Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>SK IE Technology's second largest shareholder Premier Partners is selling its shares through a block deal worth between 465 billion won to 538.9 billion won.</li>
<li>We would AVOID this block deal due to lack valuation merits coupled with additional overhang from the remaining shares by Premier Partners post this block sale. </li>
<li>SK IET, which is trading at 51.7x P/E and 5.3x P/B consensus 2022 earnings estimates, appears to be fully valued at current levels. </li>
</ul>


SK IE Technology's second largest shareholder Premier Partners is selling its shares through a block deal worth between 465 billion won to 538.9 billion won.
We would AVOID this block deal due to lack valuation merits coupled with additional overhang from the remaining shares by Premier Partners post this block sale. 
SK IET, which is trading at 51.7x P/E and 5.3x P/B consensus 2022 earnings estimates, appears to be fully valued at current levels. 


SK IE Technology - Block Deal Sale by Second Largest Shareholder Premier Partners

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

SK IE Technology   / Equity Capital Markets

<ul>
<li>SK IE Technology’s (SKIE) shareholder aims to raise around US$430m via selling part of its shareholding.</li>
<li>The deal comes close to the six-month lock-up expiry post listing and hence, there is a high likelihood that the selldown might have been expected.</li>
<li>In this note, we will run the deal through our ECM framework.</li>
</ul>


SK IE Technology’s (SKIE) shareholder aims to raise around US$430m via selling part of its shareholding.
The deal comes close to the six-month lock-up expiry post listing and hence, there is a high likelihood that the selldown might have been expected.
In this note, we will run the deal through our ECM framework.


SK IE Technology Placement - Is Probably Expected

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.

SKIET's major lockup release will hit the market on November 11. Yes, it is this Thursday, following Kakao Bank today and Krafton on November 10.A whopping 74.24% will be released, including the major shareholder (SK Innovation)'s 61.2%. Of course, we can't completely rule out the possibility of the major shareholder's partial block sale. It is true that as SK Innovation's listing schedule has been delayed, this possibility has grown.<div class="content-highlight">However, what the market is more concerned about is the IPO institutional 6-month lockup amounting to 4.24% and the local PE (Premier Superior) with an 8.8% stake. These stakes should be seen as a more imminent threat due to the shareholding nature.</div><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":"SKIET lockup release"}'>SKIET lockup release</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shares"}'>Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"% of SO"}'>% of SO</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total to be released"}'>Total to be released</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":52928580}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=sum(R[1]C[0]:R[3]C[0])">52,928,580</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7423613970020194}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C2">74.24%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Innovation"}'>: SK Innovation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":43633432}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>43,633,432</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6119902618871055}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C2">61.20%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Premier Superior"}'>: Premier Superior</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6274160}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>6,274,160</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.08799960593339534}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C2">8.80%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO institutional 6-month lockup"}'>: IPO institutional 6-month lockup</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3020988}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>3,020,988</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0423715291815185}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C2">4.24%</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><table class="table table-striped">
<colgroup>
<col width="300">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"SK IE Technology Co Ltd"}' data-sheets-formula='=googlefinance(R[-5]C[1], "name")'>Complete float schedule</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shareholding"}'>Shareholding</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Release"}'>Release</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shares"}'>Shares</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Innovation"}'>SK Innovation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6119902618871055}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">61.20%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Major shareholder"}'>Major shareholder</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44598}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 11. 11</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":43633432}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>43,633,432</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Premier Superior"}'>Premier Superior</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.08799960593339534}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">8.80%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"VC/PE"}'>VC/PE</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44598}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2022. 11. 11</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6274160}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>6,274,160</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP"}'>ESOP</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.03960801368999951}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">3.96%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44638}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2022. 03. 18</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2823956}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>2,823,956</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO institutional, lockup 6 months"}'>IPO institutional, 6-month lockup</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0423715291815185}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">4.24%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44511}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 11. 11</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3020988}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>3,020,988</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO institutional, lockup 3 months"}'>IPO institutional, 3-month lockup</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.02928110110647215}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">2.93%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44419}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 08. 11</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2087672}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>2,087,672</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO institutional, lockup 1 month"}'>IPO institutional, 1-month lockup</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.037873144439436325}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">3.79%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44358}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 06. 11</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2700264}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>2,700,264</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO institutional, lockup 15 days"}'>IPO institutional, 15-day lockup</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0005038318825690495}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">0.05%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44342}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 05. 26</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":35922}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>35,922</td>
</tr>
<tr><td colspan="5"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO institutional, non-lockup"}'>IPO institutional, non-lockup</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.06036947222565385}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">6.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4304198}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>4,304,198</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO retail"}'>IPO retail</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.09000303965384975}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[3]/R3C2">9.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6417000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>6,417,000</td>
</tr>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

SKIET's major lockup release will hit the market on November 11. Yes, it is this Thursday, following Kakao Bank today and Krafton on November 10.A whopping 74.24% will be released, including the major shareholder (SK Innovation)'s 61.2%. Of course, we can't completely rule out the possibility of the major shareholder's partial block sale. It is true that as SK Innovation's listing schedule has been delayed, this possibility has grown.However, what the market is more concerned about is the IPO institutional 6-month lockup amounting to 4.24% and the local PE (Premier Superior) with an 8.8% stake. These stakes should be seen as a more imminent threat due to the shareholding nature.







