Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

HD Hyundai Heavy Industries  / Equity Capital Markets

<ul>
<li>Hyundai Heavy Industries (HHI) was listed on Korea Exchange on 17th September, 2021. Its six month IPO lock-up will expire on 17th March, 2022.</li>
<li>Hyundai Heavy Industries (HHI) is a South Korean shipbuilder. The company is majority owned by Korea Shipbuilding &amp; Offshore Engineering (009540 KS) after the latter’s spin-off in 2019.</li>
<li>In this note, we will talk about the upcoming lock-up expiry, along with recent updates.</li>
</ul>


Hyundai Heavy Industries (HHI) was listed on Korea Exchange on 17th September, 2021. Its six month IPO lock-up will expire on 17th March, 2022.
Hyundai Heavy Industries (HHI) is a South Korean shipbuilder. The company is majority owned by Korea Shipbuilding &amp; Offshore Engineering (009540 KS) after the latter’s spin-off in 2019.
In this note, we will talk about the upcoming lock-up expiry, along with recent updates.


Hyundai Heavy IPO Lock-Up - Last of the Insti Lock-Ups, Parent’s Shares Out of Lock-Up as Well

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

HD Hyundai Heavy Industries  / Event-Driven

<p>Hyundai Heavy Industries' 15-trading day review period ended last Thursday, and the KRX officially announced that it would add Hyundai Heavy to the following KRX indexes. </p><div class="content-highlight"><ul>
<li>KRX 100 (equal-weighted):  Studio Dragon (25345) will be deleted.</li>
<li>KRX Sector (Machinery &amp; Equipment). No delete</li>
<li>The effective date for both indexes is December 10.</li>
</ul></div><p>As for KOSPI 200 Fast Entry, KRX said that Hyundai Heavy Industries' KOSPI 200 Fast Entry is currently under review. Its decision will be included in the notice of the December regular rebalancing results.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/235/523/original/2.png?1634401666" class="editor-image img-responsive" data-smartkarma-image-id="235523"></figure></section><p>Below is the average daily market cap of the KOSPI large-cap ordinary stocks during the 15-trading day review period from September 17 to October 14. Hyundai Heavy Industries ranks in 42nd place, making it eligible to join KOSPI 200 through Fast Entry.</p><div class="content-highlight"><p><strong>The rule is straightforward. If Hyundai Heavy stays within the top 50 by the average daily market cap among the KOSPI ordinary stocks for 15 trading days from listing, it will join KOSPI 200 through Fast Entry. So, its Fast Entry should be seen as a done deal.</strong></p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/235/524/original/1.png?1634402056" class="editor-image img-responsive" data-smartkarma-image-id="235524"></figure></section>

Hyundai Heavy Industries' 15-trading day review period ended last Thursday, and the KRX officially announced that it would add Hyundai Heavy to the following KRX indexes. 
KRX 100 (equal-weighted):  Studio Dragon (25345) will be deleted.
KRX Sector (Machinery &amp; Equipment). No delete
The effective date for both indexes is December 10.
As for KOSPI 200 Fast Entry, KRX said that Hyundai Heavy Industries' KOSPI 200 Fast Entry is currently under review. Its decision will be included in the notice of the December regular rebalancing results.Below is the average daily market cap of the KOSPI large-cap ordinary stocks during the 15-trading day review period from September 17 to October 14. Hyundai Heavy Industries ranks in 42nd place, making it eligible to join KOSPI 200 through Fast Entry.The rule is straightforward. If Hyundai Heavy stays within the top 50 by the average daily market cap among the KOSPI ordinary stocks for 15 trading days from listing, it will join KOSPI 200 through Fast Entry. So, its Fast Entry should be seen as a done deal.

