Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 1Q 2023.</li>
<li>Of the 33 pair trades, 2/3 of them involved holdcos outperforming opcos in the past year and 1/3 of them involved opcos outperforming holdcos in the same period.</li>
<li>We highlight 33 pair trades that involve Korean holdcos and opcos.</li>
</ul>


In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 1Q 2023.
Of the 33 pair trades, 2/3 of them involved holdcos outperforming opcos in the past year and 1/3 of them involved opcos outperforming holdcos in the same period.
We highlight 33 pair trades that involve Korean holdcos and opcos.


Korean Holdcos Vs Opcos Gap Spreads Opportunities in 1Q 2023

Hyosung Advanced Materials / Equity Bottom-Up

<ul>
<li>We have a positive rating on Hyosung Advanced Materials. We believe the stock has a 25%+ upside over the next 12 months.</li>
<li>The company recently announced that it has succeeded in developing an ultra-high-strength carbon fiber which is 14 times stronger than steel.</li>
<li>There is an opportunity for the share price to be re-rated going forward if the company succeeds in grabbing higher share in the global carbon fiber market segment.</li>
</ul>


We have a positive rating on Hyosung Advanced Materials. We believe the stock has a 25%+ upside over the next 12 months.
The company recently announced that it has succeeded in developing an ultra-high-strength carbon fiber which is 14 times stronger than steel.
There is an opportunity for the share price to be re-rated going forward if the company succeeds in grabbing higher share in the global carbon fiber market segment.


Hyosung Advanced Materials: Market Share Gains in Global Carbon Fiber Could Result in a Re-Rating

<ul>
<li>Hyosung TNC announced 50,000 won in DPS in 2021, up 10x from 2020. This is likely to reverse the recent declining share price trend in the  past several months. </li>
<li>
Hyosung TNC's current dividend yield is 10.5%, representing one of the highest dividend yields in Korea. Dividend payout in 2021 was 28%.</li>
<li>We believe Hyosung TNC is well positioned to outperform KOSPI in 2022.</li>
</ul>


Hyosung TNC announced 50,000 won in DPS in 2021, up 10x from 2020. This is likely to reverse the recent declining share price trend in the  past several months. 

Hyosung TNC's current dividend yield is 10.5%, representing one of the highest dividend yields in Korea. Dividend payout in 2021 was 28%.
We believe Hyosung TNC is well positioned to outperform KOSPI in 2022.


Hyosung TNC: 10x Increase in Dividends Per Share

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

We now have KOSPI 200 and KOSDAQ 150 rebalancing completed. What does this mean? It means we have new members of the so-called Korea Short 350 as these new additions are now eligible for short selling.So, let's look at their current loan balance, often serving as a leading indicator of short-selling intensity in the short term.

We now have KOSPI 200 and KOSDAQ 150 rebalancing completed. What does this mean? It means we have new members of the so-called Korea Short 350 as these new additions are now eligible for short selling.So, let's look at their current loan balance, often serving as a leading indicator of short-selling intensity in the short term.

Korea Short 350 New Members: KOSPI 200 & KOSDAQ 150 Adds

What would be a real-world passive money size tracking KOSPI 200?My latest estimation is ₩80 trillion, and here is a breakdown of my estimation.ETFsWe currently have 17 local ETFs mirroring KOSPI 200, including KODEX 200 (₩5.5T) and TIGER 200 (₩2.3T). Their combined market value amounts to ₩16.5T.







Local ETFs directly mirroring KOSPI 200
Ticker
Market cap as of today (June 1, 2021)


YURIE TREX 200 ETF
108590
₩13.0B


Kiwoom KOSEF200 Total Return ETF
294400
₩493.3B


Kyobo AXA Power K200 ETF
152870
₩28.6B


Samsung KODEX 200 Total Return ETF
278530
₩1,470.5B


Mirae Asset TIGER Leverage ETF
123320
₩32.1B


KIM KINDEX Leverage ETF
152500
₩11.1B


HANWHA Arirang 200 ETF
152100
₩853.6B


Samsung KODEX 200 ETF
069500
₩5,446.8B


Kiwoom KOSEF200 ETF
069660
₩542.8B


Mirae Asset TIGER200 ETF
102110
₩2,283.6B


KIM KINDEX 200 ETF
105190
₩751.7B


Samsung KODEX Leverage Derivatives ETF
122630
₩1,722.2B


KB KBSTAR 200 Securities ETF
148020
₩1,168.8B


NH-Amundi HANARO 200 ETF
293180
₩655.5B


NH-Amundi HANARO 200TR ETF
332930
₩222.4B


KIM KINDEX 200TotalReturn ETF
332500
₩340.5B


Shinhan SMART 200 Total Return ETF
295040
₩449.9B


- Total
-
₩16,486.4B

Source: KRX

Index funds39 local index funds are currently tracking KOSPI 200, including the Kyobo AXA Power Index with an AUM of ₩1.3T. Their combined AUM totals ₩3.7T.