SKIET lockup release
Shares
% of SO


Total to be released
52,928,580
74.24%


: SK Innovation
43,633,432
61.20%


: Premier Superior
6,274,160
8.80%


: IPO institutional 6-month lockup
3,020,988
4.24%

Source: KRX











Complete float schedule
Shareholding
Type
Release
Shares


SK Innovation
61.20%
Major shareholder
2021. 11. 11
43,633,432


Premier Superior
8.80%
VC/PE
2022. 11. 11
6,274,160


ESOP
3.96%
-
2022. 03. 18
2,823,956


IPO institutional, 6-month lockup
4.24%
-
2021. 11. 11
3,020,988


IPO institutional, 3-month lockup
2.93%
-
2021. 08. 11
2,087,672


IPO institutional, 1-month lockup
3.79%
-
2021. 06. 11
2,700,264


IPO institutional, 15-day lockup
0.05%
-
2021. 05. 26
35,922



IPO institutional, non-lockup
6.04%
-
-
4,304,198


IPO retail
9.00%
-
-
6,417,000

Source: DART



SKIET Lockup Release Situation Update (November 11th)

In this insight, we discuss the end of lock-up periods for <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-ie-technology" target="_blank" data-smartkarma-citation="entities:29207:1" rel="noopener">SK IE Technology (361610 KS)</a>,<a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (259960 KS)</a>, and <a href="https://www.smartkarma.com/entities/kakaobank-corp" target="_blank" data-smartkarma-citation="entities:33501:1" rel="noopener">KakaoBank (323410 KS)</a> in 4Q 2021 and 1Q 2022. <ul>
<li>In particular, there are lock up periods ending for these four stocks in November and December.</li>
<li>There are also end of lock-up periods for Krafton and Kakao Bank in early February 2022.</li>
<li>Typically, investors tend to focus on the end of the lock-up periods in Korea about 1-2 months ahead of the actual end of these lock-up periods.</li>
</ul>In addition to analyzing the end of these lock-up periods, we analyze the recent shorts balance of these stocks in recent weeks. <hr><ul>
<li>Although Kakao Bank's share price has performed well since the IPO (up 54% from IPO price), its share price is down 22% from the end of the one month lock-up period. The amount of shares that could be sold after the end of the three months and six months lock-up periods are much bigger (18.3 million shares combined) as compared to the 3.1 million shares that could be sold after the one month lock-up period. Therefore, there are continued concerns about additional selling of Kakao Bank shares in November (after the end of the three months lock-up period).</li>
<li>
Krafton's share price has not performed well after the IPO (down 2% from the IPO price of 498,000 won). With the upcoming end of the 3 month lock-up period, there could be continued negative pressure for additional selling from the existing shareholders.</li>
</ul>

In this insight, we discuss the end of lock-up periods for Hyundai Heavy Industries (329180 KS), SK IE Technology (361610 KS), Krafton Inc (259960 KS), and KakaoBank (323410 KS) in 4Q 2021 and 1Q 2022. 
In particular, there are lock up periods ending for these four stocks in November and December.
There are also end of lock-up periods for Krafton and Kakao Bank in early February 2022.
Typically, investors tend to focus on the end of the lock-up periods in Korea about 1-2 months ahead of the actual end of these lock-up periods.
In addition to analyzing the end of these lock-up periods, we analyze the recent shorts balance of these stocks in recent weeks. 
Although Kakao Bank's share price has performed well since the IPO (up 54% from IPO price), its share price is down 22% from the end of the one month lock-up period. The amount of shares that could be sold after the end of the three months and six months lock-up periods are much bigger (18.3 million shares combined) as compared to the 3.1 million shares that could be sold after the one month lock-up period. Therefore, there are continued concerns about additional selling of Kakao Bank shares in November (after the end of the three months lock-up period).

Krafton's share price has not performed well after the IPO (down 2% from the IPO price of 498,000 won). With the upcoming end of the 3 month lock-up period, there could be continued negative pressure for additional selling from the existing shareholders.


