Fall of 17% is reversal of strong share orders for Korean insurers
WSJ Fri-Sun, Oct 9-11, 2009
Tong Yang Life insurance co. tumbled 17% on its trading debut on the Korea Exchange despite strong demand for its shares during order-taking, in a second sign of souring sentiment toward initial public offerings in the country.
The company is the first Korean life insurer to enter the market after the government in 2007 eased restrictions for life insurers to list publicly. The offering was subscribed by almost 13 times last week, as retail investors showed keen interest.
But signs of investor fatigue were becoming evident earlier this week, as spirit maker Jinro Ltd. was forced to lower its IPO price to 41,000 per share, below an indicative price range of 45,000 won-50,000 won. The indicative range had been itself reduced from 54,000 won-to 60,000 won due to lack of interest.
Some said Tong Yang's disappointing debut may not bode well for some of peer companies that alos are considering IPOs.
Tong Yang Life raised 340.38 billion won ($291.4million) from the IPO, making it one of the country's largest new listings in recent years. Share ended the first day at 14,150 won, compared with its IPO price of 17,000, already the bottom of the proposed range of 17,000 won to 22,000 won. The day's drop was frar steeper than the 4.5'% fall in the Kospi index since the IPO was priced on Sept. 25. The Kospi closed at 1615.46 Thursday, up 1.1% on the day.
Stephanie Hahn, an anayyst at Woori Investment & Securities, pegged the appropriate share price for Tong Yang at between 12,000 won and 15,000 won based on a fair price-to-book ratio of 1.8 times.
"Since it was the first life insurer, investors had been, more than eager, driving up the price," during subscription, said Park Yoon-young, an analyst at HMC Investment & Securities.
Mr.Park said Tong Yang's performance will serve as a guide for the pricing of future IPOs in the sector.
With the domestic stock market up 44% so far this year, more life insurers are expected to launch IPOs from next year to replenish capital and support growth.
Next in line is Korea Life insureance, the country's second-largest life insurer by total premiums. Korea Life is majority-owned by Hanwha Group, whose chairman, Kim Seung-youn, said in September that a listing plan is in motion.
Saturday, 10 October 2009
Wednesday, 7 October 2009
Samsung Projects Growth
Chip maker, helped by increase price, expects 19% sales rise
Samsung Electronics Co., a global behemoth in memory chips and flat-screen TVs, expects its third quarter sales rise about 19% and sees its consolidated operating profit coming in between 3.9 trillion won and 4.3 trillion South Korean won ($3.67 billion).
Operating profit totaled 1.48 trillion won in the third quarter of 2008.
The company, South Korea's biggest by market capitalization, estimated the consolidated sales of between 35 trillion and 37 trillion won for the third quarter. That compares with sales of 30.3 trillion won a year earlier.
The company is expected to announce its its quarterly earnings profit Oct. 30. All figures are on a consolidated basis.
Samsung didn't provide explanation for the earnings guidance and said the latest forcast may differ from actual earnings because it hasn't completed an audit.
Analysts said the recent sharp rise in the memory chip prices and improved prices for liquid-cystal displays, combined with continued firm performances in Samsung Electronics's other businesses, are buoying the company's third-quarter profits. However, they expect their earnings growth taper off in the current quarter due to strengthening local currency and seasonally higher market costs.
A poll of 13 analysts by local researcher FNGuide put Samsug's third-quarter operating
at 3.7 trillion won. The consolidated sales forcast is 36 trillion won, in line with Samsung's estimates.
" Market share really jumps on all fronts - DRAM, flast, handsets, TVs, LCD panels, " said Jay Kim, who follows Samsung for Hydudai Securities in Seoul.
Despite the news, share of the electronics giant slipped. In Seoul trading, the stock fell 2000 won to 745,000 won, though the still outperform the broader index, which fell 0.5%.
Samsung is the world's largest manufacturer of DRAM, or dynamic ransom access memory, chips, NAND flash memory chips, flatscreen televisions and liquid crystal displays. the company is the world's second-largest maker of mobile phone handsets hehind Nokia Crop.
DRAMs are used mostly in personal computers, while NAND flash chips are used in devices such as digital cameras and music players.
