Daily BriefsEvent-Driven

Event-Driven: Kakao Games, Gremz Inc, Hexaware Technologies, Bangkok Commercial Asset Management, Altice Nv A and more

By September 16, 2020 No Comments

In today’s briefing:

  • Kakao Games: Current Selloff & KOSDAQ 150 Inclusion
  • TOPIX Inclusion Pre-Event Trade (3150 JP): Tachiaigai Bunbai Announced. It’s GREEN.
  • Hexaware Exit Offer Reverse Book Build Gets 90% & Discovered Price – Now We Wait
  • SET50 Index Rebalance Preview: Three Changes for Now, Could Be One More
  • Altice – Next Private Takeover Announcement

Kakao Games: Current Selloff & KOSDAQ 150 Inclusion

By Sanghyun Park

Kakao Games is undergoing the second day of a well-anticipated correction.

It is now down -7.7% this morning. The current TV is already one fourth that of yesterday, which soared to ₩1.5tril, 25% of the market cap.

Again, as well expected, the foreign short-term IPO money has all left Kakao G. As of the previous close, the FO % was 0.59%, down by 2.04 percent point from 2.63%. Presumably, it is even lower now.

Date Close (₩) % TV TV (₩B) Local inst. Foreign FO FO %
2020.09.15 68,100 -7.72% 5,400,000 367.7
2020.09.14 73,800 -9.00% 20,213,705 1,491.8 -578,393 -999,063 428,995 0.59%
2020.09.11 81,100 29.97% 5,013,124 406.6 -786,093 -397,435 1,428,058 1.95%
2020.09.10 62,400 30.00% 561,750 35.1 -100,870 -99,289 1,825,493 2.49%
– Opening price 48,000 100.00% 1,924,782 2.63%
– IPO price 24,000
Source: KRX

At the current price, the PERs range from 63.4x to 85.2x on FY20E earnings (an EPS band of ₩800~1,074).

PERs/FY20E earnings (₩B) Earnings EPS Price PER
1H20 annualized 65.0 ₩858 ₩68,100 79.36
Hanwha 68.7 ₩907 ₩68,100 75.11
Daishin 81.4 ₩1,074 ₩68,100 63.39
Shinyoung 75.0 ₩990 ₩68,100 68.80
– Case 1 60.6 ₩800 ₩68,100 85.15
– Case 2 66.9 ₩883 ₩68,100 77.13
– Case 3 73.2 ₩966 ₩68,100 70.49
Source: DART, KRX, & HK Consensus
Consolidated (₩B) 2020E 2021E
Sales 505.0 557.5 610.0 602.0 738.0 874.0
– Existing lineup 400.0 400.0 400.0 300.0 300.0 300.0
– Guardian Tales 75.0 112.5 150.0 180.0 270.0 360.0
: Release date July 29, 2020
: Daily est. sales 0.50 0.75 1.00 0.50 0.75 1.00
– Elyon 30.0 45.0 60.0 72.0 108.0 144.0
: Release date November 1, 2020
: Daily est. sales 0.50 0.75 1.00 0.20 0.30 0.40
– Other 0.0 0.0 0.0 50.0 60.0 70.0
OP 70.7 78.1 85.4 84.3 103.3 122.4
NP 60.6 66.9 73.2 72.2 88.6 104.9
Post-IPO SO 75,768,385 75,768,385 75,768,385 75,768,385 75,768,385 75,768,385
EPS (₩) (Case 1) 800 (Case 2) 883 (Case 3) 966 953 1,169 1,384
P/E multiple 34.90 34.90 34.90 34.90 34.90 34.90
Target price (₩) 27,915 30,817 33,719 33,277 40,795 48,313
– Lower-end discount 28.35% 35.10% 40.69% 39.90% 50.97% 58.60%
– Upper-end discount 14.03% 22.12% 28.82% 27.88% 41.17% 50.32%
– OTC price discount -179.42% -153.10% -131.32% -134.40% -91.20% -61.45%
Source: DART

Even at today’s harshly corrected price, Kakao G still stands at Korea’s most expensive game stock as even the lower end of the PER range is higher than Netmarble, which is the second over-inflated game company.