KRX Made It Clear that Hyundai Heavy KOSPI 200 Fast Entry Inclusion Would Be December 10

<p>Hyundai Heavy Industries is up 14% on the previous trading day and today. Over the past five days, the share price has risen close to 19%.</p>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/778/original/2.png?1632968483" class="editor-image img-responsive" data-smartkarma-image-id="232778"></figure>
</section>
<div class="content-caption">(Source: Google Finance)</div>
<p>It seems that the leading cause is a mixture of passive trading for KOSPI 200 inclusion and also the trading aimed at this expectation.</p>
<p>In fact, among the top net buying stocks by local pension funds (National Pension Service accounts for about 80%) over the past month, Hyundai Heavy Industries ranks second only after Krafton. Local pension funds have recorded more than 150 billion won in net purchases in the past six trading days since Hyundai Heavy Industries went public.</p>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/779/original/1.png?1632968640" class="editor-image img-responsive" data-smartkarma-image-id="232779"></figure>
</section>
<div class="content-caption">(Source: KRX)</div>
<p>The market seems to be interpreting the purchase of Hyundai Heavy Industries by local pension funds as a preemptive response to the KOSPI 200 inclusion. Hyundai Heavy Industries' current market cap is ₩10.25T, ranking 41st among KOSPI common stocks. The KOSPI 200 Fast Entry is almost certain given the difference in market cap of about ₩2T from the 50th place.</p>

Hyundai Heavy Industries is up 14% on the previous trading day and today. Over the past five days, the share price has risen close to 19%.



(Source: Google Finance)
It seems that the leading cause is a mixture of passive trading for KOSPI 200 inclusion and also the trading aimed at this expectation.
In fact, among the top net buying stocks by local pension funds (National Pension Service accounts for about 80%) over the past month, Hyundai Heavy Industries ranks second only after Krafton. Local pension funds have recorded more than 150 billion won in net purchases in the past six trading days since Hyundai Heavy Industries went public.



(Source: KRX)
The market seems to be interpreting the purchase of Hyundai Heavy Industries by local pension funds as a preemptive response to the KOSPI 200 inclusion. Hyundai Heavy Industries' current market cap is ₩10.25T, ranking 41st among KOSPI common stocks. The KOSPI 200 Fast Entry is almost certain given the difference in market cap of about ₩2T from the 50th place.

