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South Korea Archives | Page 46 of 126 | Smartkarma

Jul 24
0

Daily Brief South Korea: Kakao Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Kakao Group Founder Kim Beom-Su Gets Arrested – What’s Next?

Kakao Group Founder Kim Beom-Su Gets Arrested – What’s Next?

By Douglas Kim

  • As a result of the arrest of Kim Beom-Su, the near term impact on the Kakao companies (including Kakao Corp, Kakao Bank, Kakao Pay, and Kakao Games) is clearly negative.
  • Given that this is a highly publicized event, it is likely that this legal case will be PROLONGED and finally decided by the Supreme Court which could take several years.
  • Some of the scenarios include Kakao Group selling partial stakes in Kakao Bank and SM Entertainment but this is likely to get dragged on, resulting in further uncertainty.

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Jul 23
0

Daily Brief South Korea: Korea Stock Exchange Kospi Index, KakaoBank , Doosan Bobcat Inc, Kumho Tire Co and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX’s Plan to Integrate KOSPI & KOSDAQ into a Tiered System: Trading Considerations
  • Kakao’s Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies
  • Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations
  • Block Deal Sale of Kumho Tire: More Shares Likely to Be Sold by Creditors

KRX’s Plan to Integrate KOSPI & KOSDAQ into a Tiered System: Trading Considerations

By Sanghyun Park

  • The major framework of this realignment is likely decided, integrating KOSPI and KOSDAQ into a tiered system based on liquidity, market cap, and financial status, with periodic replacements.
  • The KOSPI 200’s continued existence is uncertain under the new realignment plan, which may shift its role to the value-up index, resembling Japan’s market restructuring model.
  • The first-tier market’s entry requirements will likely reflect value-up index criteria, suggesting greater speculative money movement toward the value-up index starting in September.

Kakao’s Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies

By Sanghyun Park

  • Kakao’s Kim Beom-su has been arrested over alleged stock price manipulation in the SM Entertainment buyout, marking a new peak in the company’s legal troubles.
  • Kakao Corp’s stock might drop due to the absence of a key figure. KakaoBank could also struggle from uncertainty about its largest shareholder and weakened business ties.
  • Kakao’s potential sale of SM Entertainment shares could initially hurt the stock price, but potential bidding interest might boost it.

Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

By Sanghyun Park

  • During Kim Byung-hwan’s hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan’s ability to maintain the original merger ratio.
  • Calculating Bobcat’s net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
  • Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.

Block Deal Sale of Kumho Tire: More Shares Likely to Be Sold by Creditors

By Douglas Kim

  • Woori Bank completed a block deal sale of 11 million shares of Kumho Tire Co (073240 KS) (3.83% of outstanding shares) on 18 July. 
  • After the recent sales by Woori Bank and the Export-Import Bank of Korea, the creditors’ stakes in Kumho Tire has been reduced to 19.17%.
  • Despite Kumho Tire’s recent improvement in financial performance, we are more concerned about the additional stake sale by the financial institutions that still own 19.2% stake in the company. 

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Jul 22
0

Daily Brief South Korea: Com2us Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea Small Cap Gem #29: Com2Us

Korea Small Cap Gem #29: Com2Us

By Douglas Kim

  • Com2Us’s net cash (including long-term financial investments) is 151% of its market cap. It is trading at P/B ratio of only 0.45x. 
  • The company paid out 2,600 won in DPS in FY23. If we assume the same DPS, this would suggest a dividend yield of 6.7% at current price of 38,900 won. 
  • Com2Us is a turnaround story. It had an operating profit of 1.2 billion won in 1Q 2024, improving from an operating loss of 13.3 billion won in 1Q 2023. 

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Jul 21
0

Daily Brief South Korea: Samsung C&T and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Examining Market Interest in the Potential Samsung C&T and SDS Restructuring

Examining Market Interest in the Potential Samsung C&T and SDS Restructuring

By Sanghyun Park

  • Maximizing Lee Jae-yong’s dividend income is crucial, making Samsung SDS’s ₩5.5T cash assets key, thus prompting the merger of Samsung C&T and Samsung SDS’s BPO division.
  • With no legal risks for Lee Jae-yong, Samsung C&T needs the merger to increase assets and avoid forced holding company conversion, making the acquisition of Samsung SDS’s BPO division necessary.
  • We should target a setup for likely appraisal rights for C&T. Monitor and capture the spread between the stock price and appraisal rights exercise price.

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Jul 19
0

Daily Brief South Korea: KT Corp, SK Innovation and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level
  • SK Innovation’s Merger with SK E&S: Bad Timing for SK Innovation and Higher Risks from RCPS

Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level

By Sanghyun Park

  • KT’s foreign room has been exhausted due to value-up trading inflows, NPS selling shares, and KT canceling treasury stocks.
  • Hyundai Motor may sell 0.5% of its KT stake, likely to overseas investors. KT’s 700,000 share cancellation will lower foreign ownership to the low-4% range, possibly below 3.75% by November.
  • Focus on the stock price surge from ETF recall requests around the effective date, and note that passive outflow corrections typically occur afterward.

SK Innovation’s Merger with SK E&S: Bad Timing for SK Innovation and Higher Risks from RCPS

By Douglas Kim

  • On 17 July, SK Innovation (096770 KS) officially announced a merger with SK E&S. The merger ratio between SK Innovation and SK E&S has been set at 1 to 1.1917417.
  • We believe this is the wrong timing for this merger from SK Innovation’s point of view. SK Innovation is trading at near three year lows.
  • This merger is likely to generate backlash from KKR which holds SK E&S redeemable convertible preferred stock (RCPS) worth 3.1 trillion won.

