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Most Read: Softbank Corp, Ming Yuan Cloud Group, Sri Trang Gloves, Kakao Games, Gremz Inc and more

By September 16, 2020 No Comments

In today’s briefing:

  • Softbank Corp (9434) – Time To Cover
  • Ming Yuan Cloud IPO Initiation: New Wiring
  • FTSE GEIS December 2020 – Potential IPO Inclusions
  • Kakao Games: Current Selloff & KOSDAQ 150 Inclusion
  • TOPIX Inclusion Pre-Event Trade (3150 JP): Tachiaigai Bunbai Announced. It’s GREEN.

Softbank Corp (9434) – Time To Cover

By Travis Lundy

When the Softbank Corp (9434 JP) block was announced on 28 August after the close, it was one of the larger secondary blocks ever placed in Japan, and it was underwritten.

It was always going to get sold rather than bought, and it appears that it has been sold. For some reason I could not figure out, the shares only fell 3-4% or so on the first day and then stayed stable for a few days. I thought it needed more of a wallop to see pricing come out right. 

It has, in the interim, been walloped. 

Now is the time to cover that sale in the market if you shorted, and to buy back if you sold long. 

The implied dividend yield on the offering is now (as I write) above 7%. Suganomics may not favor telcos but I expect the telcos probably have enough leverage to push back from time to time. 

More below the fold.


Ming Yuan Cloud IPO Initiation: New Wiring

By Arun George

Ming Yuan Cloud Group (MYCG HK) provides enterprise-grade ERP solutions and SaaS products to property developers and other industry participants along the real estate value chain in China. It is the leading software solution provider for property developers in China with a market share of 18.5% as measured by revenue in 2019, according to Frost & Sullivan. Ming Yuan has launched a Hong Kong IPO to raise as much as HK$6.17 billion ($798 million), according to press reports.

The software solutions market for the real estate industry is growing due to expanding business operations of property developers which increases complexity and the intensifying competition which drives the need for property developers to use technology to lower costs. The key barrier to entry for software developers is deep industry know-how, which Ming Yuan has in spades. Overall, we believe that Ming Yuan is an attractive play on these market dynamics.


FTSE GEIS December 2020 – Potential IPO Inclusions

By Brian Freitas

The FTSE Global Equity Index Series (GEIS) quarterly rebalance in December is used to include IPOs which did not qualify as an immediate fast entrant to the indices at the time of listing and were not listed for at least 3 months by the following semi-annual review to be included in the indices.

The results of the December 2020 quarterly review will be announced on 20 November and all changes will be effective after the close of trading on 18 December.

Based on current market prices, we see a high probability of Smoore International (6969 HK), SK Biopharmaceuticals (326030 KS), Hygeia Healthcare Group (6078 HK) and Sri Trang Gloves (STGT TB) being included in the FTSE All-World index.

Kangji Medical (9997 HK) and Mindspace Business Parks REIT (MBP IN) could be added to the All-World index if their stock prices increase by around 15% by 11 November, else they will be added to the FTSE All-Cap index.

There are a few other HK listed stocks that could be added to the FTSE All-Cap index: Akeso Biopharma Inc (9926 HK), Yeahka Limited (9923 HK), Archosaur Games (9990 HK) and Peijia Medical (9996 HK)


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. 


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