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.

Event-Driven

<p>Korea Development Bank Chairman Lee Dong-geol confirmed that KDB would convert ₩300B worth of HMM convertible bonds into stocks. Chairman Lee said that if KDB gave up profits through CB conversion, it would be a breach of trust. However, Chairman Lee did not say much about the sale of HMM.</p><h2>Shareholding dilution</h2><p>The one that Chairman Lee is talking about is the 190th unsecured privately held convertible bond having maturity on June 30. The par value is ₩300.0B, but the conversion price is ₩5,000 (only about one-tenth of the current share price), translating into 60M ordinary shares.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Outstanding convertible bonds"}'>The 190th unsecured privately held convertible bond</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Maturity"}'>Maturity</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"2021.06.30"}'>2021.06.30</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Par value"}'><strong>Par value</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":300}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=300000000000/1000000000"><strong>₩300.0B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Conversion price"}'><strong>Conversion price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'><strong>₩5,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Convertible shares"}'><strong>Convertible shares</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>60,000,000 shares</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><div>
<p>Shareholding dilution should inevitably follow. The outstanding shares will rise by 17.4%, with a shareholding dilution of 14.8%. KDB's controlling stake will increase to 25.0%.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"HMM shareholding"}'>Shareholding</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Current"}'>Current</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Full conversion"}'>Full conversion</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KDB"}'><strong>KDB</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1193}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>11.93%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2496}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>24.96%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Ocean Business Corporation"}'>Korea Ocean Business Corporation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0404}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>4.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0344}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>3.44%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Credit Guarantee Fund"}'>Korea Credit Guarantee Fund</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.071}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>7.10%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0605}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>6.05%</td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: KRX FIND"}'>Source: KRX FIND</td></tr>
</tbody>
</table>
<h2>New share listing date</h2>
<p>Korea applies a 15-day delay listing system for convertible bonds that are converted into stocks.</p>
<ul>
<li>Convertible bonds converted into stocks from the 1st to the 15th of every month are listed at the end of the month.</li>
<li>Similarly, convertible bonds exercised between the 16th and 31st of each month are listed on the 15th of the following month.</li>
</ul>
<p>KDB's 190th unsecured privately held convertible bond has an exercise period of 2017.12.18~2021.06.29. But KDB has yet to convert any of these convertible bonds. <strong>So, assuming that KDB converts all of them on June 29, these newly converted stocks will get listed on July 15</strong>.</p>
</div><div>
<h2>Float reduction</h2>
<p>The controlling stake now being at 25% leads to a 12.39%p reduction in the free-float rate. The float after a full conversion falls to 71.30%.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"HMM shareholding"}'>Float reduction</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Current"}'>Current</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Full conversion"}'>Full conversion</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KDB"}'>Non-float</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1193}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>16.31%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2496}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>28.70%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Ocean Business Corporation"}'><strong>Float</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0404}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>83.69%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0344}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>71.30%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Credit Guarantee Fund"}'><strong> - Reduction</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.071}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>-</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0605}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>12.39%p</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: KRX FIND"}'>Source: KRX FIND</td></tr>
</tbody>
</table>
<div>
<br><br>
</div>
</div>

Korea Development Bank Chairman Lee Dong-geol confirmed that KDB would convert ₩300B worth of HMM convertible bonds into stocks. Chairman Lee said that if KDB gave up profits through CB conversion, it would be a breach of trust. However, Chairman Lee did not say much about the sale of HMM.Shareholding dilutionThe one that Chairman Lee is talking about is the 190th unsecured privately held convertible bond having maturity on June 30. The par value is ₩300.0B, but the conversion price is ₩5,000 (only about one-tenth of the current share price), translating into 60M ordinary shares.





The 190th unsecured privately held convertible bond

Maturity
2021.06.30


Par value
₩300.0B


Conversion price
₩5,000


Convertible shares
60,000,000 shares

Source: DART


Shareholding dilution should inevitably follow. The outstanding shares will rise by 17.4%, with a shareholding dilution of 14.8%. KDB's controlling stake will increase to 25.0%.








Shareholding
Current
Full conversion


KDB
11.93%
24.96%


Korea Ocean Business Corporation
4.04%
3.44%


Korea Credit Guarantee Fund
7.10%
6.05%

Source: KRX FIND


New share listing date
Korea applies a 15-day delay listing system for convertible bonds that are converted into stocks.

