Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>The Starlink service is expected to be launched in Korea in 2Q/3Q 2023. Starlink gained more than 1 million active subscribers globally as of December 2022.</li>
<li>The launch of the Starlink service in Korea is likely to have a positive impact on  companies such as Hanwha Aerospace, Solu-M, Intellian Technologies, and Satrec Initiative.</li>
<li>We like a pair trade involving long (basket of 8 stocks above that are positively impacted by Starlink launch in Korea) and short (three major Korean telcos).</li>
</ul>


The Starlink service is expected to be launched in Korea in 2Q/3Q 2023. Starlink gained more than 1 million active subscribers globally as of December 2022.
The launch of the Starlink service in Korea is likely to have a positive impact on  companies such as Hanwha Aerospace, Solu-M, Intellian Technologies, and Satrec Initiative.
We like a pair trade involving long (basket of 8 stocks above that are positively impacted by Starlink launch in Korea) and short (three major Korean telcos).


Launch of Starlink Service by SpaceX - Impact on 11 Korean Companies

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<ul>
<li>NPS said it would add 50 KOSPI stocks to KOSPI 200 for direct management. However, the key was when this would be implemented and which ones would be included.</li>
<li>SBS, one of Korea's major networks, exclusively reported that NPS finalized the constituent stocks of the NPS-KR250 and started rebalancing trading on the 50 additional KOSPI stocks from January.</li>
<li>Hence, tracing and identifying who these additional 50 KOSPI stocks are is becoming the hottest topic in Korea's local market at this point.</li>
</ul>


NPS said it would add 50 KOSPI stocks to KOSPI 200 for direct management. However, the key was when this would be implemented and which ones would be included.
SBS, one of Korea's major networks, exclusively reported that NPS finalized the constituent stocks of the NPS-KR250 and started rebalancing trading on the 50 additional KOSPI stocks from January.
Hence, tracing and identifying who these additional 50 KOSPI stocks are is becoming the hottest topic in Korea's local market at this point.


Korea NPS Reportedly Finalized Additional 50 KOSPI Stocks in Its BM for Direct Management

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/solu-m-co-ltd" target="_blank" data-smartkarma-citation="entities:31092:1" rel="noopener">Solu-M Co Ltd (248070 KS), </a> which was spun off from <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a> (SEMCO) in 2015, is getting ready to complete its IPO in KOSPI in early February 2021. The company's major products include power modules, electronic shelf label (ESL), 3 in 1 boards for TV parts, and IoT products. This is a fairly decent sized IPO with solid fundamentals. The IPO base deal size ranges from $80 million to $90 million. According to the bankers' valuation, the expected market cap after the IPO ranges from 685 billion won to 775 billion won. The book building for the institutional investors starts on January 14th, 2021. How the Bankers Priced the IPO - The bankers used five companies including Hansol Technis, Powernet, and Silicon Works as comps to Solu-M. The bankers annualized the net profit of the comps (using the controlling interest net profit figures from 1Q-3Q 2020). The average P/E of the comps is 23.4x. The bankers then took Solu-M's annualized net profit in 2020 and applied this P/E multiple to derive an implied market cap of 1,059 billion won (21,182 won implied price). After applying IPO discount of 27.0% to 35.5%, the implied price range is from 13,700 won to 15,500 won.

Solu-M Co Ltd (248070 KS),  which was spun off from Samsung Electro Mechanics Co, Ltd. (009150 KS) (SEMCO) in 2015, is getting ready to complete its IPO in KOSPI in early February 2021. The company's major products include power modules, electronic shelf label (ESL), 3 in 1 boards for TV parts, and IoT products. This is a fairly decent sized IPO with solid fundamentals. The IPO base deal size ranges from $80 million to $90 million. According to the bankers' valuation, the expected market cap after the IPO ranges from 685 billion won to 775 billion won. The book building for the institutional investors starts on January 14th, 2021. How the Bankers Priced the IPO - The bankers used five companies including Hansol Technis, Powernet, and Silicon Works as comps to Solu-M. The bankers annualized the net profit of the comps (using the controlling interest net profit figures from 1Q-3Q 2020). The average P/E of the comps is 23.4x. The bankers then took Solu-M's annualized net profit in 2020 and applied this P/E multiple to derive an implied market cap of 1,059 billion won (21,182 won implied price). After applying IPO discount of 27.0% to 35.5%, the implied price range is from 13,700 won to 15,500 won.

Solu-M Co Ltd (248070 KS)

Launch of Starlink Service by SpaceX - Impact on 11 Korean Companies

The launch of the SpaceX's Starlink service in Korea in 2Q/3Q 2023 is likely to have a positive impact on companies such as Hanwha Aerospace, Solu...

Douglas Kim

Korea NPS Reportedly Finalized Additional 50 KOSPI Stocks in Its BM for Direct Management

This post investigates the 50 additional KOSPI stocks that Korea NPS has reportedly chosen for its benchmark index for direct management, called...

Sanghyun Park

Solu-M Co IPO Preview

Solu-M Co Ltd (248070 KS) is getting ready to complete its IPO in KOSPI in early February 2021. Its major products include power modules, tuners,...

Douglas Kim