Albert Yong and Chan Lee presented their in-depth investment thesis on GS Home (Korea: 028150) at Asian Investing Summit 2017. They also shared their perspective on the Korean investment opportunity as well as their investment theses on Samho (Korea: 010960) and KyungDong City Gas (Korea: 012320).
GS Home was established in 1994, the company is a non-store retailer that operates Korea’s leading cable television shopping channel. The company possesses a strong brand, having pioneered home shopping in Korea since 1995 and maintains superior bargaining power over merchants. The Korean home shopping industry enjoys high barriers to entry as the government limits the number of players. The company is expected to benefit from growth opportunities in its mobile and international operations. The home shopping business requires little incremental capex to grow; nearly 100% of net income is free cash flow. The company holds excess cash and investments of nearly 1 trillion Won, equivalent to 80% of the recent market cap. Management can unlock intrinsic value by returning cash to investors in the form of buybacks and dividends. This would reduce the cash discount and improve ROE, likely resulting in a higher multiple on the business.
About the instructors:
Albert H. Yong is a Managing Partner and the CIO of Petra Capital Management, an investment advisory and portfolio management firm based in Seoul, Korea which focuses on undervalued Korean public companies whose market prices are significantly discounted to intrinsic value. Albert believes that the Korean stock market offers exceptional value investing opportunities because many Korean companies are still cheaply valued compared to their earning power and balance sheet. Albert utilizes a disciplined and patient deep value investing approach to seek superior risk-adjusted returns with limited volatility and bases his investment decisions on detailed, research-based analysis and thorough due diligence. Prior to co-founding Petra, Albert was a Managing Director and the CIO of Pinnacle Investments and a Vice President of Pan Asia Capital where he was in charge of managing the Korean equity portfolio. Albert received his MBA from the UCLA Anderson School of Management and his BS in Electrical Engineering from Seoul National University.
Chan H. Lee is the co-founder and a Managing Partner of Petra Capital Management. Since inception in fall 2009, its Petra Korean Value Equity Strategy has returned 24.4% annualized, net of all fees to investors. Chan is constantly on the lookout for mispricing opportunities and special situations where investors can profit handsomely from a subsequent change of valuation. Chan believes that Korea offers numerous investment opportunities for activist investors. Prior to co-founding Petra, he worked as an investment banker and corporate attorney for more than 10 years in Korea. Chan’s career has focused on the analysis and execution of mergers, acquisitions, joint ventures, restructurings and debt and equity financings across a broad range of industries. Chan received his JD from the UCLA School of Law and his BS in Business Administration from the University of California at Berkeley where he was a member of Beta Gamma Sigma.
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