Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Foreign room in <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> increased above 15% in July and is currently just above 16%. Foreign investors have resumed buying again and foreign room is moving lower.</li>
<li>Foreign room staying above 15% for another month could result in passive buying at the end of November. <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> has outperformed peers over the last few weeks.</li>
<li>Foreign buying over the next month could lead to foreign room dropping below 15% in which case there will be no passive inflows. But the stock could be higher.</li>
</ul>


Foreign room in SK Telecom (017670 KS) increased above 15% in July and is currently just above 16%. Foreign investors have resumed buying again and foreign room is moving lower.
Foreign room staying above 15% for another month could result in passive buying at the end of November. SK Telecom (017670 KS) has outperformed peers over the last few weeks.
Foreign buying over the next month could lead to foreign room dropping below 15% in which case there will be no passive inflows. But the stock could be higher.


SK Telecom (017670 KS): Foreign Room & Passive Inflows

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>Millie's Library is trying to complete its IPO again in September 2023, after a failed attempt in November 2022. The IPO price range is from 20,000 won to 23,000 won.</li>
<li>Founded in 2016, Millie's Library is a reading platform company that introduced the first monthly e-book subscription service in Korea in October 2017. </li>
<li>Our valuation analysis suggests base case target price of 31,769 won per share, which is 38% higher than the high end of the IPO price range of 23,000 won.</li>
</ul>


Millie's Library is trying to complete its IPO again in September 2023, after a failed attempt in November 2022. The IPO price range is from 20,000 won to 23,000 won.
Founded in 2016, Millie's Library is a reading platform company that introduced the first monthly e-book subscription service in Korea in October 2017. 
Our valuation analysis suggests base case target price of 31,769 won per share, which is 38% higher than the high end of the IPO price range of 23,000 won.


<ul>
<li>Ecopro BM (247540 KS) and Kum Yang (001570 KS)'s shares are down 2.5% and 4.5%, respectively today, driven by news of insiders at these companies selling their shares.</li>
<li>It is estimated that the total amount of Ecopro BM shares sold by insiders and related parties was about 20 billion won in July by more than 12 insiders/related parties.</li>
<li>We are increasingly concerned about insiders selling at Ecopro BM and Kum Yang. Coupled with lofty valuations, we think there is a higher probability of downside risk on these names. </li>
</ul>


Ecopro BM (247540 KS) and Kum Yang (001570 KS)'s shares are down 2.5% and 4.5%, respectively today, driven by news of insiders at these companies selling their shares.
It is estimated that the total amount of Ecopro BM shares sold by insiders and related parties was about 20 billion won in July by more than 12 insiders/related parties.
We are increasingly concerned about insiders selling at Ecopro BM and Kum Yang. Coupled with lofty valuations, we think there is a higher probability of downside risk on these names. 


Insiders Selling at Ecopro BM and Kum Yang

<ul>
<li>Foreign investors have been selling <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> for over a year now. That has taken foreign room from near zero to close to 15% now.</li>
<li>That could mean index inclusion for <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> with timing dependent on when the 15% foreign room threshold is crossed.</li>
<li>
<a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> has performed in line with <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a> but trades at higher valuations on most parameters.</li>
</ul>


Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.

SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.


SK Telecom (017670 KS): Foreign Room Increase Has Implications

Equity Bottom-Up

<ul>
<li>The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three existing telcos.</li>
<li>This decision to allow another telco in Korea will have a major negative impact on the existing three telcos in Korea.</li>
<li>On a relative basis, we think that this could have a worse impact than LG Uplus as compared to SK Telecom due to greater price sensitivity of LG Uplus' customers.</li>
</ul>


The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three existing telcos.
This decision to allow another telco in Korea will have a major negative impact on the existing three telcos in Korea.
On a relative basis, we think that this could have a worse impact than LG Uplus as compared to SK Telecom due to greater price sensitivity of LG Uplus' customers.


The Rise of the Fourth Telco in Korea - Breaking the Oligopoly

South Korea

LG Uplus Corp., an affiliate of LG Group, provides a wide range of personal communications services (PCS) using code division multiple access (CDMA) technology.  The Company offers call forwarding, call and data transfer, call waiting, voice mail, Internet-phone, prepaid call, and authentication text-to-speech (TTS) services.

KINX INC is the Internet linkage and line adapter service providing firm.  The Company provides IX and Internet Data Center service to the network service providers to reduce the traffic and to contruct Internet infrastructure.  KINX also provides VoIP service.

Sejong Telecom, Inc. develops and provides various telecom service.  The Company's main service include international phone call, Internet phone call, and long distance call.

