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

<ul>
<li>Hanssem announced a new shareholder return policy: <strong>1. raised the minimum dividend payout ratio to 50%, 2. quarterly dividend starting next year, and 3. ₩60B worth of share buyback </strong>
</li>
<li>
<strong>IMM PE needed a way to raise the share price for the acquisition financing.</strong> For this, it introduced a remarkably improved shareholder return policy, which is virtually the only card.</li>
<li>If the stock price does not rise as expected, <strong>the uncertainty issue</strong> of financing the acquisition may rise again above the water. It <strong>may then open up a shorting opportunity.</strong>
</li>
</ul>


Hanssem announced a new shareholder return policy: 1. raised the minimum dividend payout ratio to 50%, 2. quarterly dividend starting next year, and 3. ₩60B worth of share buyback 


IMM PE needed a way to raise the share price for the acquisition financing. For this, it introduced a remarkably improved shareholder return policy, which is virtually the only card.
If the stock price does not rise as expected, the uncertainty issue of financing the acquisition may rise again above the water. It may then open up a shorting opportunity.



Hanssem Situation Checkup Amid a New Shareholder Return Policy

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>After the market close today, Hanssem, one of the largest furniture companies in Korea, announced that it will conduct a share buyback worth 60 billion won and raise dividend payouts.</li>
<li>Hanssem will start to provide quarterly dividend payments starting 1Q 2022. A 50% dividend payout on estimated net profit of 84.7 billion won would be 1,800 won in DPS.</li>
<li>The combination of share buyback, higher dividend payouts, and a change to quarterly dividend payments is likely to result in positive capital inflow to Hanssem. </li>
</ul>


After the market close today, Hanssem, one of the largest furniture companies in Korea, announced that it will conduct a share buyback worth 60 billion won and raise dividend payouts.
Hanssem will start to provide quarterly dividend payments starting 1Q 2022. A 50% dividend payout on estimated net profit of 84.7 billion won would be 1,800 won in DPS.
The combination of share buyback, higher dividend payouts, and a change to quarterly dividend payments is likely to result in positive capital inflow to Hanssem. 


Hanssem - Share Buyback Worth 60 Billion Won, Higher Dividend Payout, & Teton Capital Going Active

<p>One noteworthy news came out on Hanssem. One of Korea's local first-tier economic newspapers, Seoul Economic Daily, put out an exclusive report after the market closed on Monday, precisely at 4:50 pm local time. The report says that IMM Private Equity, which will acquire a 27.7% stake held by Hanssem's major shareholder, has decided to cancel Hanssem's treasury stock (26.7%) after the acquisition.</p><p><a href="https://signalm.sedaily.com/NewsView/22RMLWH489/GX1101" target="_blank" rel="noopener">Here is the link to the news report by Seoul Economic Daily.</a></p><div class="content-highlight"><p>Hanssem currently has <strong>6,274,504 treasury shares</strong>, representing <strong>26.66%</strong> of the shares outstanding.</p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/124/original/1.png?1632755230" class="editor-image img-responsive" data-smartkarma-image-id="232124"></figure></section><div class="content-caption">(Source: FnGuide)</div><p>This news flowed into the market around 5 pm and made some impact in the after-hours single-price trading window. The share closed with a 0.84% gain during the regular trading hours and enjoyed an additional 3%p increase in the last 30 minutes of the after-hours single-price trading window. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/125/original/2.png?1632756022" class="editor-image img-responsive" data-smartkarma-image-id="232125"></figure></section><div class="content-caption">(Source: Shinhan HTS)</div><p>However, as the number of shares traded during this after-hours trading window was less than 3,000, it is still too early to accurately estimate the impact this news will have on the share price in the short term.</p>

