Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>This past week, I had a discussion with Changhwan Lee, the founder and CEO of Align Partners which is currently an activist investor on S.M.Entertainment Co (041510 KS).</li>
<li>This insight provides the details of why Align Partners is going activist on SM Entertainment. </li>
<li>Through more successful proxy fights such as SM Entertainment, there could be greater value that could be unlocked from many listed companies in Korea with poor corporate governance. </li>
</ul>


This past week, I had a discussion with Changhwan Lee, the founder and CEO of Align Partners which is currently an activist investor on S.M.Entertainment Co (041510 KS).
This insight provides the details of why Align Partners is going activist on SM Entertainment. 
Through more successful proxy fights such as SM Entertainment, there could be greater value that could be unlocked from many listed companies in Korea with poor corporate governance. 


A Discussion with Align Partners' CEO on SM Entertainment

Event-Driven

<ul>
<li>After the market close today, S.M.Entertainment announced that its Chairman Lee Soo Man will end the contract with Like Planning, a contents producing company owned by Lee Soo Man.</li>
<li>We estimate that S.M.Entertainment has paid more than 160 billion won to Like Planning in the past 10 years.</li>
<li>By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in the coming weeks. </li>
</ul>


After the market close today, S.M.Entertainment announced that its Chairman Lee Soo Man will end the contract with Like Planning, a contents producing company owned by Lee Soo Man.
We estimate that S.M.Entertainment has paid more than 160 billion won to Like Planning in the past 10 years.
By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in the coming weeks. 


S.M.Entertainment - Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hpsp-co-ltd" target="_blank" data-smartkarma-citation="entities:36004:1" rel="noopener">HPSP (403870 KS)</a> and <a href="https://www.smartkarma.com/entities/sungeel-hitech-co-ltd" target="_blank" data-smartkarma-citation="entities:36028:1" rel="noopener">Sungeel Hitech (365340 KS)</a> are the candidates for Early Entry in the December rebalancing as they sit comfortably within the Early Entry zone.</li>
<li>
<a href="https://www.smartkarma.com/entities/rsupport-co-ltd" target="_blank" data-smartkarma-citation="entities:14783:1" rel="noopener">Rsupport (131370 KS)</a> and Kona I (052400 KS) are safe deletion bets. If they are not deleted through the rebalancing process, they will most likely be excluded by Early Entry.</li>
<li>
HPSP and SungEel should see an inflow equivalent to 0.9x and 0.8x ADTVs, respectively. Rsupport and Kona I will likely suffer an outflow of 3.4x and 3.8x ADTVs, respectively.</li>
</ul>



HPSP (403870 KS) and Sungeel Hitech (365340 KS) are the candidates for Early Entry in the December rebalancing as they sit comfortably within the Early Entry zone.

Rsupport (131370 KS) and Kona I (052400 KS) are safe deletion bets. If they are not deleted through the rebalancing process, they will most likely be excluded by Early Entry.

HPSP and SungEel should see an inflow equivalent to 0.9x and 0.8x ADTVs, respectively. Rsupport and Kona I will likely suffer an outflow of 3.4x and 3.8x ADTVs, respectively.


KOSDAQ 150 Early Entry Candidates for December Rebalancing

Equity Bottom-Up

<ul>
<li>HYBE announced a major news which was that the BTS group will go on a "temporary break" so that its members could pursue various solo projects.</li>
<li>Rather, we believe the consensus sales and operating profit estimates will decline by 20-40% in 2023 and 2024.</li>
<li>If P/E multiple is lowered to 20x (2024E), this would suggest an implied market cap of 4.8 trillion won or 117,138 won per share, representing a further 39% downside risk. </li>
</ul>


HYBE announced a major news which was that the BTS group will go on a "temporary break" so that its members could pursue various solo projects.
Rather, we believe the consensus sales and operating profit estimates will decline by 20-40% in 2023 and 2024.
If P/E multiple is lowered to 20x (2024E), this would suggest an implied market cap of 4.8 trillion won or 117,138 won per share, representing a further 39% downside risk. 


HYBE: Consensus to Slash Earning Estimates Due to BTS Going on A "Temporary Break" For Solo Projects

<ul>
<li>Among Korea's local metaverse ETFs, the Big Three have significant AUMs. At yesterday's closing prices, their AUMs are ₩0.41T, ₩0.40T, and ₩0.20T, respectively. Their total is now 1 trillion won.</li>
<li>Those on which we can perform stable momentum trading are the 14 stocks included in all three ETFs. Passive funds account for +3% of MC in half of these names.</li>
<li>Weighting adjustment uses keyword relevance. So, estimation is not easy. Nevertheless, since the absolute value does not change significantly, we can reduce the error by using the previous rebalancing weighting.</li>
</ul>


Among Korea's local metaverse ETFs, the Big Three have significant AUMs. At yesterday's closing prices, their AUMs are ₩0.41T, ₩0.40T, and ₩0.20T, respectively. Their total is now 1 trillion won.
Those on which we can perform stable momentum trading are the 14 stocks included in all three ETFs. Passive funds account for +3% of MC in half of these names.
Weighting adjustment uses keyword relevance. So, estimation is not easy. Nevertheless, since the absolute value does not change significantly, we can reduce the error by using the previous rebalancing weighting.


Korea Local Metaverse ETFs: Passive Flow Preview

South Korea

YG Entertainment Inc., produces and markets music recording, music publishing, record manufacturing/sales, artist management, concert production, and new artist discovering/training.

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YG Entertainment (122870 KS)

A Discussion with Align Partners' CEO on SM Entertainment

This past week, I had a discussion with Changhwan Lee, the founder and CEO of Align Partners which is currently an activist investor on...

Douglas Kim

S.M.Entertainment - Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)

By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in...

Douglas Kim

KOSDAQ 150 Early Entry Candidates for December Rebalancing

This post investigates the Early Entry candidates and the resulting exclusion names fo the KOSDA 150 rebalancing in December.

Sanghyun Park

HYBE: Consensus to Slash Earning Estimates Due to BTS Going on A "Temporary Break" For Solo Projects

HYBE announced a major news which was that the BTS group will go on a "temporary break" so that its members could pursue various solo projects. We...

Douglas Kim

Korea Local Metaverse ETFs: Passive Flow Preview

This post tracks and previews the passive flows of Korea's three metaverse sector ETFs for the upcoming semi-annual rebalancing in June.

Sanghyun Park

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