Hyundai Heavy Industries: Passive Impact Timing Confusion

HD Korea Shipbuilding & Offshore Engineering / Event-Driven

HD Korea Shipbuilding & Offshore Engineering

<p>The listing of Hyundai Heavy Industries is due tomorrow, and the time has come to consider the timing of short-selling Korea Shipbuilding &amp; Offshore Engineering (KSOE) due to the holding company discount risk.</p><div class="content-highlight">
<p><strong>In general, we have often witnessed a trading pattern in which a holding company's stock price plummets when one of its major operating subsidiaries goes public.</strong></p>
<p><strong>The KSOE is also highly likely to be a target of this trading pattern.</strong></p>
</div><hr><p>KSOE is an intermediate holding company of Hyundai Heavy Industries Group, and its major subsidiaries include:</p><ul>
<li><strong>Hyundai Heavy Industries</strong></li>
<li><strong>Hyundai Mipo Dockyard</strong></li>
<li><strong>Hyundai Samho Heavy Industries</strong></li>
</ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/011/original/1.png?1631749332" class="editor-image img-responsive" data-smartkarma-image-id="230011"></figure></section><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;KSOE's major subsidiaries&quot;}">KSOE's major subsidiaries</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Stake %"}'>Stake %</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Stake value"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B"}'>Stake value</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Note"}'>Note</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Mipo Dockyard Co., Ltd."}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Hyundai Mipo Dockyard</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"010620"}' data-sheets-formula='="010620"'>010620</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.424}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>42.40%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1298.9506391992}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B"}' data-sheets-formula='=googlefinance(R[0]C[-2], "price")*googlefinance(R[0]C[-2], "shares")/1000000000*R[0]C[-1]'><strong>₩1,298.95B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Market value"}'>Market value</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Heavy Industries"}'>Hyundai Heavy Industries</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7972}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>79.72%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4246.20608}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B"}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩4,246.21B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"At the IPO price"}'>At the IPO price</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Samho Heavy Industries"}'>Hyundai Samho Heavy Industries</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8054}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>80.54%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1200.213}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00B"}'><strong>₩1,200.21B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Book value"}'>Book value</td>
</tr>
<tr><td colspan="5" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td></tr>
</tbody>
</table><p>In fact, KSOE's biggest investment point so far is that it is the only channel through which to invest in Hyundai Heavy Industries and Hyundai Samho Heavy Industries, the world's largest shipyards.</p><div class="content-highlight"><p><strong>However, after Hyundai Heavy Industries is listed, the investment points of KSOE will inevitably fade. As KSOE is an intermediate holding company of Hyundai Heavy Industries Group, dividends and brand royalties from its subsidiaries such as Hyundai Heavy Industries will likely flow into the ultimate holding company, <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-holdings" target="_blank" data-smartkarma-citation="entities:24075:1" rel="noopener">Hyundai Heavy Industries Holdings (267250 KS)</a>, making it less attractive for investment.</strong></p></div><p>Nevertheless, its discount to NAV is 7.52% based on the current share price. This is significantly lower than the 50% level of the average discount rate of local holding companies.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"NAV"}' data-sheets-note="Sang Hyun Park: Cases when a company's net cash position and the value of its publically traded interests are worth more than its market cap create the opportunity of a stub trade, in which investors can take a view that the company's core business will rise by shorting the minority stakes whilst going long the underlying. Such an opportunity has arisen in the wake of the Alibaba listing which has seen early investing company Yahoo trade at a discount to the value of its stake in Alibaba.">NAV</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of listed holdings"}'><strong>Value of listed holdings (including Hyundai Heavy Industries)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5831.62191898336}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=SUM(R[8]C[5])"><strong>₩5,831.6B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of Holdco market cap"}'>- % of Holdco market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7012666341045598}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[-1]C[0]/((R[3]C[-3]*R[0]C[-3])/1000000000)">70.13%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of unlisted holdings"}'><strong>Value of unlisted holdings (which includes Hyundai Samho Heavy Industries)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1825.212}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=SUM(R[7]C[5])"><strong>₩1,825.2B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stub value"}'>Stub value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":659.0072110166407}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=(R[1]C[-3]*R[-2]C[-3]/1000000000)-R[-3]C[0]-R[-1]C[0]">₩659.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stub value per share"}'>Stub value per share</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":9311.547212597516}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]*1000000000/R[-3]C[-3]">₩9,312</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of operating assets"}'>Value of operating assets</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=SUM(R[8]C[5])">₩0.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"GAV"}'>GAV</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7656.8339189833605}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-6]C[0]+R[-4]C[0]+R[-1]C[0]">₩7,656.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"GAV per share"}'>GAV per share</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":108277.93228902365}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]/R[4]C[-3]*1000000000">₩108,278</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Discount to GAV (excl. treasury shares)"}'>Discount to GAV (excl. treasury shares)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.08517033449031985}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-4]C[-3])/R[-1]C[0]">-8.52%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Holdco net cash/debt (de-consolidated)"}'><strong>Holdco net cash/debt (de-consolidated)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1327.7}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[5]C[5]"><strong>₩1,327.7B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of pref shares"}'>Value of pref shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=(R[-5]C[-3]*R[-2]C[-3]+R[-5]C[-2]*R[-2]C[-2])/1000000000">₩0.0B</td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NAV"}'><strong>NAV</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8984.533918983361}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-5]C[0]+R[-2]C[0]-R[-1]C[0]"><strong>₩8,984.5B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NAV per share (excl. treasury shares)"}'><strong>NAV per share (excl. treasury shares)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":127053.3964327235}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]/R[-1]C[-3]*1000000000"><strong>₩127,053</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Discount to NAV"}'><strong>Discount to NAV</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.07519197991517018}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-9]C[-3])/R[-1]C[0]"><strong>7.52%</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX &amp; DART","6":1}'>Source: KRX &amp; DART</td></tr>
</tbody>
</table><p>As an intermediate holding company, KSOE plans to play a role as a control tower by conducting R&amp;D, M&amp;A, and new and renewable businesses, but at this point, its own operating operation is virtually non-existent. In other words, since the value of the operating operation is zero, the current valuation is based on the cash assets held and the value of the stake in the subsidiaries.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/013/original/2.png?1631750466" class="editor-image img-responsive" data-smartkarma-image-id="230013"></figure><p>Of course, it is true that KSOE's PBR is lower than the local peers in the same sector. However, there is a question as to whether it is appropriate to apply the PBR valuation as KSOE is a pure holding company rather than a shipbuilding company.</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":"PBR comparisons on FY2022E net assets"}'>PBR comparisons on FY2022E net assets</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"PBR"}'>PBR</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Mipo Dockyard Co., Ltd."}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Hyundai Mipo Dockyard</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"010620"}' data-sheets-formula='="010620"'>010620</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"1.31x"}'><strong>1.31x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Daewoo Shipbuilding &amp; Marine Engineering"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Daewoo Shipbuilding &amp; Marine Engineering</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"042660"}' data-sheets-formula='="042660"'>042660</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"1.25x"}'><strong>1.25x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samsung Heavy Industries Co.,Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Samsung Heavy Industries</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"010140"}' data-sheets-formula='="010140"'>010140</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"1.05x"}'><strong>1.05x</strong></td>
</tr>
<tr><td colspan="3"><strong> </strong></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Shipbuilding &amp;Offshore Engn Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Korea Shipbuilding &amp;Offshore Engn</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"009540"}' data-sheets-formula='="009540"'>009540</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"0.79x"}'><strong>0.79x</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: FnGuide"}'>Source: FnGuide</td></tr>
</tbody>
</table><p>Lastly, KSOE has an event to acquire Daewoo Shipbuilding &amp; Marine Engineering (DSME). Currently, the acquisition is awaiting approval from foreign countries.</p><p>If approved, KSOE will swap shares with Korea Development Bank through issuance of new shares. In other words, Korea Development Bank will hand over its stake in DSME (55.68%) to KSOE, and will receive a stake in KSOE instead. In this process, KSOE needs to issue more than 2 trillion won worthy of new shares. In other words, it is unlikely that this DSME acquisition event will lead to KSOE's valuation re-rating.</p>