Convertible bonds converted into stocks from the 1st to the 15th of every month are listed at the end of the month.
Similarly, convertible bonds exercised between the 16th and 31st of each month are listed on the 15th of the following month.

KDB's 190th unsecured privately held convertible bond has an exercise period of 2017.12.18~2021.06.29. But KDB has yet to convert any of these convertible bonds. So, assuming that KDB converts all of them on June 29, these newly converted stocks will get listed on July 15.

Float reduction
The controlling stake now being at 25% leads to a 12.39%p reduction in the free-float rate. The float after a full conversion falls to 71.30%.








Float reduction
Current
Full conversion


Non-float
16.31%
28.70%


Float
83.69%
71.30%


 - Reduction
-
12.39%p

Source: KRX FIND



  



HMM CB Conversion Is Official: New Share Listing Schedule & KOSPI 200 Corporate Actions

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a> and <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>. Shorts increased in the Consumer Discretionary and Health Care sectors, while decreasing in Financials and Industrials sectors.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a>, <a href="https://www.smartkarma.com/entities/hulic-co-ltd" target="_blank" data-smartkarma-citation="entities:388:1" rel="noopener">Hulic Co Ltd (3003 JP)</a> and <a href="https://www.smartkarma.com/entities/japan-prime-realty-investmen" target="_blank" data-smartkarma-citation="entities:495:1" rel="noopener">Japan Prime Realty Investmen (8955 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/inpex-corp" target="_blank" data-smartkarma-citation="entities:20665:1" rel="noopener">Inpex Corp (1605 JP)</a>, <a href="https://www.smartkarma.com/entities/casio-computer-co-ltd" target="_blank" data-smartkarma-citation="entities:18338:1" rel="noopener">Casio Computer (6952 JP)</a>, <a href="https://www.smartkarma.com/entities/showa-denko-k-k" target="_blank" data-smartkarma-citation="entities:1496:1" rel="noopener">Showa Denko K.K. (4004 JP)</a> and <a href="https://www.smartkarma.com/entities/medley-inc" target="_blank" data-smartkarma-citation="entities:31041:1" rel="noopener">Medley (4480 JP)</a>. Shorts increased on Consumer Staples, Real Estate and Communication Services, while reducing on Industrials, Energy and Consumer Discretionary names.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> and <a href="https://www.smartkarma.com/entities/hanwha-solutions" target="_blank" data-smartkarma-citation="entities:8656:1" rel="noopener">Hanwha Solutions (009830 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a>, <a href="https://www.smartkarma.com/entities/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a>, <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a> and <a href="https://www.smartkarma.com/entities/hannstar-display-corp" target="_blank" data-smartkarma-citation="entities:13922:1" rel="noopener">Hannstar Display (6116 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/china-airlines-ltd" target="_blank" data-smartkarma-citation="entities:4591:1" rel="noopener">China Airlines (2610 TT)</a>, <a href="https://www.smartkarma.com/entities/fitipower-integrated-technology-inc" target="_blank" data-smartkarma-citation="entities:8712:1" rel="noopener">Fitipower Integrated Technology (4961 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> and <a href="https://www.smartkarma.com/entities/ase-technology-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:27270:1" rel="noopener">ASE Technology Holding Co Ltd (3711 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Meituan (3690 HK), JD Health (6618 HK), Kuaishou Technology (1024 HK), Smoore International (6969 HK) and Microport Scientific (853 HK) while there was short covering on Ping An Insurance (H) (2318 HK), AIA Group Ltd (1299 HK), Tencent (700 HK), Sunny Optical (2382 HK) and HSBC Holdings (5 HK). Shorts increased in the Consumer Discretionary and Health Care sectors, while decreasing in Financials and Industrials sectors.In Japan, stocks increased on Kirin Holdings (2503 JP), Nippon Building Fund (8951 JP), NTT (Nippon Telegraph &amp; Telephone) (9432 JP), Hulic Co Ltd (3003 JP) and Japan Prime Realty Investmen (8955 JP) while there was short covering on Toshiba Corp (6502 JP), Inpex Corp (1605 JP), Casio Computer (6952 JP), Showa Denko K.K. (4004 JP) and Medley (4480 JP). Shorts increased on Consumer Staples, Real Estate and Communication Services, while reducing on Industrials, Energy and Consumer Discretionary names.In Korea, shorts increased on HMM Co., Ltd. (011200 KS), Doosan Heavy Industries &amp; Construction (034020 KS), LG Display (034220 KS) and Hanwha Solutions (009830 KS) while shorts were covered on Samsung Electronics (005930 KS), Naver Corp (035420 KS), SK Hynix (000660 KS) and LG Chem Ltd (051910 KS).In Taiwan, shorts increased on Asustek Computer (2357 TT), Unimicron Technology (3037 TT), Nanya Technology (2408 TT), Innolux Corp (3481 TT) and Hannstar Display (6116 TT) while shorts covered on Evergreen Marine Corp (2603 TT), China Airlines (2610 TT), Fitipower Integrated Technology (4961 TT), Mediatek Inc (2454 TT) and ASE Technology Holding Co Ltd (3711 TT).

