Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p>On November 27th, SK Bioscience announced that it plans to complete an IPO as early as in 1H 2021. SK Chemial owns a 98% stake in SK Bioscience. SK Bioscience plans to submit the IPO application to the Korea Exchange on December 1st. The Korea Exchange will then announce its decision as to whether to approve this IPO application within 45 days. If this application is approved, SK Bioscience is likely to complete its IPO in 1H 2021 on KOSPI. NH Investment &amp; Securities has been selected as the lead underwriter of this IPO. Korea Investment &amp; Securities and Mirae Asset Dawoo Securities are the joint book runners.</p><div class="content-highlight"><p>The local media have mentioned that the value of SK Bioscience could be at least 3 trillion won ($2.7 billion). Given the excellent success of SK Biopharm combined with the backing by Bill Gates, SK Bioscience IPO is likely to attract many investors. It is likely that SK Bioscience will be one of the biggest health-care related IPOs in Korea next year.</p></div>

On November 27th, SK Bioscience announced that it plans to complete an IPO as early as in 1H 2021. SK Chemial owns a 98% stake in SK Bioscience. SK Bioscience plans to submit the IPO application to the Korea Exchange on December 1st. The Korea Exchange will then announce its decision as to whether to approve this IPO application within 45 days. If this application is approved, SK Bioscience is likely to complete its IPO in 1H 2021 on KOSPI. NH Investment &amp; Securities has been selected as the lead underwriter of this IPO. Korea Investment &amp; Securities and Mirae Asset Dawoo Securities are the joint book runners.The local media have mentioned that the value of SK Bioscience could be at least 3 trillion won ($2.7 billion). Given the excellent success of SK Biopharm combined with the backing by Bill Gates, SK Bioscience IPO is likely to attract many investors. It is likely that SK Bioscience will be one of the biggest health-care related IPOs in Korea next year.

Initial Thoughts on the SK Bioscience IPO - Backed by Bill Gates

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/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/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> and <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK)</a> while there was short covering 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/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (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/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>. Shorts increased in Financials and Health Care stocks, and decreased on Consumer Discretionary, Industrials, Communication Services, Information Technology and Real Estate names.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 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/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> and <a href="https://www.smartkarma.com/entities/miura-co-ltd" target="_blank" data-smartkarma-citation="entities:20185:1" rel="noopener">Miura Co Ltd (6005 JP)</a> while shorts decreased 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/fuji-corp-aichi" target="_blank" data-smartkarma-citation="entities:12942:1" rel="noopener">Fuji Machine Mfg (6134 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> and <a href="https://www.smartkarma.com/entities/ricoh-company-ltd" target="_blank" data-smartkarma-citation="entities:15359:1" rel="noopener">Ricoh Company Ltd (7752 JP)</a>. Sectorally, shorts increased on Consumer Discretionary, Real Estate and Financials, while shorts were covered on Consumer Staples.</p></div><div><p>In Korea, the biggest increase in shorts were seen 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/hyundai-heavy-industries" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Hyundai Heavy Industries (009540 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" data-smartkarma-citation="entities:26190:1" rel="noopener">Sk Chemicals Co Ltd/New (285130 KS)</a>, <a href="https://www.smartkarma.com/entities/s-oil-corp" target="_blank" data-smartkarma-citation="entities:1667:1" rel="noopener">S Oil Corp (010950 KS)</a> and <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>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <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/wiwynn-corp" target="_blank" data-smartkarma-citation="entities:27838:1" rel="noopener">Wiwynn Corp (6669 TT)</a>, <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a> and <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a> while shorts were covered on <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/century-iron-steel-indus" target="_blank" data-smartkarma-citation="entities:8853:1" rel="noopener">Century Iron &amp; Steel Indus (9958 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> and <a href="https://www.smartkarma.com/entities/formosa-petrochemical-corp" target="_blank" data-smartkarma-citation="entities:20875:1" rel="noopener">Formosa Petrochemical (6505 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 Ping An Insurance (H) (2318 HK), Alibaba Group (9988 HK), Haier Electronics Group Co (1169 HK) and Ping An Healthcare and Technology Company Limited (1833 HK) while there was short covering on Meituan (3690 HK), Tencent Holdings (700 HK), Sunny Optical (2382 HK) and AIA Group Ltd (1299 HK). Shorts increased in Financials and Health Care stocks, and decreased on Consumer Discretionary, Industrials, Communication Services, Information Technology and Real Estate names.In Japan, stocks that saw the most shorts were Itochu Corp (8001 JP), Nippon Building Fund (8951 JP), Mercari Inc (4385 JP) and Miura Co Ltd (6005 JP) while shorts decreased on Toshiba Corp (6502 JP), Fuji Machine Mfg (6134 JP), Casio Computer (6952 JP) and Ricoh Company Ltd (7752 JP). Sectorally, shorts increased on Consumer Discretionary, Real Estate and Financials, while shorts were covered on Consumer Staples.In Korea, the biggest increase in shorts were seen on Hyundai Motor Co (005380 KS), Hyundai Heavy Industries (009540 KS) and Samsung SDI (006400 KS) while shorts were covered on Amorepacific Corp (090430 KS), Sk Chemicals Co Ltd/New (285130 KS), S Oil Corp (010950 KS) and HMM Co., Ltd. (011200 KS). Stocks in Taiwan that saw the highest increase in shorts were Asustek Computer (2357 TT), Wiwynn Corp (6669 TT), Acer Inc (2353 TT) and Largan Precision (3008 TT) while shorts were covered on Unimicron Technology (3037 TT), Century Iron &amp; Steel Indus (9958 TT), Yageo Corporation (2327 TT) and Formosa Petrochemical (6505 TT). 

