Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>The Korean government has initiated the M&amp;A privatization of HMM, the largest container shipping company in Korea. </li>
<li>We are Negative on the shares of HMM Co., Ltd. (011200 KS) in the next 6-12 months. We expect additional 20% to 30%+ downside risk on HMM in this period.</li>
<li>Although HMM has a strong balance sheet, more investors are likely to emphasize on the negatives including excessive share dilution risk and worsening environment for the global shipping industry.</li>
</ul>


The Korean government has initiated the M&amp;A privatization of HMM, the largest container shipping company in Korea. 
We are Negative on the shares of HMM Co., Ltd. (011200 KS) in the next 6-12 months. We expect additional 20% to 30%+ downside risk on HMM in this period.
Although HMM has a strong balance sheet, more investors are likely to emphasize on the negatives including excessive share dilution risk and worsening environment for the global shipping industry.


Privatization of HMM: Enormous Shares Dilution Risk

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<ul>
<li>A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.</li>
<li>Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.</li>
<li>Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.</li>
</ul>


A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.
Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.
Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.


Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries

Quantitative Analysis

<ul>
<li>In this insight, we discuss using Smartkarma's new feature called Smart Score Screener to screen alpha generating stocks in Korea.</li>
<li>There are five major components of the Smart Score Screener including 1) Value, 2) Dividends, 3) Growth, 4) Resilience, and 5) Momentum.</li>
<li>In addition to these five major components, the Smart Score Screener also includes Country, Sector, and Market Cap breakdowns. There is also a Score section which provides cumulative scores. </li>
</ul>


In this insight, we discuss using Smartkarma's new feature called Smart Score Screener to screen alpha generating stocks in Korea.
There are five major components of the Smart Score Screener including 1) Value, 2) Dividends, 3) Growth, 4) Resilience, and 5) Momentum.
In addition to these five major components, the Smart Score Screener also includes Country, Sector, and Market Cap breakdowns. There is also a Score section which provides cumulative scores. 


Using Smartkarma's Smart Score Screener to Screen Alpha Generating Stocks in Korea

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<ul>
<li>Spot container rates have surged, owing to conflict near Red Sea / Suez Canal</li>
<li>On top of higher spot rates, imposition of new fees also boosting carrier revenue</li>
<li>Evergreen's average monthly US$ revenue <em>increased</em> from Q123 to Q423</li>
</ul>


Spot container rates have surged, owing to conflict near Red Sea / Suez Canal
On top of higher spot rates, imposition of new fees also boosting carrier revenue
Evergreen's average monthly US$ revenue increased from Q123 to Q423


Spot Container Rates Surge | New Fees Also Boosting Carrier Revenue | Increases Could Lift '24 Rates

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

Korea Stock Exchange KOSPI 200 / Event-Driven

<ul>
<li>Korea banned all short selling in March 2020 and resumed short selling only on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> index constituents in May 2021.</li>
<li>News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.</li>
<li>There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.</li>
</ul>


Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.


Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

South Korea

Pan Ocean Co., Ltd. is a Korean shipping company that engages in marine transportation business. The Company provides bulk cargo carrier, pure car and truck carrier, container and tanker services.

Korea Line Corporation (KLC) owns and operates a fleet of vessels that carry bulk cargo, such as iron core, coal, hot coils, and liquefied natural gas (LNG). The Company provides exclusive lines for Pohang Iron & Steel, Korea Gas, and Korea Electric under long term contracts.  KLC also offers tramp services, and transports grain, sugar, logs, minerals, and steel products.

Heung-A Shipping Co., Ltd. provides shipping trade services.  The Company also provides chemical tankers to transport petrochemicals in areas that includes Japan, Taiwan, China, and Southeast Asian regions.

KSS LINE LTD provides marine transportation services.  The Company mainly transports items such as gas and chemical products.  KSS LINE provides worldwide gas product transportation, Far East and South East Asia area for chemical product shipping.

Eusu Holdings Co., Ltd. is a holding company, which operates marine transportation services such as container service, bulk service, terminal service, and ship lease.

Korean Air Lines Co., Ltd. operates air transportation services.  The Company's services include passenger and cargo transportation, aircraft maintenance, and air catering.  Korean Air Lines provides domestic and international airline services.

Hyundai Glovis Co., Ltd. provides domestic and international logistic services. The Company's services include domestic transportation, storage, packaging, vehicle logistic, and logistic consulting.  GLOVIS also runs automobile auction market for used vehicle.