Asia Shorts: Meituan, JDH, Smoore, Ping An, Kirin, NTT, Toshiba, HMM, Doosan, LGD, Hanwha, Evergreen

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>In this insight, we discuss the details of the <a href="https://www.smartkarma.com/entities/korea-line-corp" target="_blank" data-smartkarma-citation="entities:12965:1" rel="noopener">Korea Line Corp (005880 KS)</a> (SM Korea Line) rights offering details and potential trading opportunities. It currently has a market cap of 843 billion won ($730 million). The rights offering price has been confirmed to be 2,490 won. Its current price is 3,365 won so the current price is 35% higher than the rights offering price. The new shares listing date is on June 30, 2021. </p><div class="content-highlight">
<h2>Conclusion</h2>
<p>Overall, we have a positive view on the rights offering and post share price expectation after the new shares are listed. The global shipping market is clearly turning around and there are numerous evidences of <a href="https://www.hillebrand.com/media/publication/where-are-all-the-containers-the-global-shortage-explained" target="_blank" rel="noopener">shipping shortages</a> which should benefit companies such as SM Korea Lines.</p>
<p>It also appears that these shortages may be more longer lasting (several more quarters) before the supply/demand of the shipping services are more in balance. As such, we are bullish on this stock in the near term (3-6 months). Plus, we like the company's efforts to improve its balance sheet with the offering proceeds. </p>
</div>

In this insight, we discuss the details of the Korea Line Corp (005880 KS) (SM Korea Line) rights offering details and potential trading opportunities. It currently has a market cap of 843 billion won ($730 million). The rights offering price has been confirmed to be 2,490 won. Its current price is 3,365 won so the current price is 35% higher than the rights offering price. The new shares listing date is on June 30, 2021. 
Conclusion
Overall, we have a positive view on the rights offering and post share price expectation after the new shares are listed. The global shipping market is clearly turning around and there are numerous evidences of shipping shortages which should benefit companies such as SM Korea Lines.
It also appears that these shortages may be more longer lasting (several more quarters) before the supply/demand of the shipping services are more in balance. As such, we are bullish on this stock in the near term (3-6 months). Plus, we like the company's efforts to improve its balance sheet with the offering proceeds. 


