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.

Event-Driven

<ul>
<li>WISE Media Contents rebalances every quarter in January, April, July, and October. The effective date for the upcoming rebalancing is April 15.</li>
<li>The gap between the rebalancing weight change estimations based on the float-adjusted market caps and the actual implementation of the ETF operator (TIGER) is not significant.</li>
<li>Following stocks are worth paying attention: (Short) Jyp Entertainment, S.M.Entertainment, Studio Dragon, Jcontentree, and SBS Contents Hub / (Long) CJ ENM, DearU, D&amp;C Media, Genie Music, and IHQ</li>
</ul>


WISE Media Contents rebalances every quarter in January, April, July, and October. The effective date for the upcoming rebalancing is April 15.
The gap between the rebalancing weight change estimations based on the float-adjusted market caps and the actual implementation of the ETF operator (TIGER) is not significant.
Following stocks are worth paying attention: (Short) Jyp Entertainment, S.M.Entertainment, Studio Dragon, Jcontentree, and SBS Contents Hub / (Long) CJ ENM, DearU, D&amp;C Media, Genie Music, and IHQ


WISE Media Contents (TIGER ETF) Rebalancing Preview

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>According to a local media outlet called ETNews, CJ ENM is considering on selling about half of its stake in Netmarble to potentially acquire the controlling stake in S.M. Entertainment.</li>
<li>Although CJ ENM is the lead candidate to acquire SM Entertainment, other contenders including Kakao Corp and Naver are not totally out of the M&amp;A race. </li>
<li>Overall, we would wait on buying CJ ENM at current levels. We think that the market is still concerned about CJ ENM overpaying for SM Entertainment.</li>
</ul>


According to a local media outlet called ETNews, CJ ENM is considering on selling about half of its stake in Netmarble to potentially acquire the controlling stake in S.M. Entertainment.
Although CJ ENM is the lead candidate to acquire SM Entertainment, other contenders including Kakao Corp and Naver are not totally out of the M&amp;A race. 
Overall, we would wait on buying CJ ENM at current levels. We think that the market is still concerned about CJ ENM overpaying for SM Entertainment.


CJ ENM: Potential Block Sale of Its Stake In Netmarble & Concerns About Corporate Reorganization

Equity Bottom-Up

<ul>
<li>Disney+ finally plans to make its long-awaited launch in Korea in November 2021. There are millions of Disney fans in Korea and it is near-certain that Disney+ will become a big success. Disney+ will compete heads on with other leading OTT services available in Korea including Netflix and Wavve.</li>
<li>Disney will be pursuing its own mobile app service in Korea, similar to Netflix. However, it will partner with the local telcos for Internet TV services. On 24 August, it was reported in the local Korean media that KT's OTT service <a href="http://www.digitaltoday.co.kr/news/articleView.html?idxno=414324" target="_blank" rel="noopener">Seezn</a> plans to provide numerous Disney+ contents. Apparently, LG Uplus is still negotiating with Disney for a potential partnership as well for the OTT service. However, Disney plans to partner with LG Uplus for providing its contents on its IPTV services. </li>
<li>There will likely be two groups of companies that could benefit from the launch of Disney+ 'OTT services and Disney contents in Korea. They include the two local telcos (KT Corp and LG Uplus) as well as the major Korean drama producers such as Jcontentree Corp., Studio Dragon, and Astory.</li>
</ul>


Disney+ finally plans to make its long-awaited launch in Korea in November 2021. There are millions of Disney fans in Korea and it is near-certain that Disney+ will become a big success. Disney+ will compete heads on with other leading OTT services available in Korea including Netflix and Wavve.
Disney will be pursuing its own mobile app service in Korea, similar to Netflix. However, it will partner with the local telcos for Internet TV services. On 24 August, it was reported in the local Korean media that KT's OTT service Seezn plans to provide numerous Disney+ contents. Apparently, LG Uplus is still negotiating with Disney for a potential partnership as well for the OTT service. However, Disney plans to partner with LG Uplus for providing its contents on its IPTV services. 
There will likely be two groups of companies that could benefit from the launch of Disney+ 'OTT services and Disney contents in Korea. They include the two local telcos (KT Corp and LG Uplus) as well as the major Korean drama producers such as Jcontentree Corp., Studio Dragon, and Astory.


Disney+ to Launch in Korea in November: Winners & Losers?