Asia Short Interest Weekly: Haier, Sunny Optical, Itochu, Mercari, Toshiba, HMM, Asustek, Acer

Cross Asset Strategy

<p>The world will never be the same after COVID-19. We provided an extensive analysis of the on-going developments of COVID-19 in March. This novel coronavirus is a once in a century type of pandemic. As of 31 March, there were more than 0.79 million cases and nearly 38k deaths globally caused by COVID-19. Nearly one-quarter of the world's population is in various types of lockdowns.</p><p>Our model portfolio was down 3.4% on a net basis in March 2020 (cash was 70% of our model portfolio), outperforming KOSPI which was down 11.4% in the same period. <br><br>Among the 31 reports we have written so far in March, the three most widely read insights were all related to COVID-19:</p><ul>
<li>
<a href="https://www.smartkarma.com/insights/active-vs-passive-investing-post-covid-19-coronavirus-world" target="_blank" data-smartkarma-citation="insights:37765" rel="noopener">Active Vs. Passive Investing Post COVID-19 Coronavirus World</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/why-is-the-death-rate-of-covid-19-nearly-6x-higher-in-the-u-s-than-in-south-korea" target="_blank" data-smartkarma-citation="insights:37272" rel="noopener">Why Is the Death Rate of COVID-19 Nearly 6x Higher in the U.S. Than in South Korea?</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/some-encouraging-covid-19-data-from-south-korea" target="_blank" data-smartkarma-citation="insights:37340" rel="noopener">Some Encouraging COVID-19 Data from South Korea</a> </li>
</ul>

The world will never be the same after COVID-19. We provided an extensive analysis of the on-going developments of COVID-19 in March. This novel coronavirus is a once in a century type of pandemic. As of 31 March, there were more than 0.79 million cases and nearly 38k deaths globally caused by COVID-19. Nearly one-quarter of the world's population is in various types of lockdowns.Our model portfolio was down 3.4% on a net basis in March 2020 (cash was 70% of our model portfolio), outperforming KOSPI which was down 11.4% in the same period.   Among the 31 reports we have written so far in March, the three most widely read insights were all related to COVID-19:

Active Vs. Passive Investing Post COVID-19 Coronavirus World 

Why Is the Death Rate of COVID-19 Nearly 6x Higher in the U.S. Than in South Korea? 

Some Encouraging COVID-19 Data from South Korea 


Korea Stock Market Monthly Recap #46 (March 2020)

<div><p>The Korea Exchange (KRX) publishes outstanding short position data daily with a two day lag. The data below is of the close of 29 November.</p></div><div><p>Current short notional on the KOSPI market is KRW 11,124bn (US$9.37bn) with the largest short notionals in <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:991:1">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:22932:1">Samsung Biologics Co., (207940 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:22932:1">Samsung Biologics Co., (207940 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:539:1">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" rel="noopener" data-smartkarma-citation="entities:155:1">Hyundai Motor Co (005380 KS)</a> and <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" rel="noopener" data-smartkarma-citation="entities:22839:1">Netmarble Corporation (251270 KS)</a>.   <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" rel="noopener" data-smartkarma-citation="entities:155:1"></a></p></div><div><p>Stocks with the largest short percentage as a percentage of free float are <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" rel="noopener" data-smartkarma-citation="entities:22839:1">Netmarble Corporation (251270 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:3982:1">Doosan Infracore (042670 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:991:1">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/lotte-tour-development-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:5526:1">Lotte Tour Development Co, Ltd. (032350 KS)</a> and <a href="https://www.smartkarma.com/entities/fila-korea-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:10699:1">Fila Korea Ltd (081660 KS)</a>. </p></div><div><p>Stocks with the largest increase in short interest over the last week were <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:20854:1">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:5169:1">NCsoft Corp (036570 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" rel="noopener" data-smartkarma-citation="entities:26190:1">Sk Chemicals Co Ltd/New (285130 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" rel="noopener" data-smartkarma-citation="entities:6501:1">LG Household &amp; Health Care (051900 KS)</a> while shorts were covered in <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" rel="noopener" data-smartkarma-citation="entities:155:1">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-mobis-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:6089:1">Hyundai Mobis (012330 KS)</a>,<span style="color: #0b0114;"><a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:22932:1">Samsung Biologics Co., (207940 KS)</a> and <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:991:1">Celltrion Inc (068270 KS)</a>. </span></p></div>

