Daily BriefsIPOs and Placements

Equity Capital Markets: Krafton Inc, HK inno.N, KakaoBank, Beijing Airdoc Technology and more

In today’s briefing:

  • Krafton Bookbuilding: A Quick Recap of Last Day Craziness
  • HK Inno.N Book Building Results Analysis
  • HK Inno.N Bookbuilding Results: Subscription/Lockup Orders in Detail
  • Kakao Bank – Gray Market Price Declines Sharply By 35% in One Month
  • Pre-IPO Beijing Airdoc Technology – The Strength and the Concerns

Krafton Bookbuilding: A Quick Recap of Last Day Craziness

By Sanghyun Park

The last day of Krafton’s bookbuilding? Well, it was really a crazy day.

A suspicious rumor circulated at noon yesterday

First of all, at noon yesterday, a rumor circulated among local institutions through the messenger mainly used by institutions.

Previously, Yahoo Messenger was the main medium for circulating all sorts of rumors and stories between local institutional investors. But after the Yahoo Messenger service was terminated, NateOn is mainly used now.

The content of this rumor was somewhat provocative. The rumor said that the bankers are currently holding an emergency meeting due to the low competition rate for institutional subscriptions in the Krafton bookbuilding.

When Mirae Asset Securities learned that this rumor was circulating through NateOn, it immediately denied it, which led to an unusual situation where a banker updated the bookbuilding progress even before bookbuilding was closed.

In fact, Mirae Asset explained to local institutions yesterday afternoon that this Krafton bookbuilding was significantly more positive than initially expected and that the rumor of holding an emergency meeting due to the disastrous results simply was not true.

However, it is said that this rumor has caused confusion among some local institutions and has had some effect on the institutional subscription rate on the last day.


HK Inno.N Book Building Results Analysis

By Douglas Kim

HK Inno.N announced its IPO book building results today. The IPO price has been determined at 59,000 won, which was at the high end of the IPO price range. The demand ratio among the institutional investors was 1,871 to 1.

There were 13.5% of shares that were applied under a lock-up. This is relatively low and is one of the concerning factors of the bookbuilding results.

We continue to have a POSITIVE view of the HK Inno.N IPO post book building results. Our base case valuation of HK Inno.N remains implied market cap of 2.2  trillion won or implied price of 75,534 won per share. This represents 28% higher than the high end of the IPO price range of 59,000 won. 


HK Inno.N Bookbuilding Results: Subscription/Lockup Orders in Detail

By Sanghyun Park

HK Inno.N’s offering price got fixed at ₩59,000, the upper end of the indicative price band, implying a market cap of ₩1.7T. There is no change in the offering volume.

Indicative price bandLowHigh (final)
Price₩50,000₩59,000
Base deal size₩505.9B₩596.9B
– Institutional allotment₩278.2B₩328.3B
Implied market cap₩1,445.2B₩1,705.4B
– Discount29.54%16.85%
EV/EBITDA15.77x18.02x
Source: DART

The institutional subscription competition rate is 1,871 to 1, nearly hitting the record holder SKIET’s 1,883 to 1. In this bookbuilding, it seems that local institutions have been overbetting quite aggressively. In particular, it seems that local publicly raised funds with long-term holding tendencies have been active in securing the stocks. This proves that many local institutional investors felt that this IPO was price attractive enough for long-term holding.

By investor typeInstitution%Demand%
Local publicly raised funds71343.82%4,795,649,60046.05%
Local brokerages/investment advisories311.91%202,086,7501.94%
Local pensions, funds managing proprietary assets, banks, and insurance companies22013.52%1,434,513,85013.78%
Local others (mostly discretionary investment companies – local hedge funds))39224.09%2,678,313,00025.72%
Foreign (foreign IPO funds & hedge funds)744.55%79,187,1940.76%
Foreign others (mostly local hot money)19712.11%1,223,144,00011.75%
Total1,627100.00%10,412,894,394100.00%
Subscription rate1,871.36
Source: DART

The “Unspecified” category usually indicates that they want the shares above the high end.

With that in mind, about one-third have gone for the upper end or above. The remaining two-thirds selected 75-100% of the upper end. All of the orders are priced at 75-100% of the upper end or higher. So, yes, we can say the institutional pricing is quite aggressive.

By priceInstitution%Demand%
Above high end53632.94%3,597,972,50034.55%
75-100% of high end1,06165.21%6,630,326,89463.67%
50-75% of high end00.00%00.00%
25-50% of high end00.00%00.00%
0-25% of high end00.00%00.00%
Median00.00%00.00%
75-100% of median00.00%00.00%
50-75% of median00.00%00.00%
25-50% of median00.00%00.00%
0-25% of median00.00%00.00%
Low end or below00.00%00.00%
Unspecified301.84%184,595,0001.77%
Total1,627100.00%10,412,894,394100.00%
Source: DART

Kakao Bank – Gray Market Price Declines Sharply By 35% in One Month

By Douglas Kim

The gray market price of Kakao Bank has declined sharply by nearly 35% in the past month. As of 28 July 2021, Kakao Bank’s gray market price is 55,000 won, down from 85,000 won about a month ago. Typically, gray market prices of major Korean IPOs (those that have market caps of more than 1 trillion won) do not change this much within a short period of time. Kakao Bank IPO is scheduled to start trading on August 6th. 

Our base case valuation of Kakao Bank remains market cap of 26.8 trillion won or implied price of 56,144 won per share. This represents 44% higher than the high end of the IPO price range of 39,000 won. We continue to maintain a POSITIVE view of Kakao Bank, given the solid upside relative to the IPO price.

Nonetheless, given the sharp decline in the recent gray market price of Kakao Bank, there is now a reduced likelihood of Kakao Bank’s share price rising significantly to the 75,000 won to 85,000 won level in the first few hours of trading on August 6th. 


Pre-IPO Beijing Airdoc Technology – The Strength and the Concerns

By Xinyao (Criss) Wang

In recent years, the value of AI medical imaging has become increasingly prominent. For example, the application of CT for diagnosis in COVID-19 pandemic has strengthened the importance of imaging and played an immeasurable role in the prevention and treatment of COVID-19. In this context, many players in this industry have planned to start IPO in the capital market. On June 21, Beijing Airdoc Technology (BAT HK) filed its prospectus with the HKEX and officially started its IPO process. Airdoc is a global market leader and pioneer in providing AI-empowered retina-based early detection, diagnosis and health risk assessment solutions. This insight mainly analyzed the business, the financial position and concerns of the Company.


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