<div class="content-highlight">
Various local<a href="http://m.koreatimes.co.kr/pages/article.asp?newsIdx=297586" target="_blank" rel="noopener"> media</a> reported today that <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and three CJ Group related companies, including <a href="https://www.smartkarma.com/entities/cj-korea-express-corp" target="_blank" data-smartkarma-citation="entities:11557:1" rel="noopener">CJ Logistics (000120 KS)</a>, <a href="https://www.smartkarma.com/entities/cj-enm" target="_blank" data-smartkarma-citation="entities:8887:1" rel="noopener">CJ ENM (035760 KS)</a>, and <a href="https://www.smartkarma.com/entities/studio-dragon-corp" target="_blank" data-smartkarma-citation="entities:24255:1" rel="noopener">Studio Dragon (253450 KS)</a> are considering strategic stock swaps. In other words, Naver would receive a certain number of shares of CJ Logistics, CJ ENM, and Studio Dragon in exchange for a certain number of Naver shares. 
If the big stock swap deals between Naver and the three CJ Group related companies are completed, the total amount of stock deals is expected to be about 800 billion won to 1 trillion won. 
</div>


Various local media reported today that Naver Corp (035420 KS) and three CJ Group related companies, including CJ Logistics (000120 KS), CJ ENM (035760 KS), and Studio Dragon (253450 KS) are considering strategic stock swaps. In other words, Naver would receive a certain number of shares of CJ Logistics, CJ ENM, and Studio Dragon in exchange for a certain number of Naver shares. 
If the big stock swap deals between Naver and the three CJ Group related companies are completed, the total amount of stock deals is expected to be about 800 billion won to 1 trillion won. 


Big Stock Swaps Between Naver & 3 CJ Group Companies - Why?

Equity Capital Markets

CJ ENM announces a well-expected stake sale for its cash-cow subsidiary, Studio Dragon. It put out 2.25M shares, which is 8% of the SO. The discount is generous at 7~9% to the last close (₩81,100). The deal value amounts to ₩166~170bil.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/126/824/original/1.png?1586211006" class="editor-image img-responsive" data-smartkarma-image-id="126824"></figure>The offered discount is 6~8% to the 1W VWAP. But the cut is pretty slim to the 1M VWAP. To the 6M VWAP, the discount is 4~6%.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/126/806/original/2.png?1586208634" class="editor-image img-responsive" data-smartkarma-image-id="126806"></figure><figure class="editor-figure mceNonEditable">The offered volume (8% of the SO) is indeed huge. To the 1W ADV, it is more than ten-folds. To the 6M ADV, it is like 15 times more.</figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/126/807/original/3.png?1586208642" class="editor-image img-responsive" data-smartkarma-image-id="126807"></figure>

CJ ENM announces a well-expected stake sale for its cash-cow subsidiary, Studio Dragon. It put out 2.25M shares, which is 8% of the SO. The discount is generous at 7~9% to the last close (₩81,100). The deal value amounts to ₩166~170bil.The offered discount is 6~8% to the 1W VWAP. But the cut is pretty slim to the 1M VWAP. To the 6M VWAP, the discount is 4~6%.The offered volume (8% of the SO) is indeed huge. To the 1W ADV, it is more than ten-folds. To the 6M ADV, it is like 15 times more.

Studio Dragon Block Deals: Details & Noteworthy Aspects

South Korea

Studio Dragon Corporation owns and operates drama studios. The Company produces television content, shows, and dramas. Studio Dragon serves customers in South Korea.

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Studio Dragon (253450 KS)

WISE Media Contents (TIGER ETF) Rebalancing Preview

This post previews the upcoming rebalancing of the WISE Media Contents Theme Index (TIGER ETF), whose effective date is April 15.

Sanghyun Park

CJ ENM: Potential Block Sale of Its Stake In Netmarble & Concerns About Corporate Reorganization

According to a local media outlet called ETNews, CJ ENM is considering on selling about half of its stake in Netmarble in a block deal to acquire...

Douglas Kim

Disney+ to Launch in Korea in November: Winners & Losers?

Disney+ finally plans to make its long-awaited launch in Korea in November 2021. Disney+ will compete heads on with other leading OTT services...

Douglas Kim

Big Stock Swaps Between Naver & 3 CJ Group Companies - Why?

If the big stock swap deals between Naver and the three CJ Group related companies are completed, the total amount of stock deals is expected to be...

Douglas Kim

Studio Dragon Block Deals: Details & Noteworthy Aspects

CJ ENM announces a well-expected stake sale for its cash-cow subsidiary, Studio Dragon. It put out 2.25M shares, which is 8% of the SO. The...

Sanghyun Park

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