Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Krafton IPO: Offering Detail, Valuation Issue, & Index Fast Entry

Several Controversial Issues About Krafton IPO Valuation

Netmarble Corp (SoTP Valuation Analysis) - Impact of Big Hit Entertainment

Netmarble Corp - Clear Signs of Overshooting

Netmarble Corp: Firing on All Cylinders + Earnings Beat Consensus by Big Amount in 2Q 2020

Coway: Business Model Proves Resilient, Earnings Upgrades Set to Continue

Event-Driven

On 21 May, <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a> announced that <a href="http://www.koreaherald.com/view.php?ud=20210521000303" target="_blank" rel="noopener">Jam City,</a> its mobile game subsidiary in the U.S. will merge with a SPAC (Special Purpose Acquisition Company) called DPCM Capital which is publicly trading on the NYSE. DPCM has a $300 million cash held in trust. Jam City will become a public company in the U.S. in 2H 2021 (likely to be sometime in October). The filing of this merger is <a href="https://sec.report/Document/0001213900-21-028052/" target="_blank" rel="noopener">here. </a>Jam City, which is based in Los Angeles, develops popular mobile games including Cookie Jam and Panda Pop. Jam City is one of the top 10 game publishers in the U.S. According to Jam City, the combined company will have a valuation of $1.2 billion. The newly combined company will be called Jam City Holdings and its stock will be relisted on the NYSE. <div class="content-highlight">
As of end of 1Q 2021, Netmarble had a 58.69% stake in Jam City Inc.  Netmarble included a book value of 149.7 billion for its stake in Jam City. Netmarble purchased Jam City in 2015. Netmarble paid 149.7 billion won for its stake in Jam City in 2015 and the purchase value and book value (as of end of 1Q 2021) has remained the same. Adjusted EBITDA of the combined Jam City and Ludia is expected to increase from $33 million in 2020 to $54 million in 2021 and $112 million in 2022.
Since then, Jam City has made numerous acquisitions including buying rights to Disney’s popular game Emoji Blitz in 2018 and rights to Frozen intellectual properties in 2019. Jam City plans to use the cash proceeds from the public offering estimated to be about $400 million to buy a Canada based mobile game publisher called Ludia, which makes games based on the Jurassic World movies.
Overall, we believe this merger will have a positive impact on Netmarble Corp as it its controlling stake in Jam City will be valued at publicly listed market value, which is expected to be much larger than the book value of 149.7 billion won. In other words, Netmarble's stake in Jam City will be more clear and investors will be better able to put a firm value on this stake. Plus, the combined Jam City and Ludia entity has the potential to further capture higher market share in the North American game industry, in terms of both organic growth and strategic acquisitions. 
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On 21 May, Netmarble Corporation (251270 KS) announced that Jam City, its mobile game subsidiary in the U.S. will merge with a SPAC (Special Purpose Acquisition Company) called DPCM Capital which is publicly trading on the NYSE. DPCM has a $300 million cash held in trust. Jam City will become a public company in the U.S. in 2H 2021 (likely to be sometime in October). The filing of this merger is here. Jam City, which is based in Los Angeles, develops popular mobile games including Cookie Jam and Panda Pop. Jam City is one of the top 10 game publishers in the U.S. According to Jam City, the combined company will have a valuation of $1.2 billion. The newly combined company will be called Jam City Holdings and its stock will be relisted on the NYSE. 
As of end of 1Q 2021, Netmarble had a 58.69% stake in Jam City Inc.  Netmarble included a book value of 149.7 billion for its stake in Jam City. Netmarble purchased Jam City in 2015. Netmarble paid 149.7 billion won for its stake in Jam City in 2015 and the purchase value and book value (as of end of 1Q 2021) has remained the same. Adjusted EBITDA of the combined Jam City and Ludia is expected to increase from $33 million in 2020 to $54 million in 2021 and $112 million in 2022.
Since then, Jam City has made numerous acquisitions including buying rights to Disney’s popular game Emoji Blitz in 2018 and rights to Frozen intellectual properties in 2019. Jam City plans to use the cash proceeds from the public offering estimated to be about $400 million to buy a Canada based mobile game publisher called Ludia, which makes games based on the Jurassic World movies.
Overall, we believe this merger will have a positive impact on Netmarble Corp as it its controlling stake in Jam City will be valued at publicly listed market value, which is expected to be much larger than the book value of 149.7 billion won. In other words, Netmarble's stake in Jam City will be more clear and investors will be better able to put a firm value on this stake. Plus, the combined Jam City and Ludia entity has the potential to further capture higher market share in the North American game industry, in terms of both organic growth and strategic acquisitions. 


Netmarble's U.S. Subsidiary Jam City to Merge with a SPAC & List on NYSE