Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Lionheart Studio  / Equity Capital Markets

<ul>
<li>Our base case valuation of Lionheart Studio is a target price of 19,362 won per share, which is 46% lower than the low end of the IPO price range.</li>
<li>Our IPO valuation assumes a 7.2x EV/EBITDA (comps' average) using 2023 estimated EBITDA of 145 billion won for the company.</li>
<li>All in all, we believe there is a strong probability of Lionheart Studio being forced to lower its IPO price range in order to attract more investors. </li>
</ul>


Our base case valuation of Lionheart Studio is a target price of 19,362 won per share, which is 46% lower than the low end of the IPO price range.
Our IPO valuation assumes a 7.2x EV/EBITDA (comps' average) using 2023 estimated EBITDA of 145 billion won for the company.
All in all, we believe there is a strong probability of Lionheart Studio being forced to lower its IPO price range in order to attract more investors. 


Event-Driven

<ul>
<li>Kakao Games Corp (293490 KS) announced today a rights offering worth 197 billion won, representing 4.4% of its market cap.</li>
<li>Lionheart Studio's founder and CEO Kim Jae-Young is expected to purchase 3.1 million shares of the rights offering (177 billion won), representing 90% of the total rights offering shares.</li>
<li>The issue with Kakao Games and Lionheart Studio remains the fact that many investors would rather invest in Lionheart when it completes its IPO, rather than indirectly through Kakao Games.</li>
</ul>


Kakao Games Corp (293490 KS) announced today a rights offering worth 197 billion won, representing 4.4% of its market cap.
Lionheart Studio's founder and CEO Kim Jae-Young is expected to purchase 3.1 million shares of the rights offering (177 billion won), representing 90% of the total rights offering shares.
The issue with Kakao Games and Lionheart Studio remains the fact that many investors would rather invest in Lionheart when it completes its IPO, rather than indirectly through Kakao Games.


Kakao Games: Announces A Rights Offering Worth 197 Billion Won

<ul>
<li>We discuss end of the mandatory lock-up periods for 49 stocks in Korea in August 2022, among which 3 are in KOSPI and 46 are in KOSDAQ.</li>
<li>These 49 stocks on average could be subject to further selling pressures in August and could underperform relative to the market. </li>
<li>Among these 49 stocks, the top five market cap stocks include Wemade, HPSP, Sungeel Hitech, Wemade Max, and Eoflow. These companies could be exposed to greater selling pressures in August. </li>
</ul>


We discuss end of the mandatory lock-up periods for 49 stocks in Korea in August 2022, among which 3 are in KOSPI and 46 are in KOSDAQ.
These 49 stocks on average could be subject to further selling pressures in August and could underperform relative to the market. 
Among these 49 stocks, the top five market cap stocks include Wemade, HPSP, Sungeel Hitech, Wemade Max, and Eoflow. These companies could be exposed to greater selling pressures in August. 


End of Mandatory Lock-Up Periods for 49 Companies in Korea in August 2022

<ul>
<li>Lionheart Studio Corp, which is one of the fastest growing game making companies in Korea, is getting ready to complete its IPO as early as 2H 2022. </li>
<li>Lionheart Studio is best known for its popular mobile game Odin which ranked first in app market sales right after its launch in June of last year.</li>
<li>Kakao Games' share price could fall further as some investors that are enthusiastic about Odin would rather invest invest in Lionheart Studio directly rather than in Kakao Games.</li>
</ul>


Lionheart Studio Corp, which is one of the fastest growing game making companies in Korea, is getting ready to complete its IPO as early as 2H 2022. 
Lionheart Studio is best known for its popular mobile game Odin which ranked first in app market sales right after its launch in June of last year.
Kakao Games' share price could fall further as some investors that are enthusiastic about Odin would rather invest invest in Lionheart Studio directly rather than in Kakao Games.


Lionheart Studio Getting Ready for an IPO as Early as 2H 2022: A Near-Term Negative for Kakao Games

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<ul>
<li>The announced changes are exactly in line with our forecasts with one change each for the Secondary Battery, Bio and Game Index. There are three changes to the Internet Index.</li>
<li>There are two changes to the BBIG Index with <a href="https://www.smartkarma.com/entities/lg-energy-solution" target="_blank" data-smartkarma-citation="entities:33464:1" rel="noopener">LG Energy Solution (373220 KS)</a> replacing <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/afreecatv-co-ltd" target="_blank" data-smartkarma-citation="entities:20163:1" rel="noopener">AfreecaTV (067160 KS)</a> replacing <a href="https://www.smartkarma.com/entities/douzone-bizon-co-ltd" target="_blank" data-smartkarma-citation="entities:20161:1" rel="noopener">Douzone Bizon (012510 KS)</a>. </li>
<li>The largest buying impact will be on <a href="https://www.smartkarma.com/entities/afreecatv-co-ltd" target="_blank" data-smartkarma-citation="entities:20163:1" rel="noopener">AfreecaTV (067160 KS)</a> while the largest selling impact will be on <a href="https://www.smartkarma.com/entities/douzone-bizon-co-ltd" target="_blank" data-smartkarma-citation="entities:20161:1" rel="noopener">Douzone Bizon (012510 KS)</a>, <a href="https://www.smartkarma.com/entities/soulbrain-co-ltd-4208cf78-7fa9-4449-af35-bd0bde9d4726" target="_blank" data-smartkarma-citation="entities:35407:1" rel="noopener">Soulbrain (357780)</a> and <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a>.</li>
</ul>


The announced changes are exactly in line with our forecasts with one change each for the Secondary Battery, Bio and Game Index. There are three changes to the Internet Index.
There are two changes to the BBIG Index with LG Energy Solution (373220 KS) replacing LG Chem Ltd (051910 KS) and AfreecaTV (067160 KS) replacing Douzone Bizon (012510 KS). 
The largest buying impact will be on AfreecaTV (067160 KS) while the largest selling impact will be on Douzone Bizon (012510 KS), Soulbrain (357780) and LG Chem Ltd (051910 KS).


KRX New Deal Index Rebalance: No Surprises as LG Chem Not Deleted from Battery Index

South Korea

Wemade Co., Ltd. develops and markets on-line games that enable users to play over the internet.  The Company also provides computer game software and mobile games for cellular phone users.

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Wemade Co (112040 KS)

Lionheart Studio IPO Valuation Analysis

Our base case valuation of Lionheart Studio is a target price of 19,362 won per share, which is 46% lower than the low end of the IPO price range.

Douglas Kim

Kakao Games: Announces A Rights Offering Worth 197 Billion Won

Kakao Games Corp (293490 KS) announced today a rights offering worth 197 billion won, representing 4.4% of its market cap. We remain cautious on...

Douglas Kim

End of Mandatory Lock-Up Periods for 49 Companies in Korea in August 2022

We discuss end of the mandatory lock-up periods for 49 stocks in Korea in August 2022, among which 3 are in KOSPI and 46 are in KOSDAQ.

Douglas Kim

Lionheart Studio Getting Ready for an IPO as Early as 2H 2022: A Near-Term Negative for Kakao Games

Lionheart Studio Corp, which is one of the fastest growing game making companies in Korea, is getting ready to complete its IPO as early as 2H...

Douglas Kim

KRX New Deal Index Rebalance: No Surprises as LG Chem Not Deleted from Battery Index

There is one change each for the Secondary Battery, Bio and Game Index. There are three changes to the Internet Index. LG Chem has not been deleted...

Brian Freitas

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