PERs/FY20E earnings (₩B) Sales OP Earnings PER OPM NPM
Netmarble Corp 2,597.3 272.7 270.3 58.25 10.50% 10.41%
NCSoft Corp 2,561.9 947.5 733.9 24.56 36.98% 28.65%
PearlAbyss Corp 524.6 185.3 150.4 17.48 35.32% 28.67%
Com2uS Corp 513.8 128.6 121.0 12.97 25.03% 23.55%
WE MADE Co Ltd 121.4 6.4 13.8 46.87 5.27% 11.37%
Webzen Inc 257.7 79.4 63.2 21.04 30.81% 24.52%
Neowiz 296.0 67.8 58.5 11.01 22.91% 19.76%
Doubleu Games Co Ltd 662.8 204.5 145.0 9.41 30.85% 21.88%
Kakao Games Corp 557.5 78.1 66.9 74.52 14.00% 12.00%
Source: KRX & DART

TOPIX Inclusion Pre-Event Trade (3150 JP): Tachiaigai Bunbai Announced. It’s GREEN.

By Janaghan Jeyakumar, CFA

Gremz Inc (3150 JP) announced (J-only) a tachiaigai bunbai (equity offering) today stating that they intend to work towards achieving the Section Transfer requirements to move from TSE2 to TSE1. 

The shares for sale will be coming from controlling shareholder Masaomi Tanaka’s holdings.  

The Offering will place up to 878,000 shares with a maximum limit of 800 shares per buyer. The Offering is scheduled to take place from 25th September to 2nd October 2020. The Offer Price will be set at a discount to the last close prior to the Offer Date. Usually the Offer Date is the first day in the period.

As always, there is more below the fold. 


Hexaware Exit Offer Reverse Book Build Gets 90% & Discovered Price – Now We Wait

By Travis Lundy

Hexaware Technologies (HEXW IN) took it down to the wire. The Reverse Book Build got to the 90.0% threshold at a little past 2:30pm local time, and small shareholders continued putting in offers until 5pm local time. 

It looks, from a combination of the BSE data and NSE data that we have a Discovered Price. 

Now we wait. 

More comment below the fold. 


SET50 Index Rebalance Preview: Three Changes for Now, Could Be One More

By Brian Freitas

The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the SET50 index in mid-December and the changes will be effective after the close of trading on 30 December.

The review period for market cap calculations runs from 1 September to 30 November, while the liquidity calculations run from 1 December 2019 to 30 November 2020.

We see three potential changes at the current time with an estimated one-way turnover for the rebalance at 1.75%.

We see a high probability of Bangkok Commercial Asset Management (BAM TB) being included in the SET50 index and of Thanachart Capital (TCAP TB) being deleted from the index.

There is a lower probability of Com7 PCL (COM7 TB) and CK Power PCL (CKP TB) being included in the index and of Banpu Power PCL (BPP TB) and WHA Corp Pcl (WHA TB) being excluded.

There is a chance that TTW Pcl (TTW TB) fails the liquidity test in which case it will be deleted from the index, and WHA Corp Pcl (WHA TB) stays in the index.

Sri Trang Agro Industry (STA TB) could make the cut for inclusion if its stock rallies in the next couple of weeks, while Sri Trang Gloves (STGT TB) is not eligible for index inclusion in this review since it does not have a long enough listing history.


Altice – Next Private Takeover Announcement

By Jesus Rodriguez Aguilar

  • Patrick Drahi, through Next Private has launched an agreed takeover offer for the 22.42% shares of Altice Nv A (ATC NA) he does not already own, with the aim of taking it private and delisting the company. The minimum acceptance level to achieve this is 95%.
  • The bid price represents 2.8x EV/NTM Revenue, 7.2x EV/NTM EBITDA and 23.8x EV/NTM EBIT (Capital IQ consensus). 
  • Altice is one of Europe’s biggest HY issuers, rated B by S&P.
  • The offer price takes advantage of the dismal performance of European telcos on the stock market following the onset of the Covid crisis. It is difficult to believe that shareholders will accept an offer below recent highs in February, and there are chances of an improved offer. Performance is improving at SFR (France), the company’s biggest subsidiary.
  • The shares are trading between EUR 4.15 and 4.12, with a close on Tuesday 15 of EUR 4.14, with a volume traded of c. EUR 24 mn.
  • I recommend using this price levels of EUR 4.12-4.15 as an entry point and holding out for an improved offer.

Before it’s here, it’s on Smartkarma