CLSA completed a block trade yesterday (September 13) for Kospi-listed S1 Corp raising $161 million. The vendor was a single institutional investor that has held the stock for eight years and divested the entire stake through the 3.6 million share deal.
After marketing the offering at Won45,500 to Won47,000 per share, the lead priced it at Won45,500. This equated to a 4.8% discount to the stock's Won47,800 close.
The order book closed 1.3 times covered with participation by 14 accounts, of which just under a half already held the stock. By geography, 50% went to the US, 25% to Europe and 25% to Asia. Only about 10% of Asian demand was generated by Korean accounts.
The transaction was relatively large for S1 Corp and represented 90 days trading volume and 9.6% of the issued share capital. The company's major shareholders are Japanese security systems provider Secom, which owns 24.7% and a handful of Samsung group companies, which own roughly 12% between them.
Year-to-date, the stock is up 30.96% in line with the Kospi and has returned 50.92% on a one-year basis. This strong performance may lead some to wonder whether the stock is at peak valuation.
So too, aside from CLSA and Nomura, the company is not covered by any other international houses. According to CLSA's estimates S1 Corp is currently trading at about 20 times 2005 earnings.
It is regarded as a good proxy for retail confidence and particularly the property sector. Analysts have argued that earnings have huge room for upside performance given S1 has the largest market share in Korea (1%) in what is a hugely fragmented market.
The company recently reported second quarter earnings, which saw sales and net income up 12.6% and 18.2% year-on-year, respectively.