SM Korea Line Rights Offering & Trading Opportunities

<p><a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener"></a>HMM is down +5% this morning on the concern that KDB will likely convert the CBs into stocks at maturity on June 30, causing a potential overhang in the market.</p><p>The one getting the market attention is the 190th unsecured privately held convertible bond. The bondholder is KDB, and the maturity is June 30. The par value is ₩300.0B, but the conversion price is a mere ₩5,000, translating into 60M ordinary shares.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Outstanding convertible bonds"}'>Outstanding convertible bonds</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td data-sheets-value='{"1":2,"2":"The 190th unsecured privately held convertible bond\nPrivate Equity Convertible Bonds"}'>The 190th unsecured privately held convertible bond</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bondholder"}'>Bondholder</td>
<td data-sheets-value='{"1":2,"2":"KDB"}'>KDB</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Issuance date"}'>Issuance date</td>
<td data-sheets-value='{"1":2,"2":"2016.12.19"}'>2016.12.19</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Maturity"}'><strong>Maturity</strong></td>
<td data-sheets-value='{"1":2,"2":"2021.06.30"}'><strong>2021.06.30</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Par value"}'>Par value</td>
<td data-sheets-value='{"1":3,"3":300}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=300000000000/1000000000">₩300.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Conversion target share type"}'>Conversion target share type</td>
<td data-sheets-value='{"1":2,"2":"Ordinary share"}'>Ordinary share</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Conversion rate"}'>Conversion rate</td>
<td data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>100.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Conversion price"}'><strong>Conversion price</strong></td>
<td data-sheets-value='{"1":3,"3":5000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'><strong>₩5,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Convertible shares"}'><strong>Convertible shares</strong></td>
<td data-sheets-value='{"1":3,"3":60000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>60,000,000</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>KDB isn't saying anything about whether to convert these bonds into stocks on June 30. If not converted, KDB will get back the original investment with a 3% interest. It'd surely be insane to give up on a 7~8x return if converted into stocks for ₩5,000 at the current price of ₩43,000.</p><p>If fully converted, which is very likely at this point, the outstanding shares will rise by 17.37%, and KDB's shareholding will increase to 24.96%.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="80">
<col width="80">
<col width="80">
<col width="80">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"HMM shareholding"}'>HMM shareholding</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Current"}'>Current</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shareholding %"}'>Shareholding %</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"After fully converted"}'>After fully converted</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shareholding %"}'>Shareholding %</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KDB"}'>KDB</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":41199297}'>41,199,297</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.11928255115751837}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">11.93%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":101199297}' data-sheets-formula="=(R[0]C[-2]+List!R[8]C[-2])">101,199,297</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.24963288725180544}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>24.96%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Executives"}'>Executives</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":155225}'>155,225</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0004494162607538131}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">0.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":155225}' data-sheets-formula="=R[0]C[-2]">155,225</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.00038290053461202895}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>0.04%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1038396}'>1,038,396</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0030064232404684588}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">0.30%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1038396}' data-sheets-formula="=R[0]C[-2]">1,038,396</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0025614584218971973}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>0.26%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Ocean Business Corporation"}'>Korea Ocean Business Corporation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13943850}'>13,943,850</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.040371028684245816}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">4.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13943850}' data-sheets-formula="=R[0]C[-2]">13,943,850</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.034395926039941634}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>3.44%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Credit Guarantee Fund"}'>Korea Credit Guarantee Fund</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":24527807}'>24,527,807</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.07101430379404865}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">7.10%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":24527807}' data-sheets-formula="=R[0]C[-2]">24,527,807</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.060503851912776074}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>6.05%</strong></td>
</tr>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Source: KRX FIND"}'>Source: KRX FIND</td></tr>
</tbody>
</table>

HMM is down +5% this morning on the concern that KDB will likely convert the CBs into stocks at maturity on June 30, causing a potential overhang in the market.The one getting the market attention is the 190th unsecured privately held convertible bond. The bondholder is KDB, and the maturity is June 30. The par value is ₩300.0B, but the conversion price is a mere ₩5,000, translating into 60M ordinary shares.





Outstanding convertible bonds

Type
The 190th unsecured privately held convertible bond


Bondholder
KDB


Issuance date
2016.12.19


Maturity
2021.06.30


Par value
₩300.0B


Conversion target share type
Ordinary share


Conversion rate
100.00%


Conversion price
₩5,000


Convertible shares
60,000,000

Source: DART

KDB isn't saying anything about whether to convert these bonds into stocks on June 30. If not converted, KDB will get back the original investment with a 3% interest. It'd surely be insane to give up on a 7~8x return if converted into stocks for ₩5,000 at the current price of ₩43,000.If fully converted, which is very likely at this point, the outstanding shares will rise by 17.37%, and KDB's shareholding will increase to 24.96%.