One noteworthy news came out on Hanssem. One of Korea's local first-tier economic newspapers, Seoul Economic Daily, put out an exclusive report after the market closed on Monday, precisely at 4:50 pm local time. The report says that IMM Private Equity, which will acquire a 27.7% stake held by Hanssem's major shareholder, has decided to cancel Hanssem's treasury stock (26.7%) after the acquisition.Here is the link to the news report by Seoul Economic Daily.Hanssem currently has 6,274,504 treasury shares, representing 26.66% of the shares outstanding.(Source: FnGuide)This news flowed into the market around 5 pm and made some impact in the after-hours single-price trading window. The share closed with a 0.84% gain during the regular trading hours and enjoyed an additional 3%p increase in the last 30 minutes of the after-hours single-price trading window. (Source: Shinhan HTS)However, as the number of shares traded during this after-hours trading window was less than 3,000, it is still too early to accurately estimate the impact this news will have on the share price in the short term.

IMM PE Has Reportedly Decided to Cancel Hanssem's 26.7% Treasury Shares

<p>For those who aren't familiar with this Hanssem deal, here is a quick summary:</p><ul>
<li><strong>In July, Hanssem's major shareholder signed an MOU to sell a 30.21% stake to IMM PE for 1.5 trillion won.</strong></li>
<li><strong>And Lotte Shopping will participate as a strategic investor (SI) by investing 299.5 billion won in a fund created by IMM PE for the acquisition.</strong></li>
</ul><section class="figure"><hr>
<p><a href="https://www.koreatimes.co.kr/www/biz/2021/07/602_312155.html" target="_blank" rel="noopener">Here is the link to the news article about the MOU (source: Korea Times). </a></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/771/original/Screen+Shot+2021-09-14+at+1.03.41+PM.png?1631639045" class="editor-image img-responsive" data-smartkarma-image-id="229771"></figure></section><p><a href="https://koreajoongangdaily.joins.com/2021/09/10/business/industry/lotte-shopping-hanssem-imm/20210910193400446.html" target="_blank" rel="noopener">Here is the link to the news article about Lotte Shopping investing in the fund created by IMM PE for the acquisition (source: JoongAng Daily).</a></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/772/original/Screen+Shot+2021-09-14+at+1.06.00+PM.png?1631639174" class="editor-image img-responsive" data-smartkarma-image-id="229772"></figure></section><hr><p><strong>Now, an unexpected event occurred in this deal that was expected to be completed smoothly. Teton Capital Partners, Hanssem's second-largest shareholder, has taken legal action.</strong></p><p>Teton Capital first purchased Hanssem shares in October 2009. At that time, the stock price of Hanssem was 9,900 won. Teton expanded its stake to 5% in September 2011 and became subject to the disclosure of changes in its stake. As of the end of June this year, Teton's stake was 8.43%.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/774/original/Screen+Shot+2021-09-14+at+12.54.53+PM.png?1631639664" class="editor-image img-responsive" data-smartkarma-image-id="229774"></figure></section><p>So what are the legal actions Teton Capital has taken? The Korea Times article below summarizes this well.</p><p><a href="https://www.koreatimes.co.kr/www/biz/2021/09/175_315422.html" target="_blank" rel="noopener">Here is the link to the news article about Teton Capital taking legal actions.</a></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/775/original/Screen+Shot+2021-09-14+at+1.15.36+PM.png?1631640566" class="editor-image img-responsive" data-smartkarma-image-id="229775"></figure></section><div class="content-highlight">
<p><strong>The key reason for Teton Capital's legal action is the MANDATORY TENDER OFFER.</strong></p>
<p><strong>Yes, Teton requests the court to legally guarantee a mandatory tender offer to minority shareholders in this deal.</strong></p>
</div>

For those who aren't familiar with this Hanssem deal, here is a quick summary:
In July, Hanssem's major shareholder signed an MOU to sell a 30.21% stake to IMM PE for 1.5 trillion won.
And Lotte Shopping will participate as a strategic investor (SI) by investing 299.5 billion won in a fund created by IMM PE for the acquisition.

