2Q16 review: Below-consensus OP of W240.6bn (+15.6% YoY)For 2Q16, AmorePacific reported preliminary consolidated revenue of W1.44tr (+20.7% YoY), operating profit of W240.6bn (+15.6% YoY), and OP margin of 16.7%.While revenue was in line with expectations, operating profit missed our forecast and the consensus by 5.3% and 8.7%, respectively. The lower-than-expected profitability was due to negative sales growth of the domestic hypermarket channel and rising costs related to overseas expansion.Do

[THE INVESTOR] South Korea has extended the trading hours of its stocks and foreign exchange markets by 30 minutes starting Aug. 1 in a bid to attract investment.Markets trading in stocks, currency and gold will close at 3:30 p.m. 30 minutes later than the current 3:00 p.m., while the derivatives market will close at 3:45 p.m., instead of the current 3:15 p.m. Yeouido financial district in western SeoulIt marks the first time in 16 years for the Korea Exchange to revise its trading hours. In 200

[THE INVESTOR] CJ Korea Express is expected to tap deeper into the Chinese market with the recent acquisition of Speedex, an affiliate of China’s leading home appliance firm TCL, a local brokerage firm said on Aug. 1. CJ Korea Express' distribution center.“CJ Korea Express is likely to enter China’s consumer-oriented delivery service market after acquiring Speedex,” said Ha Joon-young, an analyst at HI Investment & Securities. On July 29, CJ Korea Express announced that its Chinese holding compa

2Q16 net profit of controlling interests in line with consensus at W307bn (+35.8% YoY)Won-based loan growth stood at 1.6% QoQ in 2Q16, which is generally in line with the annual target (5-6%). Loan growth for households came in at +4.6%, big businesses -4.8%, and SMEs +0.4%. Growth was sluggish for big businesses due to disposal of NPLs. Meanwhile, household loans are growing faster than the annual target rate. The pace is likely to be adjusted in 2H16. NIM dropped 2bp QoQ due to the increase in

[THE INVESTOR] Despite the string of merger and acquisition deals in the pipeline in South Korea, the companies are expected to struggle to attract interest from potential buyers, industry sources said on July 19. As creditor banks set to sell companies which are undergoing creditor-led restructuring and private equity firms seek to exit investments by putting acquired companies such as Coway up for sale, the country’s M&A market will see a strong number of deals in the second half of 2016. Howe

After our recent earnings reviews for the sector, we have concluded that the current consensus operating profit estimates for 2016 and 2017 look aggressive, considering: 1) tougher comps heading into 2H16; 2) limited room for further gross profit margin expansion; and 3) stiffer competition.We think it will be difficult for the current 110% premium to the Korean stock market (KOSPI) P/E to expand further from the current levels.Expect weak 2Q16 earnings Excluding KT&G and CJ CheilJedang, we expe

[THE INVESTOR] Nexon, South Korea’s top game developer, said on July 4 that it has bought stakes in I Fun Factory, a game server engine developer, without disclosing the exact number of shares acquired. As a strategic investor, Nexon will strengthen its partnership with the company in various sectors by applying I Fun Factory‘s game server engine technology into its game development and other services. “I Fun Factory has a competitive edge in the server engine sector... we willl closely cooperat

[DISCLOSURE] Mirae Asset Securities (037620) said on July 4 that it will invest 20 billion won (US$1.73 million) into private equity fund called Multi Asset Gateway Global Fund set by its affiliate Multi Asset Global Investments.

[DISCLOSURE] Keystone Global (012170) said on July 4 that it will buy 75,000 shares in Kiwi Company, an entertainment agency, for 20 billion won (US$17.4 million) to diversify its business portfolio.

[DISCLOSURE] Huons Global (084110) said on July 4 that it will issue 4,959,779 new shares in a bid to raise 288.2 billion won (US$250 million) to acquire securities of its subsidiary Huons.

[DISCLOSURE] GS Engineering & Construction (006360) will guarantee a 322.5 billion won (US$280 million) loan for buyers of its newly built apartments called “Xie the Express,” the company said on June 4.

[DISCLOSURE] EcoBio Holdings (038870) said on July 4 that it will hold an investors relations meeting in Incheon on July 5.

[DISCLOSURE] Melfas (096640) said on July 4 that it is exploring the possibility of establishing a semiconductor joint venture in China. The firms said it will announce its plans in a month through a regulatory filing when negotiations regarding the JV are finalized.

[DISCLOSURE] Kukdong (005320) announced on July 4 that its largest shareholder has changed to KB Asset Management, which holds a 21.06 percent stake in the firm, from Byun Hyo-soo and seven others who have 18.75 percent stake in the company. KB said the acquisition of equity stake was for an investment purpose.

[DISCLOSURE] Chosun Refractories (000480) has inked a 155.4 billion won (US$135.5 million) supply deal with POSCO, the company announced on July 4.The deal size is equivalent to 21.34 percent of the company’s latest total sales. The contract started on July 1 and ends June 20, 2017. 　

[DISCLOSURE] ESTsoft (047560) announced on July 4 that it will issue convertible bonds to raise 10 billion won (US$8.72 million) for operating funds.The bonds will be sold at a yield to maturity of 1.0 percent. A 100 percent conversion rate of bonds to common shares at 11,298 won per share, and a conversion period from July 6, 2017, was also announced.

[DISCLOSURE] Shinil Industrial (002700) announced on July 4 that the company’s executives are being investigated for alleged embezzlement by prosecutors. “Seoul Southern District Prosecutors’ Office has launched a probe. We will disclose details when the prosecutors take a final decision,” the company said.

[DISCLOSURE] Namkwang Engineering & Construction (001260) announced on July 4 that it has decided to acquire 7,669 treasury stocks, worth 83.5 million won (US$ 72,900).

[DISCLOSURE] Tesna (131970) announced on July 4 that it would close its list of stockholders from July 19 to 21 to confirm shareholders with rights for its upcoming extraordinary shareholders meeting.

[DISCLOSURE] Korea Real Estate Investment Trust, or KOREIT (034830), said on July 4 that it will be delisted from the nation’s secondary bourse KOSDAQ and shift to the main bourse KOSPI. The stock will commence trading on KOSPI from July 11.