SK Telecom Co., Ltd. is a Korean mobile and telecommunications operator. The Company provides cellular voice, wireless data, and wireless internet services. SK Telecom also offers fixed line services and platform services.

ECS Telecom Co.,Ltd. is a provider of communication products and services.  The company offers private branch exchange (PBX), IP telephony, contact center solution, and trading system.

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

Netmarble Corporation develops and publishes mobile games. The Company develops and publishes casual games, action, sports games, strategy, simulation games, and social casino games. Netmarble offers services worldwide.

Pearl Abyss Corp. operates as a computer games making company. The Company offers games development, games exporting, and other services. Pearl Abyss serves customers worldwide.

KRTnet Corporation provides radio relay services for mobile phone companies by building and maintaining relay station.  The Company also manufactures telecommunication equipment used for radio relay station.

Kakao Games Corp. operates as a multiply platform gaming company. The Company provides mobile games, computer games, virtual reality games, and other related products. Kakao Games markets its products worldwide.

Telekom Malaysia Berhad establishes, provides, and maintains telecommunication and related services. Through its subsidiaries, the Company provides payphone network, mobile telecommunication, public telephone, and leasing of optical fiber telecommunication system services. Telekom also manages and operates Kuala Lumpur Tower and provides intelligent security services.

Tata Communications Limited provides telecommunications services. The Company provides international telephone, telex and telegraphy services, international maritime mobile communications, INTELSAT business service and bureau fax and t-fax services. Tata Communications also provides internet access, electronic mail and electronic data interchange services.

Telecom Italia S.p.A., through subsidiaries, offers fixed line and mobile telephone and data transmission services in Italy and abroad.  The Company offers local and long-distance telephone, satellite communications, Internet access, and teleconferencing services.

Telefonica Deutschland Holding AG provides telecommunications services in Germany. The Company offers fixed-line and mobile telephone, Internet, and data transmission services to residential and corporate customers.

Telekom Austria AG offers telecommunications services.  The Company offers fixed -line and mobile telephone, Internet access, and data transmission services. Telekom Austria also offers Internet access and mobile services in Liechtenstein , Slovenia, Bulgaria, Belarus and Croatia.

Hellenic Telecommunications Organization S.A. (OTE S.A.) provides telecommunications services. The Company offers fixed-line television and mobile telecommunication services including voice, broadband, data and leased lines. OTE S.A. serves the audio-visual, communications, industrial, and residential industries as well as public customers.

Turk Telekomunikasyon A.S. is an integrated telecommunications services provider for businesses and individuals. The Company offers land and mobile telecommunications solutions, as well as Internet services.

True Corporation PCL is an integrated telecommunications provider. The Company offers a wide range of voice, video, and data services, including dial-up and broadband Internet services, pay television, fixed-line phone, online games, and mobile phone services.

HKT Trust and HKT Ltd trade together as a stapled security.  HKT Ltd provides telecommunications services.  The Company's business provides telecommunications products and services including local telephony services, local data and broadband services, international telecommunications services, and other services.

Spark New Zealand Limited (formerly Telecom Corporation of New Zealand Limited) provides digital communications, entertainment and IT services over its networks and the Cloud to New Zealanders and businesses. The Company's strategy is focused on mobility, data and effortless service, and cost.

KT Corporation provides telecommunication services including local, long distance, and international calling, satellite communication, data transmission, and wireless telephone services in South Korea.  The Company also offers network portal and high-speed Internet access services using asymmetric digital subscriber lines (ADSLs).

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KT Corp (030200 KS)

SK Telecom (017670 KS): Foreign Room & Passive Inflows

SK Telecom's foreign room is over 16% and the stock could see passive buying (and pre-positioning). Foreigners have resumed buying and the stock...

Brian Freitas

Millie's Library IPO Analysis

Millie's Library is trying to complete its IPO again in September 2023, after a failed attempt in November 2022. The company lowered the IPO price...

Douglas Kim

Insiders Selling at Ecopro BM and Kum Yang

Ecopro BM (247540 KS) and Kum Yang (001570 KS)'s shares are down 2.5% and 4.5%, respectively today, driven by news of insiders at these companies...

Douglas Kim

SK Telecom (017670 KS): Foreign Room Increase Has Implications

Foreign investors have sold SK Tel for over a year leading to foreign room moving from 0% to nearly 15%. Crossing the 15% threshold could lead to...

Brian Freitas

The Rise of the Fourth Telco in Korea - Breaking the Oligopoly

The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three...

Douglas Kim

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