The Korea Exchange (KRX) publishes outstanding short position data daily with a two day lag. The data below is of the close of 29 November.Current short notional on the KOSPI market is KRW 11,124bn (US$9.37bn) with the largest short notionals in Celltrion Inc (068270 KS), Samsung Biologics Co., (207940 KS), Samsung Biologics Co., (207940 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS), Hyundai Motor Co (005380 KS) and Netmarble Corporation (251270 KS).   Stocks with the largest short percentage as a percentage of free float are Netmarble Corporation (251270 KS), Doosan Infracore (042670 KS), Celltrion Inc (068270 KS), Lotte Tour Development Co, Ltd. (032350 KS) and Fila Korea Ltd (081660 KS). Stocks with the largest increase in short interest over the last week were Amorepacific Corp (090430 KS), NCsoft Corp (036570 KS), Sk Chemicals Co Ltd/New (285130 KS) and LG Household &amp; Health Care (051900 KS) while shorts were covered in Hyundai Motor Co (005380 KS), Hyundai Mobis (012330 KS),Samsung Biologics Co., (207940 KS) and Celltrion Inc (068270 KS). 

Korea - Massive Covering on Hyundai Motor, Shorts Increase on SK Companies

Korea, Equity Bottom-up, Events, Governance, Sustinvest

Sewon Park

Korea, Equity Bottom-up, Events, Governance

Responsible investment, Proxy advisory

Sustinvest

Sustinvest is a specialized ESG research firm that provides comprehensive analysis on company-level ESG performance, industry-level ESG issues, and ESG-related regulations. In particular, we attempt to identify investment risks and opportunities associated with events such as corporate governance changes and M&A. We also conduct company visits and fundamental analysis to discover smaller companies with sustainable business model which are usually overlooked by institutional investors. Our focus is on Korean listed companies and not limited to specific sectors.  

Event-Driven

<p><strong>Overview</strong></p><p>On 2 March 2018, SK Chemical announced that it is going to split its vaccine business division into a new company, which is tentatively named as SK Bio Science. This is a “spin-out” (also called “physical division”) where SK Bio Science becomes a wholly-owned subsidiary of SK Chemical.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/055/063/original/structure.PNG?1528875254" class="editor-image img-responsive" data-smartkarma-image-id="55063"></figure><table class="table table-striped"><tbody>
<tr>
<td style="text-align: center;"><p><strong>Event</strong></p></td>
<td style="text-align: center;"><p><strong>Date</strong></p></td>
</tr>
<tr>
<td><p>Board resolution</p></td>
<td><p>2018-05-02</p></td>
</tr>
<tr>
<td><p>Record date of the register of shareholders</p></td>
<td><p>2018-05-17</p></td>
</tr>
<tr>
<td><p>Closing of the register of shareholders</p></td>
<td><p>2018-05-18 ~ 2018-05-22</p></td>
</tr>
<tr>
<td><p>EGM Approval</p></td>
<td><p>2018-06-15</p></td>
</tr>
<tr>
<td><p>Divestiture</p></td>
<td><p>2018-07-01</p></td>
</tr>
</tbody></table><p>SK Chemical…</p>

OverviewOn 2 March 2018, SK Chemical announced that it is going to split its vaccine business division into a new company, which is tentatively named as SK Bio Science. This is a “spin-out” (also called “physical division”) where SK Bio Science becomes a wholly-owned subsidiary of SK Chemical.

Event
Date


Board resolution
2018-05-02


Record date of the register of shareholders
2018-05-17


Closing of the register of shareholders
2018-05-18 ~ 2018-05-22


EGM Approval
2018-06-15


Divestiture
2018-07-01

SK Chemical…

SK Chemicals: Spinning Out Vaccine Business

South Korea

SK Chemicals Co.,Ltd manufactures environmentally friendly materials. The Company produces and sells composites, high-performance materials, energy saving materials, and other products. SK Chemicals also offers total healthcare solutions services. SK Chemicals serves customers worldwide.

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SK Chemicals (285130 KS)

Initial Thoughts on the SK Bioscience IPO - Backed by Bill Gates

SK Bioscience, which is backed by Bill Gates, is getting ready to complete its IPO in 1H 2021 in Korea. The local media have mentioned the value of...

Douglas Kim

Asia Short Interest Weekly: Haier, Sunny Optical, Itochu, Mercari, Toshiba, HMM, Asustek, Acer

This Insight looks at short interest movements in stocks across Asian markets and highlights stocks that have seen large increase/ decrease in...

Brian Freitas

Korea Stock Market Monthly Recap #46 (March 2020)

The world will never be the same after COVID-19. We provided an extensive analysis of the on-going developments of COVID-19 in March. This novel...

Douglas Kim

Korea - Massive Covering on Hyundai Motor, Shorts Increase on SK Companies

The Korea Exchange (KRX) publishes outstanding short position data daily with a two day lag. The data below is of the close of 29 November.Current...

Brian Freitas

SK Chemicals: Spinning Out Vaccine Business

OverviewOn 2 March 2018, SK Chemical announced that it is going to split its vaccine business division into a new company, which is tentatively...

Sustinvest

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52-week Range

Market Cap (USDm)

P/E

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