The listing of Hyundai Heavy Industries is due tomorrow, and the time has come to consider the timing of short-selling Korea Shipbuilding &amp; Offshore Engineering (KSOE) due to the holding company discount risk.
In general, we have often witnessed a trading pattern in which a holding company's stock price plummets when one of its major operating subsidiaries goes public.
The KSOE is also highly likely to be a target of this trading pattern.
KSOE is an intermediate holding company of Hyundai Heavy Industries Group, and its major subsidiaries include:
Hyundai Heavy Industries
Hyundai Mipo Dockyard
Hyundai Samho Heavy Industries










KSOE's major subsidiaries
Ticker
Stake %
Stake value
Note


Hyundai Mipo Dockyard
010620
42.40%
₩1,298.95B
Market value


Hyundai Heavy Industries
Unlisted
79.72%
₩4,246.21B
At the IPO price


Hyundai Samho Heavy Industries
Unlisted
80.54%
₩1,200.21B
Book value

Source: DART &amp; KRX

In fact, KSOE's biggest investment point so far is that it is the only channel through which to invest in Hyundai Heavy Industries and Hyundai Samho Heavy Industries, the world's largest shipyards.However, after Hyundai Heavy Industries is listed, the investment points of KSOE will inevitably fade. As KSOE is an intermediate holding company of Hyundai Heavy Industries Group, dividends and brand royalties from its subsidiaries such as Hyundai Heavy Industries will likely flow into the ultimate holding company, Hyundai Heavy Industries Holdings (267250 KS), making it less attractive for investment.Nevertheless, its discount to NAV is 7.52% based on the current share price. This is significantly lower than the 50% level of the average discount rate of local holding companies.





