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.

Equity Capital Markets

SK Biobioscience IPO price hit the ceiling at ₩65,000, raising ₩1.5T with a ₩5T market cap.







Pricing (₩B)
Floor
Ceiling (final)


Price (₩)
₩49,000
₩65,000


Base deal size
1,124.6
1,491.8


- Institutional allotment
618.5
820.5


Implied market cap
3,748.5
4,972.5

Source: DART

Literally, all of the pricing sits at or above the high end.Despite several concerns, many investors must not be complaining about the price level.It is worth noting that foreign funds priced it a little less favorably than local investors.









By investor type
Institution
%
Demand
%


Local PO funds
513
35.04%
5,673,643,000
35.24%


Local BR/IA
32
2.19%
358,760,000
2.23%


Local pension/bank/insurance
281
19.19%
3,056,667,000
18.99%


Local others (hedge funds)
346
23.63%
3,927,753,000
24.40%


Foreign (foreign funds)
130
8.88%
1,150,736,214
7.15%


Foreign others (local hot money)
162
11.07%
1,932,004,000
12.00%


Total
1,464
100.00%
16,099,563,214
100.00%


Subscription rate
1,275.47

Source: DART











By price
Institution
%
Demand
%


Above high end
1,135
77.53%
12,982,935,500
80.64%


75-100% of high end
271
18.51%
2,592,017,714
16.10%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
58
3.96%
524,610,000
3.26%


Total
1,464
100.00%
16,099,563,214
100.00%

Source: DART











Local PO funds
Institution
%
Demand
%


Above high end
412
80.31%
4,614,489,000
81.33%


75-100% of high end
55
10.72%
610,783,000
10.77%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
46
8.97%
448,371,000
7.90%


Total
513
100.00%
5,673,643,000
100.00%

Source: DART











Local BR/IA
Institution
%
Demand
%


Above high end
23
71.88%
268,023,000
74.71%


75-100% of high end
9
28.13%
90,737,000
25.29%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
0
0.00%
0
0.00%


Total
32
100.00%
358,760,000
100.00%

Source: DART











Local pension/bank/insurance
Institution
%
Demand
%


Above high end
233
82.92%
2,553,390,000
83.54%


75-100% of high end
43
15.30%
452,784,000
14.81%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
5
1.78%
50,493,000
1.65%


Total
281
100.00%
3,056,667,000
100.00%

Source: DART











Local others (hedge funds)
Institution
%
Demand
%


Above high end
294
84.97%
3,412,833,000
86.89%


75-100% of high end
45
13.01%
489,174,000
12.45%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
7
2.02%
25,746,000
0.66%


Total
346
100.00%
3,927,753,000
100.00%

Source: DART











Foreign (foreign funds)
Institution
%
Demand
%


Above high end
22
16.92%
240,862,500
20.93%


75-100% of high end
108
83.08%
909,873,714
79.07%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
0
0.00%
0
0.00%


Total
130
100.00%
1,150,736,214
100.00%

Source: DART











Foreign others (local hot money)
Institution
%
Demand
%


Above high end
151
93.21%
1,893,338,000
98.00%


75-100% of high end
11
6.79%
38,666,000
2.00%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
0
0.00%
0
0.00%