Here is the link to the news article about the MOU (source: Korea Times). 
Here is the link to the news article about Lotte Shopping investing in the fund created by IMM PE for the acquisition (source: JoongAng Daily).Now, an unexpected event occurred in this deal that was expected to be completed smoothly. Teton Capital Partners, Hanssem's second-largest shareholder, has taken legal action.Teton Capital first purchased Hanssem shares in October 2009. At that time, the stock price of Hanssem was 9,900 won. Teton expanded its stake to 5% in September 2011 and became subject to the disclosure of changes in its stake. As of the end of June this year, Teton's stake was 8.43%.So what are the legal actions Teton Capital has taken? The Korea Times article below summarizes this well.Here is the link to the news article about Teton Capital taking legal actions.
The key reason for Teton Capital's legal action is the MANDATORY TENDER OFFER.
Yes, Teton requests the court to legally guarantee a mandatory tender offer to minority shareholders in this deal.


Hanssem Vs. Teton Capital Partners on Mandatory Tender Offer in Korea

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Upside momentum continues to wane for global equities. Price action this week has indeed confirmed lower highs for now in the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes. These lower highs increase the probability for breakdowns and a deeper pullback, but we do not want to get ahead of ourselves. Until we see breakdowns we still view global equities as being in a period of consolidation. We outline important technical levels across markets and highlight actionable set ups within Technology, Health care and Staples.</p>

Upside momentum continues to wane for global equities. Price action this week has indeed confirmed lower highs for now in the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes. These lower highs increase the probability for breakdowns and a deeper pullback, but we do not want to get ahead of ourselves. Until we see breakdowns we still view global equities as being in a period of consolidation. We outline important technical levels across markets and highlight actionable set ups within Technology, Health care and Staples.

Global Equity Strategy: Stay Defensive With Technology, Health Care, Staples

South Korea

Hanssem Co., Ltd. manufactures kitchen furniture.  The Company's products include kitchen sinks, kitchen cabinets, dining tables and chairs, and kitchen accessories.  Hanssem also designs and manufactures interior products, such as sofas, bedsteads, closets, drawers, lamps, bathroom and office furniture.

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Hanssem Co Ltd (009240 KS)

Hanssem Situation Checkup Amid a New Shareholder Return Policy

This post examines the trading dynamics of the Hanssem situation amid the announcement of a new shareholder return policy starting next year.

Sanghyun Park

IMM PE Has Reportedly Decided to Cancel Hanssem's 26.7% Treasury Shares

IMM PE has reportedly decided to cancel Hanssem's treasury shares (26.7%). This post examines two reasons behind this decision and the dynamic we...

Sanghyun Park

Hanssem Vs. Teton Capital Partners on Mandatory Tender Offer in Korea

This post examines the very interesting case of a possible mandatory tender offer to minority shareholders in the Hanssem deal.

Sanghyun Park

Global Equity Strategy: Stay Defensive With Technology, Health Care, Staples

Upside momentum continues to wane for global equities. Price action this week has indeed confirmed lower highs for now in the MSCI ACWI, ACWI...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hanssem Situation Checkup Amid a New Shareholder Return Policy

This post examines the trading dynamics of the Hanssem situation amid the announcement of a new shareholder return policy starting next year.

Sanghyun Park

Hanssem - Share Buyback Worth 60 Billion Won, Higher Dividend Payout, & Teton Capital Going Active

After the market close today, Hanssem, one of the largest furniture companies in Korea, announced that it will conduct a share buyback worth 60...

Douglas Kim

IMM PE Has Reportedly Decided to Cancel Hanssem's 26.7% Treasury Shares

IMM PE has reportedly decided to cancel Hanssem's treasury shares (26.7%). This post examines two reasons behind this decision and the dynamic we...

Sanghyun Park

Hanssem Vs. Teton Capital Partners on Mandatory Tender Offer in Korea

This post examines the very interesting case of a possible mandatory tender offer to minority shareholders in the Hanssem deal.

Sanghyun Park

Global Equity Strategy: Stay Defensive With Technology, Health Care, Staples

Upside momentum continues to wane for global equities. Price action this week has indeed confirmed lower highs for now in the MSCI ACWI, ACWI...

Vermilion Research