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Daewoo Shipbuilding‘s credit rating lowered to BB-

Aug 18, 2016

[THE INVESTOR] NICE Investors Service cut the long-term credit rating of Daewoo Shipbuilding & Marine Engineering, citing the shipbuilder’s deteriorating financial structure and the growing uncertainty of business normalization. The South Korean credit rating agency revised the company’s rating to BB- from BB and put it on the review list for further possible downgrade. “The company’s financial stability indicators have been deeply exacerbated, including the occurrence of impairment in the secon
[ANALYST REPORT] Hankook Tire: Weak raw material prices lead to strong results

Aug 18, 2016

1) Investment highlights- 2Q16 output and sales narrowly beat our forecasts but lower-than-expected raw material costs combined with an improving product mix (e.g., robust sales of UHPT) drove operating profit much higher than the consensus and our estimates.- The domestic market remains sluggish, but in China, the pace of sales decline is slowing. Growth in European and North American sales are still upbeat. With the growth in demand slowing, price competition will likely continue for a bit lon
[ANALYST REPORT] Doosan Corp: Earnings and consolidated financials all set to improve

Aug 18, 2016

Backed by likely high earnings growth at its FuelCell division and reduced operating losses at its DFS business, operating profit at Doosan Corp’s inhouse domain is set to rise in 2H16. Moreover, the firm’s consolidated financial structure and shareholder value should also improve going forward.Currently trading at a 48% discount rate to NAV, we view Doosan Corp’s shares as offering valuation merit. In-house business earnings to be strong in 2H16We estimate that Doosan Corp’s operating profit wi
LIG Nex1 to enter Saudi Arabia’s defense market

Aug 18, 2016

[THE INVESTOR] South Korean defense company LIG Nex1 plans to tap into Saudi Arabia in its broader expansion plan to the Middle East market. According to a source on Aug. 18, the weapon-maker has received board members’ approval to set up an operation in Saudi Arabia, the world’s largest weapons importer in 2015. This is the first time that the Korean firm establish a unit in the Middle East region. Currently, it has offices in the US, India, Indonesia and some Latin American countries. The deci
[ANALYST REPORT] F&B: Q2 earnings disappointing

Aug 18, 2016

Affected by lackluster 2Q16 results, the domestic F&B industry index plunged on Aug 17. Having suffered from rising COGS-to-sales ratios in 1Q16, F&B players faced growing cost burdens in 2Q16 due to fiercer competition. With competition set to heat up further, and with F&B demand likely to remain lackluster, it is difficult to expect sector earnings momentum to pick up over the near term. Also worrisome, the sector’s valuations remain lofty. Finding the sector unappealing for the above reasons,
Heng Sheng Holding stock sinks on first trading day after IPO

Aug 18, 2016

[THE INVESTOR] Chinese toy-maker Heng Sheng Holding Group ’s stock slumped on its first day of trading on South Korea’s secondary KOSDAQ market as a public company. The stock closed at 2,690 won (US$2.40) on Aug. 18, down nearly 17 percent from its opening price, which was already below the initial public offering price of 3,600 won. Heng Sheng Holding Group’s Chairman Hui Man-Kit (third from left) poses with Korea Exchange officials. KRXSluggish demand from investors is a disappointing result
Hanwha Investment targets bigger rival for takeover

Aug 17, 2016

[THE INVESTOR] Hanwha Investment & Securities, South Korea’s mid-sized brokerage house, is considering an acquisition of a bigger peer, the CEO of the firm said Aug. 17. “Hanwha Investment is a small company which ranked No. 14 among local securities firms, but I think we can soon become a mega-sized brokerage,” Yeo Seung-Joo, who took office as CEO in February, said during a press conference held in Seoul. Hanwha Investment & Securities CEO Yeo Seung-Joo speaks during a press conference.He said
[ANALYST REPORT] Asian steel industry: Lower earnings keep outlook negative

