Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>On 24 November, the SNT Group formalized its hostile takeover of Smec. S&amp;T Holdings  disclosed that it acquired an additional 5.46% stake in SMEC, raising its stake to 13.65%.</li>
<li>S&amp;T Holdings and SNT Group Chairman Choi combined own a 20.2% stake in SMEC. In comparison, the SMEC CEO Choi Young-seop owns a 9.75% stake in SMEC.</li>
<li>In our view, this is likely to lead to a potential fight for the control of SMEC's management rights, pushing up the share price of SMEC even further.</li>
</ul>


On 24 November, the SNT Group formalized its hostile takeover of Smec. S&amp;T Holdings  disclosed that it acquired an additional 5.46% stake in SMEC, raising its stake to 13.65%.
S&amp;T Holdings and SNT Group Chairman Choi combined own a 20.2% stake in SMEC. In comparison, the SMEC CEO Choi Young-seop owns a 9.75% stake in SMEC.
In our view, this is likely to lead to a potential fight for the control of SMEC's management rights, pushing up the share price of SMEC even further.


SNT Group - Formalizes a Hostile Takeover of SMEC

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/s-t-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16022:1" rel="noopener">SNT Holdings (036530 KS)</a> has lifted its stake in <a href="https://www.smartkarma.com/entities/smec-co-ltd" target="_blank" data-smartkarma-citation="entities:1649:1" rel="noopener">SMEC (099440 KS)</a>, South Korea's second-largest machine tool manufacturer, to 13.65% from 8.19%. SNT's chairman also holds 6.55%, or 20.2% all-in.</li>
<li>Concurrent with the stake increase, SNT formally declared its equity holding in SMEC to  “management participation” from "simple investment". </li>
<li>The move could simply be one of SNT aligning its interests with SMEC's management. But more likely, it's a precursor to a potential hostile takeover. SMEC is now up ~40%.</li>
</ul>



SNT Holdings (036530 KS) has lifted its stake in SMEC (099440 KS), South Korea's second-largest machine tool manufacturer, to 13.65% from 8.19%. SNT's chairman also holds 6.55%, or 20.2% all-in.
Concurrent with the stake increase, SNT formally declared its equity holding in SMEC to  “management participation” from "simple investment". 
The move could simply be one of SNT aligning its interests with SMEC's management. But more likely, it's a precursor to a potential hostile takeover. SMEC is now up ~40%.


SMEC (099440 KS) Pops As SNT Shifts Its Intent

<ul>
<li>This deal for <a href="https://www.smartkarma.com/entities/qube-holdings-ltd" target="_blank" data-smartkarma-citation="entities:958:1" rel="noopener">Qube Holdings (QUB AU)</a> from Macquarie should really get competitive. Scarce and strategic assets  - and nothing else like it that's listed. </li>
<li>As <a href="https://www.smartkarma.com/entities/digital-holdings-inc" target="_blank" data-smartkarma-citation="entities:1697:1" rel="noopener">Digital Holdings (2389 JP)</a> goes higher, "This is Japan" risk increases; but those who didn't sign up say "wait a minute, that's real money" also goes up.</li>
<li>
<a href="https://www.smartkarma.com/entities/wynn-resorts-ltd" target="_blank" data-smartkarma-citation="entities:606:1" rel="noopener">Wynn Resorts (WYNN US)</a> is at extreme levels vs. <a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK)</a>; yet consensus indicates considerably higher forward EBITDA growth for Resorts stub ops vs. Macau.</li>
</ul>


This deal for Qube Holdings (QUB AU) from Macquarie should really get competitive. Scarce and strategic assets  - and nothing else like it that's listed. 
As Digital Holdings (2389 JP) goes higher, "This is Japan" risk increases; but those who didn't sign up say "wait a minute, that's real money" also goes up.

Wynn Resorts (WYNN US) is at extreme levels vs. Wynn Macau Ltd (1128 HK); yet consensus indicates considerably higher forward EBITDA growth for Resorts stub ops vs. Macau.


Last Week In Event SPACE: Qube Holdings, Digital Holdings, Wynn Resorts/Macau, SNT/SMEC

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dn-solutions" target="_blank" data-smartkarma-citation="entities:44474:1" rel="noopener">DN Solutions (298440 KS)</a>, the third-largest machining centre/turning centre machine tool manufacturer, seeks to raise US$1.1 billion in a KRX IPO.</li>
<li>In <a href="https://www.smartkarma.com/insights/dn-solutions-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:180468" rel="noopener">DN Solutions IPO: The Bull Case</a>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on tepid growth due to volume declines, early indications of margin pressure, rising cash conversion cycle, and mid-tier FCF margin.</li>
</ul>



DN Solutions (298440 KS), the third-largest machining centre/turning centre machine tool manufacturer, seeks to raise US$1.1 billion in a KRX IPO.
In DN Solutions IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on tepid growth due to volume declines, early indications of margin pressure, rising cash conversion cycle, and mid-tier FCF margin.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/dn-solutions" target="_blank" data-smartkarma-citation="entities:44474:1" rel="noopener">DN Solutions (298440 KS)</a>, the third-largest machining centre/turning centre machine tool manufacturer, seeks to raise US$1.1 billion in a KRX IPO.   </li>
<li>
<a href="https://www.smartkarma.com/entities/dn-automotive-corporation" target="_blank" data-smartkarma-citation="entities:20840:1" rel="noopener">DN Automotive (007340 KS)</a> is the largest shareholder, representing 84.8% of outstanding shares. The primary/secondary split is 43%/57%.</li>
<li>The bull case rests on the market share gains, high barriers to entry, healthy forward revenue indicators, a return to growth, and top-tier EBIT margin.</li>
</ul>



DN Solutions (298440 KS), the third-largest machining centre/turning centre machine tool manufacturer, seeks to raise US$1.1 billion in a KRX IPO.   

DN Automotive (007340 KS) is the largest shareholder, representing 84.8% of outstanding shares. The primary/secondary split is 43%/57%.
The bull case rests on the market share gains, high barriers to entry, healthy forward revenue indicators, a return to growth, and top-tier EBIT margin.


South Korea

SMEC Co., Ltd. engages in the machinery and communication industry business. The Company's machinery business produces CNC lathe, machine center, robot, laser, and catalogue archives. In addition, communication industry business develops BcN solution, mobile solution, video solution, security solution, and catalogue archives.

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Smec Co Ltd (099440 KS)

SNT Group - Formalizes a Hostile Takeover of SMEC

On 2 December, it was announced that Smec Co Ltd (099440 KS)'s CEO Choi Young-seop purchased a total of 0.68mn shares (0.99% stake) in SMEC,...

Douglas Kim

SMEC (099440 KS) Pops As SNT Shifts Its Intent

I wouldn't chase it here. SMEC is trading rich to a key listed peer; and to precedent takeover metrics. Look to enter on any material weakness. ...

David Blennerhassett

Last Week In Event SPACE: Qube Holdings, Digital Holdings, Wynn Resorts/Macau, SNT/SMEC

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

DN Solutions IPO: The Bear Case

The bear case rests on tepid growth due to volume declines, early indications of margin pressure, rising cash conversion cycle, and mid-tier FCF...

Arun George

DN Solutions IPO: The Bull Case

The bull case rests on the market share gains, high barriers to entry, healthy forward revenue indicators, a return to growth, and top-tier EBIT...

Arun George

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