Petra Capital's Presentation on Nexen Tire: Value Investing Congress Las Vegas

We've posted up notes from the Value Investing Congress in Las Vegas and next up in the series is Chan H. Lee and Albert Yong of Petra Capital Management whose presentation was entitled "In Search of Hidden Champions in South Korea."  They pitched Nexen Tire as a long.


Petra Capital's Value Investing Congress Presentation

•    South Korean based value manager based in Seoul – disciples of Ben Graham. Outperformed the Korean index – since inception annualized returns of 24% outpacing the KOSPI.
•    Misconception – Korea is not an emerging market
•    Size of Kentucky – GDP over $1 Trillion dollars in addition to being on of the wealthiest countries in the world.
•    Korea’s credit rating is higher than Japan, China, Israel and Italy.
•    Korean culture is heavily focused on education.
•    One of the best infrastructures in regards to internet – 83% high speed penetration and 80% using LTE smart phones.
•    GS thinks in FY15 – one of the wealthiest by GDP per capita.


•    Nexen Tire – Trades at 9.9x p/e. It is a hidden champion. Nexen tire currently Korea’s third largest manufacturer. One of the fastest growing tire manufacturers.
•    Growing at 20% a year – overall industry grew at 8% a year. Last year replacement tires declined by sales to auto makers increased materially.
•    Third tier tire manufacturer by tire price and brand recognition. 1st tier are players like Michelin/Goodyear.
•    Sales are diversified across the globe. Built a new factory in Czech Republic to penetrate Europe further.
•    Very efficient factories – cost structure is materially lower. Factories are highly automated.
•    Trades around 9x should be worth between 12x – 13x.
•    How to buy this cheap? Preferred stock. Pay a slightly higher dividend but no voting rights. 60% discount to the common stock! Trades at 4x PE .
•    Need to be careful – choose the right security. The price of common stock shouldn’t be overvalued. GAP will narrow eventually. 
•    Another method to buy this business cheap: Holding Company – Nexen Corp the holdco. $300 market cap, 70% BV, 6x P/E. 70% of the value is derived from Nexen Tire. 40% stake in Nexen Tire is GREATER than its market cap.

Be sure to check out the rest of the Value Investing Congress presentations.

Notes & Presentations From the Value Investing Congress Omaha 2012

We've posted up notes from both days of the Value Investing Congress in Omaha.  Please follow the links below to read about each speaker's investment ideas.  All links have been updated with the actual slideshow presentations as well:


- Doug Kass on the end of the bond bull market

- Aaron Edelheit's presentation on the housing market

- Chuck Akre on judgment in investing and bull case for MasterCard

- Isaac Schwartz's three investment ideas

- Whitney Tilson's presentation on AIG

- Doug Grey's presentation on the cost of money

- Bob Robotti's presentation on Enterflex

- Bestinver's European idea

- GoodHaven Capital on White Mountains Insurance & Alleghany

- David Nierenberg on Superior Energy Services

- Tom Russo on global value equity investing

- Chan Lee on Korea as a goldmine for value investors

- Bruce Zessar and Matt Swaim on Vail Resorts

Chan Lee on Korea as a Goldmine of Ideas: Value Investing Congress Omaha

Today we're posting up notes from day 1 of the Value Investing Congress.  Below is the presentation from Chan Lee of Petra Capital Management on Korea as an attractive investment opportunity.  Since inception, their flagship fund has returned 20.4% annualized.  The following notes are courtesy of Kyle Mowery from GrizzlyRock Capital.

Korea: A Goldmine for Value Investors

- Korea is the size of the state of Maine; 7th largest exporter & 10th largest importer in the world

- There are more than 100 net nets on Korean stock exchange - two are Samsung Climate Control and Pangrim (textile producer).  Market Folly note: We recently posted up notes from Warren Buffett's meeting with MBA students where the legendary investor said he sees opportunity in Korea as well.

- CJO Shopping: TV home shopping company (71.8% revenue, internet shopping is 18%).  Trades 9.9x earnings and is about $1,000mm USD.  Stock dropped sharply after Chinese JV as market regarded it as weakening position in China.  Public in 2000 acquired by conglomerate.  Received 3 new licenses.  Average ticket higher than QVC, standard shipping is one day.

- KG Inicis: Leading company in online transactions, focused on South Korea.  Not as much Chinese exposure.  Trades at 5.9x earnings.  Payment gateway service which also owns mobile payment business.


Embedded below is Chan Lee's slideshow presentation:




Be sure to click here for other presentations from the Value Investing Congress.