Samsung recorded its first net ever loss in the four quarter of 2008 as the global economic slump hit prices and demand. the company returned to profi in the first quarter of this year, though it was down sharply from the year before.
from WSJ on Oct. 7
Samsung Electronics Co., a global behemoth in memory chips and flat-screen TVs, expects its third quarter sales rise about 19% and sees its consolidated operating profit coming in between 3.9 trillion won and 4.3 trillion South Korean won ($3.67 billion).
Operating profit totaled 1.48 trillion won in the third quarter of 2008.
The company, South Korea's biggest by market capitalization, estimated the consolidated sales of between 35 trillion and 37 trillion won for the third quarter. That compares with sales of 30.3 trillion won a year earlier.
The company is expected to announce its its quarterly earnings profit Oct. 30. All figures are on a consolidated basis.
Samsung didn't provide explanation for the earnings guidance and said the latest forcast may differ from actual earnings because it hasn't completed an audit.
Analysts said the recent sharp rise in the memory chip prices and improved prices for liquid-cystal displays, combined with continued firm performances in Samsung Electronics's other businesses, are buoying the company's third-quarter profits. However, they expect their earnings growth taper off in the current quarter due to strengthening local currency and seasonally higher market costs.
A poll of 13 analysts by local researcher FNGuide put Samsug's third-quarter operating
at 3.7 trillion won. The consolidated sales forcast is 36 trillion won, in line with Samsung's estimates.
" Market share really jumps on all fronts - DRAM, flast, handsets, TVs, LCD panels, " said Jay Kim, who follows Samsung for Hydudai Securities in Seoul.
Despite the news, share of the electronics giant slipped. In Seoul trading, the stock fell 2000 won to 745,000 won, though the still outperform the broader index, which fell 0.5%.
Samsung is the world's largest manufacturer of DRAM, or dynamic ransom access memory, chips, NAND flash memory chips, flatscreen televisions and liquid crystal displays. the company is the world's second-largest maker of mobile phone handsets hehind Nokia Crop.
DRAMs are used mostly in personal computers, while NAND flash chips are used in devices such as digital cameras and music players.
Samsung recorded its first net ever loss in the four quarter of 2008 as the global economic slump hit prices and demand. the company returned to profi in the first quarter of this year, though it was down sharply from the year before.
from WSJ on Oct. 7
Tuesday, 6 October 2009
IPhone's entry to South Korea to test Samsung, LG
from WSJ on Oct 6
Apple Inc.'s entry in South Korean mobile phone market will likely ramp up price competition, pressuring margins at Samsung Electronics Co. and LG Electronics Co. that are already suffering from weak demand.
The entry of the IPhone in South Korea comes as both Samsung and LG have been feeling the squeeze on their margins from a global slowdown in demand for consumer electronics due to the world-wide recession.
Samsung's margin from its telecommunication division, including handsets, fell to 10% for the second quarter from 11% from a year ealier. LG's margin from the handsets fell to 11% in the quarter, from 14.4% from a year earlier.
" Since Samsung and LG don't have impressive smartphones in the pipeline, it's woule be hard to compete with IPhone," said Oh In-bum, an analyst at Dongbu Securities "IPhone's entry to Korea will have a negative impact on both companies."
Califonia-base Apple is widely expected to start selling its popular IPhone this year, after South Korean government approved last month the sale of the smartphone, which features a touch screan and multimedia capabilities such as web surfing an email.
Apple hasn't signed a deal with any telecom operator in the country and an Apple spokesman declined to comment on when the IPhone is available there. A spokesman from KT Corp., South Korea's largest telecom operator, said the company is in talks with Apple on shipment size and subsidies for the IPhone.
Samsung and LG are latecomers to the smartphone market, a segment that is expected to see shipments grow double-digit percentage this year, compared with an overall decline of sales in regular cellphones.
Globally, Samsung is the world's second-largest handset maker by shipments after Nokia Corp. with 19% of the market, while LG ranks the third, with 11%. But at home, Samsung and LG have a combined 85% of the market.
Samsung and LG have been launching similar touchscreen devices globally to compete with IPhone, since the device's U.S. debut in 2007, but sales haven't taken off partly due to weak branding and the absence of their own mobile operating systems. But they also recognize the segment's potential. Smartphones also fetch higher average selling prices,boosting margins.