NAV

Value of listed holdings (including Hyundai Heavy Industries)
₩5,831.6B


- % of Holdco market cap
70.13%


Value of unlisted holdings (which includes Hyundai Samho Heavy Industries)
₩1,825.2B


Stub value
₩659.0B


Stub value per share
₩9,312


Value of operating assets
₩0.0B


GAV
₩7,656.8B


GAV per share
₩108,278


Discount to GAV (excl. treasury shares)
-8.52%


Holdco net cash/debt (de-consolidated)
₩1,327.7B


Value of pref shares
₩0.0B



NAV
₩8,984.5B


NAV per share (excl. treasury shares)
₩127,053


Discount to NAV
7.52%

Source: KRX &amp; DART

As an intermediate holding company, KSOE plans to play a role as a control tower by conducting R&amp;D, M&amp;A, and new and renewable businesses, but at this point, its own operating operation is virtually non-existent. In other words, since the value of the operating operation is zero, the current valuation is based on the cash assets held and the value of the stake in the subsidiaries.Of course, it is true that KSOE's PBR is lower than the local peers in the same sector. However, there is a question as to whether it is appropriate to apply the PBR valuation as KSOE is a pure holding company rather than a shipbuilding company.







PBR comparisons on FY2022E net assets
Ticker
PBR


Hyundai Mipo Dockyard
010620
1.31x


Daewoo Shipbuilding &amp; Marine Engineering
042660
1.25x


Samsung Heavy Industries
010140
1.05x

 

Korea Shipbuilding &amp;Offshore Engn
009540
0.79x

Source: FnGuide

Lastly, KSOE has an event to acquire Daewoo Shipbuilding &amp; Marine Engineering (DSME). Currently, the acquisition is awaiting approval from foreign countries.If approved, KSOE will swap shares with Korea Development Bank through issuance of new shares. In other words, Korea Development Bank will hand over its stake in DSME (55.68%) to KSOE, and will receive a stake in KSOE instead. In this process, KSOE needs to issue more than 2 trillion won worthy of new shares. In other words, it is unlikely that this DSME acquisition event will lead to KSOE's valuation re-rating.

Outright Shorting KSOE or Long/Short Setup with HHI on a Likely Widening Holdco Discount