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Jul 18
0

Daily Brief South Korea: Hyundai Glovis, SK Innovation, Sanil Electric and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”
  • SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio
  • Sanil Electric IPO Book Building Results Analysis

Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”

By Sanghyun Park

  • Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
  • Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
  • We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.

SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio

By Sanghyun Park

  • The merger ratio, not as unfavorable to SK Innovation as feared, shows SK Group acting cautiously amid political and regulatory scrutiny.
  • SK Inc.’s stake will drop to mid-60s; the 1.2x merger ratio for SK E&S could positively affect SK Innovation’s stock price short-term.
  • Persuading KKR is crucial. SK E&S won’t convert ₩3T in RCPS or grant appraisal rights, potentially leading KKR to consider litigation, a significant risk to the merger.

Sanil Electric IPO Book Building Results Analysis

By Douglas Kim

  • Sanil Electric reported excellent IPO book building results. The IPO price has been determined at 35,000 won, which is 16.7% higher than the high end of the IPO price range.
  • The demand ratio from 2,205 institutional investors was 414 to 1. Sanil Electric (062040 KS) IPO will start trading on 29 July 2024. 
  • Our base case valuation of Sanil Electric is market cap of 1.8 trillion won or target price of 58,593 won (67% higher than the IPO price of 35,000 won).

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Jul 17
0

Daily Brief South Korea: Doosan Robotics , I-Scream Media and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Doosan Group: Index Implications of the Corporate Restructuring
  • I-Scream Media IPO Valuation Analysis

Doosan Group: Index Implications of the Corporate Restructuring

By Brian Freitas

I-Scream Media IPO Valuation Analysis

By Douglas Kim

  • Our valuation analysis suggests a base case implied market cap of 567 billion won or implied price per share of 41,450 won.
  • This suggests a 3% upside to the high end of the IPO price range. We would not subscribe to this IPO due to lack of upside.
  • Our base case valuation is based on P/E of 18.8x using the company’s net profit of 30.2 billion won in 2023.

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Jul 16
0

Daily Brief South Korea: Korea Stock Exchange KOSPI 200, SK Innovation and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Recently Observed Market Flow Movements Related to Korea’s Value-Up Initiatives
  • SK Innovation and SK E&S to Discuss a Potential Merger on 17 July

Recently Observed Market Flow Movements Related to Korea’s Value-Up Initiatives

By Sanghyun Park

  • Nine companies disclosed value-up plans, with four official and five pending disclosures. Initially, these announcements boosted stock prices, but long-term correlations were inconclusive. Yet, shareholder returns notably rose in H1.
  • NPS increased stakes in three of the nine recently announced value-up companies. They share traits in value-up trading (large caps & low PBR), potentially guiding our strategy as NPS enters.
  • BlackRock’s Hong Kong branch has recently engaged with six Korean asset management firms for potential entrustment of its Asian fund’s Korean investment portion, focusing on the value-up policy.

SK Innovation and SK E&S to Discuss a Potential Merger on 17 July

By Douglas Kim

  • SK Innovation (096770 KS) and SK E&S plan to hold a board meeting on 17 July to discuss the potential merger between the two companies.
  • If this merger is successful, it would create the eighth largest company in Korea with a combined assets of 106 trillion won (US$77 billion). 
  • Although the merger ratio is not yet available, we believe that this potential merger could potentially benefit SK E&S and SK Inc but could be negative on SK Innovation.

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Jul 15
0

Daily Brief South Korea: POSCO Holdings and more

By | Daily Briefs, South Korea

In today’s briefing:

  • POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won

POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won

By Douglas Kim

  • POSCO Holdings (005490 KS) announced a major shareholder return policy to buyback and cancel nearly 2 trillion won worth of treasury shares from 2024 to 2026. 
  • The company will cancel 5.25 million treasury shares representing 6.2% of outstanding shares (about 1.9 trillion won). It will also repurchase and cancel additional 100 billion won of shares.
  • POSCO Holdings has taken a major initiative to provide greater returns to its shareholders and this should have a positive impact on its share price. 

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Jul 14
0

Daily Brief South Korea: Sigong Tech, Sam Chun Dang Pharm and more

By | Daily Briefs, South Korea

In today’s briefing:

  • I-Scream Media IPO Preview
  • Sam Chun Dang Pharm (000250 KS): Positive Momentum to Continue

I-Scream Media IPO Preview

By Douglas Kim

  • I-Scream Media is getting ready to complete its IPO on KOSDAQ exchange in August. The IPO price range is from 32,000 won to 40,200 won. 
  • I-Scream Media is one of the the leading digital education platform companies in Korea. Its I-Scream S platform is used by more than 93% of elementary school classrooms in Korea.
  • Post IPO, Sigong Tech will have a 23.7% stake in I-Scream Media. Sigong Tech’s stake in I-Scream media (at high end of IPO value) is 157% of its market cap.

Sam Chun Dang Pharm (000250 KS): Positive Momentum to Continue

By Tina Banerjee

  • Sam Chun Dang Pharm (000250 KS) secured exclusive 10-year contract to supply Eylea biosimilar (SCD411) to nine European countries. The company will receive 55% of gross sales of the product.
  • Last month, the company placed 500K shares (~2% of issued capital) to Shinhan Investment Securities to raise KRW71.4B. Proceeds will be utilized to fund the company’s global clinical trial cost.
  • The company has started exporting generic glaucoma eye drop to the U.S. and expects to start exporting at least two more generic ophthalmic products in the U.S. this year.

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