Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

KOSPI 200 Rebalance in June 2022 Amid Portfolio Changes Post Outbreak of War in Ukraine

Lotte Rental IPO - Not Growing Its Fleet as Fast but Utilizing Them Better

Equity Capital Markets

<p><strong>On 6 August, Lotte Rental announced its IPO book building results. The IPO price has been determined at 59,000 won, which was at the high end of the IPO price range. </strong>The demand ratio among the institutional investors was 218 to 1. There were 762 institutional investors that participated in the IPO survey of which 640 were domestic investors and 122 were overseas investors. </p><div class="content-highlight"><p>We continue to have a POSIVE view of the Lotte Rental IPO post book building results. Our base case valuation of Lotte Rental remains implied market cap of 2.9 trillion won or implied price of 79,679 won per share, which represents 35% higher than the IPO price of 59,000 won. </p></div><table class="table table-striped">
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<td colspan="4" style="width: 515.09px;"><div style="text-align: start;"><div><div><strong>Institutional Investors Demand Breakdown of Lotte Rental IPO Bookbuilding Results</strong></div></div></div></td>
<td style="width: 99.27px;"><strong> </strong></td>
</tr>
<tr>
<td style="text-align: left; width: 141.29px;"><strong>Domestic Investors</strong></td>
<td style="text-align: center; width: 115.24px;"><strong> </strong></td>
<td style="text-align: center; width: 112.23px;"><strong> </strong></td>
<td style="text-align: center; width: 146.33px;"><strong> </strong></td>
<td style="text-align: center; width: 99.27px;"><strong> </strong></td>
</tr>
<tr>
<td style="width: 141.29px;"><strong> </strong></td>
<td style="text-align: center; width: 115.24px;"><strong>Asset mgmt companies</strong></td>
<td style="text-align: center; width: 112.23px;"><strong>Brokerages</strong></td>
<td style="text-align: center; width: 146.33px;"><strong>Pension funds/insurance/banks</strong></td>
<td style="text-align: center; width: 99.27px;"><strong>Others</strong></td>
</tr>
<tr>
<td style="width: 141.29px;">No. of companies</td>
<td style="text-align: center; width: 115.24px;">322</td>
<td style="text-align: center; width: 112.23px;">23</td>
<td style="text-align: center; width: 146.33px;">145</td>
<td style="text-align: center; width: 99.27px;">150</td>
</tr>
<tr>
<td style="width: 141.29px;">Demand</td>
<td style="text-align: center; width: 115.24px;">86.3 to 1</td>
<td style="text-align: center; width: 112.23px;">9.6 to 1</td>
<td style="text-align: center; width: 146.33px;">49.2 to 1</td>
<td style="text-align: center; width: 99.27px;">35.6 to 1</td>
</tr>
<tr>
<td style="width: 141.29px;"> </td>
<td style="text-align: center; width: 115.24px;"> </td>
<td style="text-align: center; width: 112.23px;"> </td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr>
<td style="width: 141.29px;"><strong> Overseas Investors</strong></td>
<td style="text-align: center; width: 115.24px;"><strong> </strong></td>
<td style="text-align: center; width: 112.23px;"><strong> </strong></td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr>
<td style="width: 141.29px;"><strong> </strong></td>
<td style="text-align: center; width: 115.24px;"><strong>(A)*</strong></td>
<td style="text-align: center; width: 112.23px;"><strong>(B)**</strong></td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr>
<td style="width: 141.29px;">No. of companies</td>
<td style="text-align: center; width: 115.24px;">79</td>
<td style="text-align: center; width: 112.23px;">43</td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr>
<td style="width: 141.29px;">Demand</td>
<td style="text-align: center; width: 115.24px;">34.5 to 1</td>
<td style="text-align: center; width: 112.23px;">2.5 to 1</td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr>
<td style="width: 141.29px;"> </td>
<td style="text-align: center; width: 115.24px;"> </td>
<td style="text-align: center; width: 112.23px;"> </td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr>
<td style="width: 141.29px;"><strong>Total (No. of companies)</strong></td>
<td style="text-align: center; width: 115.24px;"><strong>762</strong></td>
<td style="text-align: center; width: 112.23px;"> </td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr>
<td style="width: 141.29px;"><strong>Total Demand</strong></td>
<td style="text-align: center; width: 115.24px;"><strong>217.6 to 1</strong></td>
<td style="text-align: center; width: 112.23px;"> </td>
<td style="text-align: center; width: 146.33px;"> </td>
<td style="text-align: center; width: 99.27px;"> </td>
</tr>
<tr><td colspan="5" style="width: 614.36px;">Note: (A)* refers to overseas investment mgmt companies that have records of trading with the brokers involved in this deal.</td></tr>
<tr><td colspan="5" style="width: 614.36px;">(B)** refers to overseas investment mgmt companies that do not have records of trading with the brokers involved in this deal.</td></tr>
<tr>
<td colspan="2" style="width: 256.53px;">Source: Company data</td>
<td style="width: 112.23px;"> </td>
<td style="width: 146.33px;"> </td>
<td style="width: 99.27px;"> </td>
</tr>
</tbody>
</table>

On 6 August, Lotte Rental announced its IPO book building results. 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 218 to 1. There were 762 institutional investors that participated in the IPO survey of which 640 were domestic investors and 122 were overseas investors. We continue to have a POSIVE view of the Lotte Rental IPO post book building results. Our base case valuation of Lotte Rental remains implied market cap of 2.9 trillion won or implied price of 79,679 won per share, which represents 35% higher than the IPO price of 59,000 won. 









Institutional Investors Demand Breakdown of Lotte Rental IPO Bookbuilding Results
 


Domestic Investors
 
 
 
 


 
Asset mgmt companies
Brokerages
Pension funds/insurance/banks
Others


No. of companies
322
23
145
150


Demand
86.3 to 1
9.6 to 1
49.2 to 1
35.6 to 1


 
 
 
 
 


 Overseas Investors
 
 
 
 


 
(A)*
(B)**
 
 


No. of companies
79
43
 
 


Demand
34.5 to 1
2.5 to 1
 
 


 
 
 
 
 


Total (No. of companies)
762
 
 
 


Total Demand
217.6 to 1
 
 
 

Note: (A)* refers to overseas investment mgmt companies that have records of trading with the brokers involved in this deal.
(B)** refers to overseas investment mgmt companies that do not have records of trading with the brokers involved in this deal.

Source: Company data
 
 
 




Trading Strategy of Lotte Rental IPO Post Bookbuilding Results