HD Hyundai Infracore / Equity Capital Markets

<h2>Overview</h2><p>This is again an offering to the stockholders with forfeited shares going to a public offering. A total of 115 million new shares are issued, and the tentative issuance price is set at ₩6,950. So, the total issuance size is ₩0.8T.</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":"Overview"}'>Overview</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target"}'>Target</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A public offering of forfeited shares after offering to stockholders"}'>A public offering of forfeited shares after offering to stockholders</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Transferability"}'>Transferability</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Renounceable"}'>Renounceable</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Volume"}'><strong>Offering volume</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":115107913}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>115,107,913</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary price"}'><strong>Preliminary price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6950}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>₩6,950</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary value"}'><strong>Preliminary value</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":799999995350}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-3]C[0]*R[-1]C[0]"><strong>₩799,999,995,350</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Oversubscription privilege"}'>Oversubscription privilege</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Banker"}'>Banker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KB, NH, KIS, Mirae Asset, Hana, Samsung, DB, Daishin, &amp; Hi"}'>KB, NH, KIS, Mirae Asset, Hana, Samsung, DB, Daishin, &amp; Hi</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Underwriting type"}'>- Underwriting type</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Standby"}'>Standby</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><div class="content-highlight"><p>The tentative issuance price of ₩6,950 was calculated based on this formula: Average [1M VWAP, 1W VWAP, 1D Close], as of September 9, 2021.</p></div><h2>Allocation</h2><p>Currently, the number of issued common stock is 79.5 million. So the capital increase rate is a whopping 144.75%, and the dilution per share is 59.14%. Since 20% is allocated to the ESOP, the allocation ratio to stockholders is <strong>1.1589273</strong>.</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":"Allocation"}'>Allocation</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offer volume"}'><strong>Offering volume</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":115107913}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]"><strong>115,107,913</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase"}'>Capital increase</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.447498858082393}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-4]C[0]/R[-7]C[0]">144.75%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5914196255096533}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-5]C[0]/(R[-8]C[0]+R[-5]C[0])">59.14%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares after rights offer"}'>Total shares after rights offer</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":194629850}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]">194,629,850</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP allocation"}'>ESOP allocation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":23021582}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>23,021,582</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - %"}'>- %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.19999999478749997}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-17]C[0]">20.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stockholder allocation"}'><strong>Stockholder allocation</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":92086331}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-18]C[0]-R[-2]C[0]"><strong>92,086,331</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - %"}'><strong>- %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8000000052125}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-19]C[0]"><strong>80.00%</strong></td>
</tr>
<tr>
<td><strong>Per-share allocation</strong></td>
<td style="text-align: right;"><strong>1.1589273</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Schedule</h2><div>
<p>This event's schedule has pretty much nothing unusual, except for the addition of the short-selling ban period. Oh, there is one more thing. This event takes an unusually long time. We have like one and half months gap from now to the first round pricing. It is probably to avoid schedule conflict with another major rights offering, Samsung Heavy Industries, whose payment date falls on November 5th.</p>
<p>So, Doosan Infracore's first-round pricing will be November 11. And ex-rights are on November 3rd, with the subscription rights trading period falling on November 24~30. The issuer will confirm the final price on December 6th, and the listing date is December 28th.</p>
</div><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"BOD meeting"}'>BOD meeting</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44449}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 09. 10</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary pricing"}'><strong>Preliminary pricing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44501}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 01</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights date"}'><strong>Ex-rights date</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44503}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 03</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Record date"}'>Record date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44504}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 04</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade beginning"}'><strong>Subscription rights trade beginning</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44524}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 24</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade ending"}'><strong>Subscription rights trade ending</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44530}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 30</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Final pricing"}'><strong>Final pricing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44536}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 12. 06</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stockholder subscription"}'>Stockholder subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44538}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 12. 08</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Public subscription"}'>Public subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44540}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 12. 10</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44546}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 12. 16</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44558}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 12. 28</td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Short restriction begins"}'><strong>Short restriction begins</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44452}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 09. 13</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Short restriction ends"}'><strong>Short restriction ends</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44533}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 12. 03</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'><p>Source: DART</p></td></tr>
</tbody>
</table><p>The short-selling ban period is from September 13 to December 3rd. Investors who short-sell during this period cannot participate in this capital increase unless they purchase the same quantity they shorted within this period.</p><div class="content-highlight"><p>There seems to be a lot of confusion about this. According to the official documents of the FSC, it is not that only the quantity sold short during the short-selling ban period cannot participate in the rights issue. If we short-sell even one share during this period, we will be completely banned from participating in the rights issue. Then, the only exception is to buy more than the number of stocks short-sold during this period.</p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/161/original/Screen+Shot+2021-09-10+at+11.09.54+AM.png?1631287116" class="editor-image img-responsive" data-smartkarma-image-id="229161"></figure></section><h2>Pricing</h2><p>The procedure for determining the offering price is as follows, again nothing unusual here. The discount rate of this event is 20%, which is the usual discount rate for local rights offerings. Just, this is a bit less aggressive than the 15% discount rate of Samsung Heavy Industries announced last month. Given the current market liquidity, it seems to me that Doosan Infracore could have gone for a little more aggressive discount, say 15%.</p><table class="table table-striped">
<colgroup>
<col width="400">
<col width="400">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1st round"}'><strong>1st round</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"RP × (1 - 20%) / [1 + (144.75% × 20%)]"}' data-sheets-formula='="RP × (1 - "&amp;(R[11]C[0]*100&amp;"%")&amp;") / [1 + ("&amp;(R[12]C[0]*100&amp;"%"&amp;" × "&amp;(R[11]C[0]*100&amp;"%"&amp;")]"))'><strong>RP × (1 - 20%) / [1 + (144.75% × 20%)]</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'><strong>- Reference price (RP)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]"}'><strong>Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'><strong>- Reference date</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44501}' data-sheets-numberformat='[null,5,"yyyy\". \"mm\". \"dd",1]' data-sheets-formula="=Terms!R[41]C[0]"><strong>2021. 11. 01</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights base price"}'>Ex-rights base price</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"[RP + (1st × 144.75%)] / (1 + 144.75%)"}' data-sheets-formula='="[RP + (1st × "&amp;R[9]C[0]*100&amp;"%"&amp;")] / (1 + "&amp;R[9]C[0]*100&amp;"%"&amp;")"'>[RP + (1st × 144.75%)] / (1 + 144.75%)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'>- Reference price (RP)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Previous close"}'>Previous close</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44503}' data-sheets-numberformat='[null,5,"yyyy\". \"mm\". \"dd",1]' data-sheets-formula="=Terms!R[39]C[0]">2021. 11. 03</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"2nd round"}'><strong>2nd round</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"RP × (1 - 20%)"}' data-sheets-formula='="RP × (1 - "&amp;(R[5]C[0]*100&amp;"%")&amp;")"'><strong>RP × (1 - 20%)</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'><strong>- Reference price (RP)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Min [Close, Avg (Close, 1W VWAP)]"}'><strong>Min [Close, Avg (Close, 1W VWAP)]</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'><strong>- Reference date</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44536}' data-sheets-numberformat='[null,5,"yyyy\". \"mm\". \"dd",1]' data-sheets-formula="=Terms!R[40]C[0]"><strong>2021. 12. 06</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Final"}'>Final</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Max [Min (1st, 2nd), 3D VWAP × 60%]"}'>Max [Min (1st, 2nd), 3D VWAP × 60%]</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44536}' data-sheets-numberformat='[null,5,"yyyy\". \"mm\". \"dd",1]' data-sheets-formula="=Terms!R[38]C[0]">2021. 12. 06</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Discount rate"}'><strong>Discount rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='[null,3,"0.00%",1]'><strong>20.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.4475}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=LEFT(Terms!R[11]C[0],7)*100/100"><strong>144.75%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