Much of the impact on the local vendors are determined by Apple's pricing strategy. It is still unclear how much the IPhones will sell in Korea.
In China, the IPhone will retail for around $700, while in teh U.S it costs around $300. Samsung's smartphones sell for about 600,000won to 900,000 won ($511-$766) in the domestic market, while LG phones retal for around 700,000 won.
LG spokesman Yoon won-ill said the company see "limited impact" from IPhones given weak demand for more expensive smartphones.
At the same time, LG is beefing up its product pipeline to compete.
The company said in September that it will launch it first smartphone powered by Google Inc.'s Android platform in the fourth quarter of this year, starting in European market. It also said it would introduce a minimum of 13 new smartphones over the next 16 months that use Microsoft COrp.'s Window Mobile operating system to reinforce its standing with the brand.
" At home, demand for smarphones is expected to increase gradually, so [Samsung]is preparing to roll out new smartphone models to meet consumer needs," Samsung said. The company declined to comment specifically on how Apple will impact its business strategy andprofitability.
Apple's IPhone, which launched two years ago, has so far sold more than 26 million units world-wide in more than 80 countries, with its operating system, particularly its Safari Web browse, acknowledged by many to be a major selling point.
Apple Inc.'s entry in South Korean mobile phone market will likely ramp up price competition, pressuring margins at Samsung Electronics Co. and LG Electronics Co. that are already suffering from weak demand.
The entry of the IPhone in South Korea comes as both Samsung and LG have been feeling the squeeze on their margins from a global slowdown in demand for consumer electronics due to the world-wide recession.
Samsung's margin from its telecommunication division, including handsets, fell to 10% for the second quarter from 11% from a year ealier. LG's margin from the handsets fell to 11% in the quarter, from 14.4% from a year earlier.
" Since Samsung and LG don't have impressive smartphones in the pipeline, it's woule be hard to compete with IPhone," said Oh In-bum, an analyst at Dongbu Securities "IPhone's entry to Korea will have a negative impact on both companies."
Califonia-base Apple is widely expected to start selling its popular IPhone this year, after South Korean government approved last month the sale of the smartphone, which features a touch screan and multimedia capabilities such as web surfing an email.
Apple hasn't signed a deal with any telecom operator in the country and an Apple spokesman declined to comment on when the IPhone is available there. A spokesman from KT Corp., South Korea's largest telecom operator, said the company is in talks with Apple on shipment size and subsidies for the IPhone.
Samsung and LG are latecomers to the smartphone market, a segment that is expected to see shipments grow double-digit percentage this year, compared with an overall decline of sales in regular cellphones.
Globally, Samsung is the world's second-largest handset maker by shipments after Nokia Corp. with 19% of the market, while LG ranks the third, with 11%. But at home, Samsung and LG have a combined 85% of the market.
Samsung and LG have been launching similar touchscreen devices globally to compete with IPhone, since the device's U.S. debut in 2007, but sales haven't taken off partly due to weak branding and the absence of their own mobile operating systems. But they also recognize the segment's potential. Smartphones also fetch higher average selling prices,boosting margins.
Much of the impact on the local vendors are determined by Apple's pricing strategy. It is still unclear how much the IPhones will sell in Korea.
In China, the IPhone will retail for around $700, while in teh U.S it costs around $300. Samsung's smartphones sell for about 600,000won to 900,000 won ($511-$766) in the domestic market, while LG phones retal for around 700,000 won.
LG spokesman Yoon won-ill said the company see "limited impact" from IPhones given weak demand for more expensive smartphones.
At the same time, LG is beefing up its product pipeline to compete.
The company said in September that it will launch it first smartphone powered by Google Inc.'s Android platform in the fourth quarter of this year, starting in European market. It also said it would introduce a minimum of 13 new smartphones over the next 16 months that use Microsoft COrp.'s Window Mobile operating system to reinforce its standing with the brand.
" At home, demand for smarphones is expected to increase gradually, so [Samsung]is preparing to roll out new smartphone models to meet consumer needs," Samsung said. The company declined to comment specifically on how Apple will impact its business strategy andprofitability.
Apple's IPhone, which launched two years ago, has so far sold more than 26 million units world-wide in more than 80 countries, with its operating system, particularly its Safari Web browse, acknowledged by many to be a major selling point.
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