Aug 17, 2016

Declining production and weak profitability will reduce earnings. Our view that Asian steelmakers’ aggregate earnings will be lower in the next 12 months keeps the outlook negative. A continued decline in demand, driven by China, and increasing trade barriers around the world, which limit exports, will reduce steel production. And persistent overcapacity will keep steel prices and companies’ average profitability low.China drives demand weakness. We expect Asian steel demand will continue to dec
Auditor issues disclaimers of opinion for STX Heavy Industries and five other firms

Aug 17, 2016

[THE INVESTOR] Six listed companies in South Korea have received disclaimers of opinion from external auditors in their semiannual report. The independent external auditor of STX Heavy Industries gave the alarming opinion of financially trouble as its balance sheet and income statement in the January-June period include uncertainties as the company has gone into court receivership. Two other KOSPI-listed firms -- Hyundai Paint and Korea Steel Shapes -- were issued the same audit report as their
Orion shares tumble to 3-year low after Q2 result disappoints

Aug 17, 2016

[THE INVESTOR] Shares in Orion, South Korea’s leading confectionery firm, dropped to its lowest level in three years on Aug. 17, as the company’s latest results missed market estimates by a large margin. Second-quarter sales and profit fell far short of estimates as the company has struggled in the Chinese market due to soaring marketing costs in the face of growing competition from local rivals.Orion shares traded at 763,000 won (US$693.20), down 15.6 percent as of 11:30 a.m.“Sales in both Kore
Jeju Air to build hotel, buy own jets by 2018

Aug 17, 2016

[THE INVESTOR] Jeju Air, South Korea‘s largest low-cost carrier, plans to enter the hotel business and buy its own aircrafts in a search of a new revenue stream amid fierce competition among local budget airlines. The carrier will commit 60 billion won (US$54.9 million) to build a 17-story hotel near Hongik University in Seoul, a popular destination among young people and tourists, the company said in a regulatory filing. Marking a foray into the new business aims at attracting more inbound tour
[ANALYST REPORT] NCSOFT: Three reasons why August is a good time to buy

Aug 17, 2016

2Q16 review: Earnings well above expectationsFor 2Q16, NCSOFT reported earnings well above our estimates and the market consensus. The latest results once again confirmed the stable earnings potential of the company’s existing titles, including Lineage I and Blade & Soul. 2Q16 revenue and operating profit expanded 10.6% and 28.4% YoY to W240.5bn and W86.1bn, respectively.By title, revenue from Lineage I grew to W94.4bn (+10.5% YoY, 19.8% QoQ) thanks to a microtransaction event. Despite concerns,
[ANALYST REPORT] Won strengthening to expedite additional base rate cut

Aug 17, 2016

We expect the BOK to cut the base rate again in October, given: 1) the likelihood of continued won strengthening (attributable to global monetary easing); and 2) significant economic downward risk. Under the circumstances (and until the next rate cut), we recommend expanding duration upon yield hikes. ▶BOK leaves base rate frozen for second consecutive monthAt the August Monetary Policy Committee (MPC) meeting, members unanimously decided to leave the base rate unchanged. We believe that the Ban
Korea Gas Corporation faces extra W100b tax bill

Aug 16, 2016

[THE INVESTOR] Korea Gas Corporation, the nation’s public natural gas company, is liable to pay over 100 billion won (US$91.6 million) in extra taxes following extensive investigation by the tax agency.The National Tax Service charged 124.9 billion won to the state-run energy company in the form of corporate and individual consumption taxes due to failed tax payments on some of its gas product sales. Kogas headquarters.Tax authorities began investigating Korea Gas Corporation‘s accounting pract
Doosan Bobcat gets green light for IPO

Aug 16, 2016

[THE INVESTOR] Doosan Bobcat, the South Korean firm that controls U.S. construction machinery-maker Bobcat, received preliminary exchange approval to float its shares on the main KOSPI market, Korea Exchange announced Aug. 16. With the bourse operator’s green light, the company will proceed with one of this year’s largest initial public offerings, along with those of Samsung BioLogics and Netmarble Games, which are also seeking KOSPI listings in the second half of 2016. Doosan Infracore and Doos