OverviewThis is again an offering to the stockholders with forfeited shares going to a public offering. A total of 115 million new shares are issued, and the tentative issuance price is set at ₩6,950. So, the total issuance size is ₩0.8T.





Overview

Target
A public offering of forfeited shares after offering to stockholders


Transferability
Renounceable


Offering volume
115,107,913


Preliminary price
₩6,950


Preliminary value
₩799,999,995,350


Oversubscription privilege
20.00%


Banker
KB, NH, KIS, Mirae Asset, Hana, Samsung, DB, Daishin, &amp; Hi


- Underwriting type
Standby

Source: DART

The tentative issuance price of ₩6,950 was calculated based on this formula: Average [1M VWAP, 1W VWAP, 1D Close], as of September 9, 2021.AllocationCurrently, the number of issued common stock is 79.5 million. So the capital increase rate is a whopping 144.75%, and the dilution per share is 59.14%. Since 20% is allocated to the ESOP, the allocation ratio to stockholders is 1.1589273.





Allocation

Offering volume
115,107,913


Capital increase
144.75%


Dilution
59.14%


Total shares after rights offer
194,629,850


ESOP allocation
23,021,582


- %
20.00%


Stockholder allocation
92,086,331


- %
80.00%


Per-share allocation
1.1589273

Source: DART

Schedule
This event's schedule has pretty much nothing unusual, except for the addition of the short-selling ban period. Oh, there is one more thing. This event takes an unusually long time. We have like one and half months gap from now to the first round pricing. It is probably to avoid schedule conflict with another major rights offering, Samsung Heavy Industries, whose payment date falls on November 5th.
So, Doosan Infracore's first-round pricing will be November 11. And ex-rights are on November 3rd, with the subscription rights trading period falling on November 24~30. The issuer will confirm the final price on December 6th, and the listing date is December 28th.






