billion. The H Share starts trading tomorrow.
The H Share listing price implies an AH discount of 27.2% at A Share price of RMB189.80. This compares to an average AH discount of 46.6% of listed AH shares.
The China Tourism Group Duty Free Corp Ltd (601888 CH) A Shares are trading close to fair value. The H Shares valuation is unattractive compared to peers. 


CTG Duty Free H Share Listing: Trading Debut

China Tourism Group Duty Free Corp Ltd / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.</li>
<li>In <a href="https://www.smartkarma.com/insights/ctg-duty-free-h-share-listing-another-false-dawn" target="_blank" data-smartkarma-citation="insights:78718" rel="noopener">CTG Duty Free H Share Listing: Another False Dawn?</a>, we noted that on a fundamental view, we would prefer to remain on the sidelines.</li>
<li>Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.</li>
</ul>



China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.


CTG Duty Free H Share Listing: Valuation Insights

South Korea

Shinsegae Co., Ltd. operates department stores in South Korea.  The Company retails food, clothing, household goods, electronics, and other items through several branch stores.

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Shinsegae (004170 KS)

When Will the Korean Government Allow the Fourth Telco in Korea?

The Korean government could allow a fourth major telco in Korea in the next 1-2 years which would have a significant negative impact on the three...

Douglas Kim

Korea Loan Guarantees: A Pair Trade Between Shinsegae & Hyundai Dept Store

Four major reasons why we prefer Shinsegae vs Hyundai Dept Store include negative impact from equity spin-off, increasing leverage (including loan...

Douglas Kim

Hanwha Solutions: Biggest Restructuring Measures in 50 Years

On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

When Will the Korean Government Allow the Fourth Telco in Korea?

The Korean government could allow a fourth major telco in Korea in the next 1-2 years which would have a significant negative impact on the three...

Douglas Kim

Korea Loan Guarantees: A Pair Trade Between Shinsegae & Hyundai Dept Store

Four major reasons why we prefer Shinsegae vs Hyundai Dept Store include negative impact from equity spin-off, increasing leverage (including loan...

Douglas Kim

Hanwha Solutions: Biggest Restructuring Measures in 50 Years

On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50...

Douglas Kim

CTG Duty Free H Share Listing: Trading Debut

The H Share listing price implies an AH discount of 27.2% at the last close A Share price of RMB189.80. The AH discount and H Shares valuation are...

Arun George

CTG Duty Free H Share Listing: Valuation Insights

Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We...

Arun George