Low end or below
0
0.00%
0
0.00%


Unspecified
0
0.00%
0
0.00%


Total
162
100.00%
1,932,004,000
100.00%

Source: DART



SK Bioscience IPO: Bookbuilding Results & KOSPI 200 Fast Entry

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>SK Bioscience announced an excellent IPO book building results on 8 March. The IPO price has been confirmed at 65,000 won per share, which is at the top of the IPO price range. At the IPO price of 65,000 won, the company's initial market cap will be 5.0 trillion won.</li>
<li>The total demand ratio of the SK Bioscience IPO was 1,275.5 to 1, which is very high. Of these institutional investors, 96.7% of them thought that the value of the company should be 65,000 won or more. Our base case valuation for the company is a market cap of 11.5 trillion won or 149,000 won per share, which would represent a 129% upside from the IPO price of 65,000 won. </li>
<li>Despite the numerous positives about the SK Bioscience IPO, the biggest near-term and long-term problem of SK Bioscience is whether or not the COVID-19 vaccines of AstraZeneca, NovaVax, and other major global vaccine developers are safe or not.  Since 26 February (when COVID-19 vaccinations started in Korea), there have been <a href="https://blog.naver.com/jijisjungle/222264180891" target="_blank" rel="noopener">11 people</a> that have died in Korea after taking the AstraZeneca COVID-19 vaccines (death rate of 0.003%). For now, the Korean authorities have ruled out any association that may link the deaths of these 11 people with the COVID-19 vaccines.</li>
</ul>


SK Bioscience announced an excellent IPO book building results on 8 March. The IPO price has been confirmed at 65,000 won per share, which is at the top of the IPO price range. At the IPO price of 65,000 won, the company's initial market cap will be 5.0 trillion won.
The total demand ratio of the SK Bioscience IPO was 1,275.5 to 1, which is very high. Of these institutional investors, 96.7% of them thought that the value of the company should be 65,000 won or more. Our base case valuation for the company is a market cap of 11.5 trillion won or 149,000 won per share, which would represent a 129% upside from the IPO price of 65,000 won. 
Despite the numerous positives about the SK Bioscience IPO, the biggest near-term and long-term problem of SK Bioscience is whether or not the COVID-19 vaccines of AstraZeneca, NovaVax, and other major global vaccine developers are safe or not.  Since 26 February (when COVID-19 vaccinations started in Korea), there have been 11 people that have died in Korea after taking the AstraZeneca COVID-19 vaccines (death rate of 0.003%). For now, the Korean authorities have ruled out any association that may link the deaths of these 11 people with the COVID-19 vaccines.


Trading Strategy of SK Bioscience IPO Post Pricing

<div class="content-highlight"><div>Over a 6-12 months view, we believe that SK Bioscience's market cap value could be about 11.5 trillion won or 149,000 won per share. At a market cap of 11.5 trillion won for SK Bioscience, this would suggest a P/S multiple of 11.5x (30% discount to the average P/S multiple of its comps in 2022) assuming annual revenue of 1 trillion won for the company. </div></div>Our base case value of 149,000 won per share would represent 129% higher than the high end IPO price of 65,000 won. Given such a high upside versus the IPO price, we have a POSITIVE view of this IPO.Remember, the key investment merits of SK Bioscience is that it is a company which has been picked by AstraZeneca and NovaVax to produce COVID-19 vaccines and there is a good chance that other major global biopharm companies may select SK Bioscience for additional COVID-19 vaccines production.

Over a 6-12 months view, we believe that SK Bioscience's market cap value could be about 11.5 trillion won or 149,000 won per share. At a market cap of 11.5 trillion won for SK Bioscience, this would suggest a P/S multiple of 11.5x (30% discount to the average P/S multiple of its comps in 2022) assuming annual revenue of 1 trillion won for the company. Our base case value of 149,000 won per share would represent 129% higher than the high end IPO price of 65,000 won. Given such a high upside versus the IPO price, we have a POSITIVE view of this IPO.Remember, the key investment merits of SK Bioscience is that it is a company which has been picked by AstraZeneca and NovaVax to produce COVID-19 vaccines and there is a good chance that other major global biopharm companies may select SK Bioscience for additional COVID-19 vaccines production.