Schedule

BOD meeting
2021. 09. 10


Preliminary pricing
2021. 11. 01


Ex-rights date
2021. 11. 03


Record date
2021. 11. 04


Subscription rights trade beginning
2021. 11. 24


Subscription rights trade ending
2021. 11. 30


Final pricing
2021. 12. 06


Stockholder subscription
2021. 12. 08


Public subscription
2021. 12. 10


Payment
2021. 12. 16


Listing
2021. 12. 28



Short restriction begins
2021. 09. 13


Short restriction ends
2021. 12. 03

Source: DART

The short-selling ban period is from September 13 to December 3rd. Investors who short-sell during this period cannot participate in this capital increase unless they purchase the same quantity they shorted within this period.There seems to be a lot of confusion about this. According to the official documents of the FSC, it is not that only the quantity sold short during the short-selling ban period cannot participate in the rights issue. If we short-sell even one share during this period, we will be completely banned from participating in the rights issue. Then, the only exception is to buy more than the number of stocks short-sold during this period.PricingThe procedure for determining the offering price is as follows, again nothing unusual here. The discount rate of this event is 20%, which is the usual discount rate for local rights offerings. Just, this is a bit less aggressive than the 15% discount rate of Samsung Heavy Industries announced last month. Given the current market liquidity, it seems to me that Doosan Infracore could have gone for a little more aggressive discount, say 15%.





Pricing

1st round
RP × (1 - 20%) / [1 + (144.75% × 20%)]


- Reference price (RP)
Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]


- Reference date
2021. 11. 01


Ex-rights base price
[RP + (1st × 144.75%)] / (1 + 144.75%)


- Reference price (RP)
Previous close


- Reference date
2021. 11. 03


2nd round
RP × (1 - 20%)


- Reference price (RP)
Min [Close, Avg (Close, 1W VWAP)]


- Reference date
2021. 12. 06


Final
Max [Min (1st, 2nd), 3D VWAP × 60%]


- Reference date
2021. 12. 06


Discount rate
20.00%


Capital increase rate
144.75%

Source: DART



Doosan Infracore Rights Offer Walkthrough & Thoughts on Arb Trading Setups

South Korea

HD Hyundai Co.,Ltd. operates as a oil refining company. The Company provides crude oil refining, petroleum refinery, and other related products. HD Hyundai markets its products worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

HD Hyundai (267250 KS)

Hyundai Heavy IPO Lock-Up - Last of the Insti Lock-Ups, Parent’s Shares Out of Lock-Up as Well

Hyundai Heavy Industries (HHI) was listed on Korea Exchange on 17th September, 2021. Its six month IPO lock-up will expire on 17th March, 2022.

Sumeet Singh

KRX Made It Clear that Hyundai Heavy KOSPI 200 Fast Entry Inclusion Would Be December 10

The KRX made it clear in its official disclosure that the effective date of the Hyundai Heavy Industries' KOSPI 200 Fast Entry would be December 10.

Sanghyun Park

Hyundai Heavy Industries: Passive Impact Timing Confusion

This post discusses the passive impact timing confusion for Hyundai Heavy Industries, which might have been a reason behind the recent price surge.

Sanghyun Park

Outright Shorting KSOE or Long/Short Setup with HHI on a Likely Widening Holdco Discount

This post discusses shorting opportunity on KSOE after HHI listing tomorrow to capitalize on a likely widening holdco discount.

Sanghyun Park

Doosan Infracore Rights Offer Walkthrough & Thoughts on Arb Trading Setups

This post details Doosan Infracore's rights offering and examines the situation/dynamics for various arb trading setups.

Sanghyun Park

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