End of Lock-Ups for Kakao Bank, Krafton, SK IET, & HHI in 4Q 2021 and Increasing Short Volumes

Maeil Business Daily <a href="https://finance.naver.com/news/news_read.naver?article_id=0004867946&amp;office_id=009&amp;mode=LSS3D&amp;type=0&amp;section_id=101&amp;section_id2=258&amp;section_id3=402&amp;date=20211021&amp;page=1" target="_blank" rel="noopener">reported</a> after the market close today that <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (377300 KS)</a> has successfully completed its IPO book building with the IPO price of 90,000 won, which was at the high end of the IPO price range. As of 2PM, it was estimated that the competition rate for the IPO shares was about 1,400 to 1. It is estimated that the final competition rate could be closer to about 2,000 to 1.More than 70% of the subscription shares included lock-up periods, which is quite high. There is a good chance that Kakao Pay could be the last major IPO with market cap of more than 10 trillion won and many institutional investors subscribed to this IPO. The successful IPO of Kakao Bank also likely to have played an important role in the strong IPO demand of Kakao Pay as well.Valuation - Our one year base case valuation of Kakao Pay is implied market cap of 11.1 trillion won or 81,829 won per share, which is based on EV/S of 10x using our estimated sales of 919 billion won in 2022. However, given the excellent book building results, we believe that there is a strong likelihood of a short term pop on the share price after the IPO. Our sensitivity analysis suggests a high end price of 103,366 won and we believe that it is likely to reach/surpass this high end level in the first few hours of trading. In the first few days of trading Kakao Pay IPO, it may not be as bullish as Kakao Bank's IPO in the first two weeks of trading. However, there is a good probability that Kakao Pay's stock price will likely exceed our high end valuation levels (103,366 won). Nonetheless, over a longer period of time (1 year), we believe that the share price of Kakao Pay will likely come down closer to our base case (81,829 won) as investors become more concerned about the heightened competitive pressures and the company's growth rate starts to decline.

Maeil Business Daily reported after the market close today that Kakao Pay (377300 KS) has successfully completed its IPO book building with the IPO price of 90,000 won, which was at the high end of the IPO price range. As of 2PM, it was estimated that the competition rate for the IPO shares was about 1,400 to 1. It is estimated that the final competition rate could be closer to about 2,000 to 1.More than 70% of the subscription shares included lock-up periods, which is quite high. There is a good chance that Kakao Pay could be the last major IPO with market cap of more than 10 trillion won and many institutional investors subscribed to this IPO. The successful IPO of Kakao Bank also likely to have played an important role in the strong IPO demand of Kakao Pay as well.Valuation - Our one year base case valuation of Kakao Pay is implied market cap of 11.1 trillion won or 81,829 won per share, which is based on EV/S of 10x using our estimated sales of 919 billion won in 2022. However, given the excellent book building results, we believe that there is a strong likelihood of a short term pop on the share price after the IPO. Our sensitivity analysis suggests a high end price of 103,366 won and we believe that it is likely to reach/surpass this high end level in the first few hours of trading. In the first few days of trading Kakao Pay IPO, it may not be as bullish as Kakao Bank's IPO in the first two weeks of trading. However, there is a good probability that Kakao Pay's stock price will likely exceed our high end valuation levels (103,366 won). Nonetheless, over a longer period of time (1 year), we believe that the share price of Kakao Pay will likely come down closer to our base case (81,829 won) as investors become more concerned about the heightened competitive pressures and the company's growth rate starts to decline. 

South Korea

SK IE Technology Co., Ltd operates as a material solution provider. The Company provides information material solutions, electronic materials solutions, and other products. SK IE Technology conducts businesses across worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

SK IE Technology (361610 KS)

SK IE Technology - Block Deal Sale by Second Largest Shareholder Premier Partners

SK IE Technology's second largest shareholder Premier Partners is selling its shares through a block deal worth between 465 billion won to 538.9...

Douglas Kim

SK IE Technology Placement - Is Probably Expected

SK IE Technology’s (SKIE) shareholder aims to raise around US$430m via selling part of its shareholding. The deal is probably expected.

Sumeet Singh

SKIET Lockup Release Situation Update (November 11th)

SKIET's major lockup release (74% of the SO) will be this Thursday, November 11th. This post offers the latest update on the situation.

Sanghyun Park

End of Lock-Ups for Kakao Bank, Krafton, SK IET, & HHI in 4Q 2021 and Increasing Short Volumes

In this insight, we discuss end of lock-up periods for Hyundai Heavy Industries (329180 KS), SK IE Technology (361610 KS), Krafton Inc (259960 KS),...

Douglas Kim

Kakao Pay Book Building Results

Maeil Business Daily reported after the market close today that Kakao Pay has successfully completed its IPO book building with the IPO price of...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)