HMM shareholding
Current
Shareholding %
After fully converted
Shareholding %


KDB
41,199,297
11.93%
101,199,297
24.96%


Executives
155,225
0.04%
155,225
0.04%


Treasury shares
1,038,396
0.30%
1,038,396
0.26%


Korea Ocean Business Corporation
13,943,850
4.04%
13,943,850
3.44%


Korea Credit Guarantee Fund
24,527,807
7.10%
24,527,807
6.05%

Source: KRX FIND



HMM CB Conversion on June 30: Shareholding Dilution & Float Reduction Risks

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> and <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a>, <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> and <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a>. Shorts increased in the Consumer Discretionary and Industrials sectors, while decreasing in Financials, Information Technology, Energy and Real Estate.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/pharma-foods-international" target="_blank" data-smartkarma-citation="entities:10530:1" rel="noopener">Pharma Foods International (2929 JP)</a>, <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-yusen-kk" target="_blank" data-smartkarma-citation="entities:12285:1" rel="noopener">Nippon Yusen Kk (9101 JP)</a>, <a href="https://www.smartkarma.com/entities/ebara-corp" target="_blank" data-smartkarma-citation="entities:4728:1" rel="noopener">Ebara Corp (6361 JP)</a> and <a href="https://www.smartkarma.com/entities/skylark-co-ltd" target="_blank" data-smartkarma-citation="entities:474:1" rel="noopener">Skylark Co Ltd (3197 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/kyushu-railway-company" target="_blank" data-smartkarma-citation="entities:23609:1" rel="noopener">Kyushu Railway Company (9142 JP)</a>, <a href="https://www.smartkarma.com/entities/marui-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13604:1" rel="noopener">Marui Group (8252 JP)</a>, <a href="https://www.smartkarma.com/entities/chugoku-electric-power-co" target="_blank" data-smartkarma-citation="entities:16243:1" rel="noopener">Chugoku Electric Power Co (9504 JP)</a>, <a href="https://www.smartkarma.com/entities/keihan-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:6120:1" rel="noopener">Keihan Holdings Co., Ltd. (9045 JP)</a> and <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>. Shorts decreased in almost all sectors led by Industrials, Materials, Consumer Discretionary, Financials and Consumer Staples.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/posco-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12421:1" rel="noopener">Posco Chemical Co Ltd (003670 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a> and <a href="https://www.smartkarma.com/entities/hannstar-display-corp" target="_blank" data-smartkarma-citation="entities:13922:1" rel="noopener">Hannstar Display (6116 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/chicony-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:13085:1" rel="noopener">Chicony Electronics (2385 TT)</a>, <a href="https://www.smartkarma.com/entities/chunghwa-telecom-co-ltd" target="_blank" data-smartkarma-citation="entities:9181:1" rel="noopener">Chunghwa Telecom (2412 TT)</a>, <a href="https://www.smartkarma.com/entities/highwealth-construction-corp" target="_blank" data-smartkarma-citation="entities:6739:1" rel="noopener">Highwealth Construction (2542 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> and <a href="https://www.smartkarma.com/entities/quanta-computer-inc" target="_blank" data-smartkarma-citation="entities:2754:1" rel="noopener">Quanta Computer (2382 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Alibaba Group (9988 HK), Ping An Insurance (H) (2318 HK)Kuaishou Technology (1024 HK), Country Garden Services Holdings (6098 HK) and Chow Tai Fook Jewellery (1929 HK) while there was short covering on ICBC (H) (1398 HK), ASM Pacific Technology (522 HK), Tencent (700 HK), PCCW Ltd (8 HK) and Sunny Optical (2382 HK). Shorts increased in the Consumer Discretionary and Industrials sectors, while decreasing in Financials, Information Technology, Energy and Real Estate.In Japan, stocks increased on Pharma Foods International (2929 JP), CyberAgent Inc (4751 JP), Nippon Yusen Kk (9101 JP), Ebara Corp (6361 JP) and Skylark Co Ltd (3197 JP) while there was short covering on Kyushu Railway Company (9142 JP), Marui Group (8252 JP), Chugoku Electric Power Co (9504 JP), Keihan Holdings Co., Ltd. (9045 JP) and Canon Inc (7751 JP). Shorts decreased in almost all sectors led by Industrials, Materials, Consumer Discretionary, Financials and Consumer Staples.In Korea, shorts increased on HMM Co., Ltd. (011200 KS), Doosan Heavy Industries &amp; Construction (034020 KS), LG Chem Ltd (051910 KS) and Posco Chemical Co Ltd (003670 KS) while shorts were covered on Hyundai Motor Co (005380 KS), Samsung Electronics (005930 KS), SK Hynix (000660 KS) and Naver Corp (035420 KS).In Taiwan, shorts increased on AU Optronics (2409 TT), Yageo Corporation (2327 TT), Innolux Corp (3481 TT), Yang Ming Marine Transport (2609 TT) and Hannstar Display (6116 TT) while shorts covered on Chicony Electronics (2385 TT), Chunghwa Telecom (2412 TT), Highwealth Construction (2542 TT), Mediatek Inc (2454 TT) and Quanta Computer (2382 TT).

Asia Shorts: CGS, CTF, ASM Pac, PCCW, KyushuRail, Marui, HMM, Doosan, LG Chem, HMC, Yang Ming

South Korea

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.

Price Gauge
52-week Range	0.00 - 0.00
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HMM Co., Ltd. (011200 KS)

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