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

The Korea Exchange (KRX) will announce the results of the June 2021 review of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> in May with the changes becoming effective after the close of trading on 10 June.We currently see <a href="https://www.smartkarma.com/entities/taihan-electric-wire-co-ltd" target="_blank" data-smartkarma-citation="entities:11551:1" rel="noopener">Taihan Electric Wire (001440 KS)</a>, <a href="https://www.smartkarma.com/entities/dongwon-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:1783:1" rel="noopener">Dongwon Industries (006040 KS)</a>, <a href="https://www.smartkarma.com/entities/hyosung-advanced-materials-c" target="_blank" data-smartkarma-citation="entities:27751:1" rel="noopener">Hyosung Advanced Materials C (298050 KS)</a> and <a href="https://www.smartkarma.com/entities/hyosung-tnc-co-ltd" target="_blank" data-smartkarma-citation="entities:27749:1" rel="noopener">Hyosung TNC Co Ltd (298020 KS)</a> as potential inclusions in the index, with <a href="https://www.smartkarma.com/entities/taeyoung-engineering-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:18740:1" rel="noopener">Taeyoung Engineering &amp; Construction (009410 KS)</a>, <a href="https://www.smartkarma.com/entities/namsun-aluminum-co-ltd" target="_blank" data-smartkarma-citation="entities:17514:1" rel="noopener">Namsun Aluminum (008350 KS)</a>, <a href="https://www.smartkarma.com/entities/hanil-hyundai-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:14406:1" rel="noopener">Hanil Hyundai Cement (006390 KS)</a> and <a href="https://www.smartkarma.com/entities/binggrae-co-ltd" target="_blank" data-smartkarma-citation="entities:16424:1" rel="noopener">Binggrae Co Ltd (005180 KS)</a> as the corresponding exclusions.<a href="https://www.smartkarma.com/entities/sk-bioscience-co-ltd" target="_blank" data-smartkarma-citation="entities:31484:1" rel="noopener">SK Bioscience (302440 KS)</a> is expected to list on the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-index" target="_blank" data-smartkarma-citation="entities:22911:1" rel="noopener">Korea Stock Exchange Kospi Index (KOSPI INDEX)</a> market in March and there is a possibility that the stock gets Fast Entry into the index. That could see <a href="https://www.smartkarma.com/entities/sebang-global-battery-co-ltd" target="_blank" data-smartkarma-citation="entities:9618:1" rel="noopener">Sebang Global Battery (004490 KS)</a> being deleted from the index.<a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (1486402D KS)</a> is another possible Fast Entry into the index though there are few details available on when the stock is expected to list.The short sell ban in Korea has been extended to 2 May. Stocks that are constituents of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> can be short sold from 3 May. The commencement of short selling on these stocks prior to the announcement of the June review changes could result in the expected inclusions outperforming the expected exclusions and opening up other interesting trading strategies.

The Korea Exchange (KRX) will announce the results of the June 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in May with the changes becoming effective after the close of trading on 10 June.We currently see Taihan Electric Wire (001440 KS), Dongwon Industries (006040 KS), Hyosung Advanced Materials C (298050 KS) and Hyosung TNC Co Ltd (298020 KS) as potential inclusions in the index, with Taeyoung Engineering &amp; Construction (009410 KS), Namsun Aluminum (008350 KS), Hanil Hyundai Cement (006390 KS) and Binggrae Co Ltd (005180 KS) as the corresponding exclusions.SK Bioscience (302440 KS) is expected to list on the Korea Stock Exchange Kospi Index (KOSPI INDEX) market in March and there is a possibility that the stock gets Fast Entry into the index. That could see Sebang Global Battery (004490 KS) being deleted from the index. Krafton Inc (1486402D KS) is another possible Fast Entry into the index though there are few details available on when the stock is expected to list.The short sell ban in Korea has been extended to 2 May. Stocks that are constituents of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) can be short sold from 3 May. The commencement of short selling on these stocks prior to the announcement of the June review changes could result in the expected inclusions outperforming the expected exclusions and opening up other interesting trading strategies.