Hanjin KAL Corporation is a holding company. The Company, through its subsidiaries, engages in airline, hotel, and travel related services. Hanjin also invests in real estates.

Sun Kwang Co., Ltd. provides harbor loading and unloading, general and hard goods transportation, warehouse, cargo handling, container handling, and stevedoring services.  The Company also extracts and sells sea sand for ready mixed concrete manufacturing.

CJ Logistics Corporation provides logistics services. The Company provides land transportation, maritime transportation, harbor unloading, cargo storage, international logistics processing, and other services. CJ Logistics also provides internet home shopping services. CJ Logistics serves customers worldwide.

Orient Overseas International Ltd, through its subsidiaries, owns and leases ships, operates terminals, and provides freight forwarding and container transportation services.  The Company also develops and invests in properties, leases equipment, and invests in securities.

Kirby Corporation operates a fleet of inland tank barges.  The Company transports industrial chemicals, refined petroleum products, black oil products, and agricultural chemicals.  Kirby also overhauls and services diesel engines employed in marine, power generation, and rail applications.

Kawasaki Kisen Kaisha, Ltd. operates marine cargo and passenger transportation around the world.  The Company provides ocean liner, bulk carrier, car carrier, unscheduled specialized carrier, and energy transportation services. The Company also offers insurance, warehousing, and land transportation services.  Items transported include automobile, grain, petroleum, coal, iron ore, and wood chip.

MISC Berhad owns ships and operates shipping and related services. Through its subsidiaries, the Company provides trucking, warehousing and forwarding service, containers and prime movers repair, and container haulage. MISC Berhad also has operation in trucking and launch operator.

Yang Ming Marine Transport provides transportation services and handles domestic and foreign maritime services on cargos.  The Company also operates warehouse, wharf, tug, barge, and container freight station services as well as repairs, leases, and sells containers and chassis.

Wan Hai Lines Ltd. provides marine transportation and shipping agent services. The Company also purchases, sells, and leases vessels and containers as well as operates container freight stations.

SITC International Holdings Company Ltd. offers marine shipping services.  The Company offers container liner shipping, freight forwarding, customs clearance, shipping agency, and ship brokerage services.  SITC operates in Asia.

Evergreen Marine Corp. (Taiwan) Ltd. transports freight by ships. The Company operates container ships to move freight throughout the world. Evergreen Marine has interests in terminals, airline operations and motor freight transportation, as well as container manufacturing.

Mitsui O.S.K. Lines, Ltd. provides marine transportation, warehousing, and cargo handling services.  The Company operates container ship, specialized carrier, oil tankers, and ferry.  Items transported include coal, iron ore, grain, logs, aluminum, cement, industrial salt, copper ore, wood chips, paper products, chemical products, gasoline and other petroleum products, LPG, and other cargoes.

COSCO SHIPPING Energy Transportation Co., Ltd. offers marine shipping services. The Company provides refined oil transportation, crude oil transportation, and other services. COSCO SHIPPING Energy Transportation also ships iron ores, dry bulks, coal, and other products.

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)

Cosco Shipping Energy Transportation Co. Ltd. (H)

HMM Co., Ltd. provides marine transportation services.  The Company commands different types of vessels including full container vessels, oil tankers, car carriers, LNG carriers, bulk carriers, and tramps.

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HMM Co., Ltd. (011200 KS)

Privatization of HMM: Enormous Shares Dilution Risk

The Korean government has initiated the privatization of HMM, the largest container shipping company in Korea. We are Negative on the shares of HMM...

Douglas Kim

Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries

A high-ranking official confirmed that tax cut incentives for the value-up program will be unveiled by the end of this month. This post...

Sanghyun Park

Using Smartkarma's Smart Score Screener to Screen Alpha Generating Stocks in Korea

In this insight, we discuss using Smartkarma's new feature called Smart Score Screener to screen alpha generating stocks in Korea.

Douglas Kim

Spot Container Rates Surge | New Fees Also Boosting Carrier Revenue | Increases Could Lift '24 Rates

Spot container rates have surged, and carriers are also benefitting from newly-imposed ancillary charges. It's possible the ongoing conflict in the...

Tracking Traffic

Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Media reports indicate that there could be a temporary short sell ban in Korea. This could lead to futures backwardation, market manipulation and a...

Brian Freitas

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