KOSPI200 Index Rebalance Preview: Increasing Number of Potential Changes

<div class="content-highlight">
SK Bioscience is getting ready to complete its IPO in Korea in March. SK Bioscience will be the biggest IPO in Korea so far this year in 2021. The IPO price range is from 49,000 won to 65,000 won. The IPO deal base size ranges from US$1.0 billion to US$1.3 billion. The expected market cap after the IPO ranges from 3.8 trillion won to 5.0 trillion won, according to the bankers's valuation. The book building for the institutional investors starts on 4 March 2021. The lead bankers on this IPO include NH Investment &amp; Securities, Korea Investment &amp; Securities, and Mirae Asset Daewoo Securities. 
Institutional investors will be allocated about 55% of the deal and retail 25%, and the rest will go to an employee stock ownership plan. There is a voluntary lock-up of 15 days to six months for investors. SK Bioscience is currently 98% owned by <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" data-smartkarma-citation="entities:26190:1" rel="noopener">Sk Chemicals Co Ltd/New (285130 KS) </a>and the latter company is 33.5% owned by <a href="https://www.smartkarma.com/entities/sk-discovery-co-ltd" target="_blank" data-smartkarma-citation="entities:5181:1" rel="noopener">Sk Discovery (006120 KS)</a>. 
SK Bioscience was spun off from <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" data-smartkarma-citation="entities:26190:1" rel="noopener">Sk Chemicals Co Ltd/New (285130 KS)</a> in July 2018. SK Biosciene specializes in making vaccines. SK Bioscience is backed by Bill Gates. In June 2020, Bill Gates mentioned that SK Bioscience may be capable of producing 200 million COVID-19 vaccine kits by June 2021. The Bill &amp; Melinda Gates foundation <a href="https://www.skchemicals.com/prcenter/new_view.do" target="_blank" rel="noopener">gave</a> $3.6 million in May to SK Bioscience to accelerate the development of Covid-19 vaccines. 
</div>


SK Bioscience is getting ready to complete its IPO in Korea in March. SK Bioscience will be the biggest IPO in Korea so far this year in 2021. The IPO price range is from 49,000 won to 65,000 won. The IPO deal base size ranges from US$1.0 billion to US$1.3 billion. The expected market cap after the IPO ranges from 3.8 trillion won to 5.0 trillion won, according to the bankers's valuation. The book building for the institutional investors starts on 4 March 2021. The lead bankers on this IPO include NH Investment &amp; Securities, Korea Investment &amp; Securities, and Mirae Asset Daewoo Securities. 
Institutional investors will be allocated about 55% of the deal and retail 25%, and the rest will go to an employee stock ownership plan. There is a voluntary lock-up of 15 days to six months for investors. SK Bioscience is currently 98% owned by Sk Chemicals Co Ltd/New (285130 KS) and the latter company is 33.5% owned by Sk Discovery (006120 KS). 
SK Bioscience was spun off from Sk Chemicals Co Ltd/New (285130 KS) in July 2018. SK Biosciene specializes in making vaccines. SK Bioscience is backed by Bill Gates. In June 2020, Bill Gates mentioned that SK Bioscience may be capable of producing 200 million COVID-19 vaccine kits by June 2021. The Bill &amp; Melinda Gates foundation gave $3.6 million in May to SK Bioscience to accelerate the development of Covid-19 vaccines. 


SK Bioscience IPO Preview - Biggest IPO in Korea in 1Q 2021

South Korea

SK Bioscience Co.,Ltd. operates biopharmaceutical businesses. The Company produces vaccines, sky cellflu prefilled syringes, sky cellflu quadrivalent prefilled syringes, varicella drugs, and other related products. SK Bioscience markets its products throughout South Korea.

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SK Bioscience (302440 KS)

SK Bioscience IPO: Bookbuilding Results & KOSPI 200 Fast Entry

This post has SK Bioscience's IPO book-building results and examines the situation/likelihood of the KOSPI 200 fast entry.

Sanghyun Park

Trading Strategy of SK Bioscience IPO Post Pricing

The IPO price of SK Bioscience was confirmed at 65,000 won per share, which is at the top of the IPO price range. The total demand ratio of the SK...

Douglas Kim

SK Bioscience IPO - Valuation Analysis

We believe that SK Bioscience's market cap value could be about 11.5 trillion won or 149,000 won per share which would represent 129% higher than...

Douglas Kim

KOSPI200 Index Rebalance Preview: Increasing Number of Potential Changes

We see 4 potential changes to the KOSPI200 index at the June review (up from 1 change in Nov). With the short sell ban expiring on 2 May for...

Brian Freitas

SK Bioscience IPO Preview - Biggest IPO in Korea in 1Q 2021

SK Bioscience is getting ready to complete its IPO in Korea in March. SK Bioscience will be the biggest IPO in Korea so far this year in 2021. The...

Douglas Kim

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