Local Index funds directly mirroring KOSPI 200
Assets under management as of today (June 1, 2021)


Kiwoom New Frontier Index Plus αF- 1 [Equity-Derivative] A1
₩17.5B


Kiwoom e-Alpha Index 1 [Equity]
₩11.0B


Kiwoom Korea Index 1 [Equity] C-e
₩28.1B


Kiwoom Korea Happy Pension Index 1 [Equity]
₩16.6B


Korea Investment Index Plus 1 [Equity-Derivative] (A)
₩28.4B


BNKK200 Index (Equity-Derivative) ClassA
₩25.4B


KB Star Power Index Korea [Equity-Derivative] C-E
₩18.3B


Hungkuk Index Alpha [Equity-Derivative] C-f
₩17.9B


Daishin Index Value [Equity] ClassC-F
₩130.5B


Mirae Asset Market Plus [Equity] Type F
₩11.8B


Consus Moebius 1 200 Index (Equity-Derivative) Class C
₩11.0B


IBKKOSPI200 Index 1 [Equity] Type A
₩39.8B


Truston Index Alpha s [Equity-Derivative] C
₩14.5B


Hyundai KOSPI 200 Index Type C-f
₩10.2B


DGB Index Plus 1 [Equity-Derivative] A
₩27.6B


Woori KOSPI200 Index 1 (Equity-Derivative) ClassC-e
₩49.1B


Kyobo AXA Power Index 2 [Equity] ClassA1
₩22.5B


East Spring Korea Index [Equity] Class C-F
₩207.0B


Mirae KOSPI 200 Index 1 [Equity] Type C-e
₩164.0B


Kyobo AXA Power Index 1 [Equity] Class A 1
₩332.0B


Kyobo AXA Power Index 3 [Equity] ClassA
₩12.6B


Daishin KOSPI200 Index [Equity-Derivative] ClassC1
₩64.1B


Kyobo AXA Power Index 1 (Equity-Derivative) ClassA
₩1,277.0B


DB Index Haeohreum Alpha [Equity-Derivative] ClassA
₩15.5B


Hana UBS Umbrella New Index K- 1 [Equity-Derivative] ClassC
₩12.9B


Samsung Retirement Pension Index 1 [Equity] C
₩138.7B


Korea Investment &amp; Cruise F2.8 Index [Equity] (A)
₩14.1B


KB Index Annuity [Equity] C
₩20.6B


Samsung Index Alpha 1 [Equity-Derivative] (A)
₩18.6B


Samsung Pension Korea Index [Equity-Derivative]
₩34.6B


Samsung Classic Index Pensions 1 [Equity] _C
₩180.6B


KB Star Korea Index [Equity] C-E class
₩88.8B


Samsung Premium Index A [Equity-Derivative]
₩74.2B


Hanwha Smart ++ Index [Equity] C / C2β
₩240.4B


Feynman Index Premium 2 [Equity-Derivative]
₩18.8B


Samsung Index Plus 1 [Equity-Derivative] (C 1)
₩49.7B


KB Star Korea Index [Equity-Derivative] C
₩54.1B


NH-Amundi Premier Index [Equity-Derivative] ClassA
₩26.7B


Hyundai Investment Index 1 Alpha [Equity-Derivative] C-I
₩135.5B


- Total
₩3,660.7B

Source: KG Zeroin

National Pension Service (NPS)Now, we need to add NPS. In 2019, the internal (direct) management accounted for 54.15% of the domestic equity, whereas the external (consignment) management was responsible for 45.85%. Only the internal management operates passive funds, which accounted for 33.75% of the total domestic equity.The total domestic equity at March-end of this year was ₩178.7T. Assuming the same 33.75% weight for the passive in the domestic equity churns out ₩60.3T for the local passive funds within the NPS. An assumed 70% of this ₩60.3T would be ₩42.2T, supposedly tracking KOSPI 200. 70% should be a conservative assumption as their BM index for domestic equity is KOSPI.









NPS asset allocation
FY2019, amount
FY2019, weight
FY2021 March, amount
Directly mirroring KOSPI 200 at an assumed 70% of the total passive funds


Internal (direct) management
₩71,612.1B





- Active
₩26,976.9B
20.40%




- Passive
₩44,635.2B
33.75%
₩60,301.4B
₩42,211.0B


External (consignment) management
₩60,641.9B





- Active
₩60,641.9B
45.85%




- Passive
₩0.0B
0.00%




Total domestic Equity
₩132,254.0B

₩178,673.0B


Source: NPS

Variable insurance index fundsLastly, we have variable insurance index funds. A vast majority of the local variable insurance index funds are tracking KOSPI 200. I don't have the latest figure, but the FY2019 year-end data (compiled by YONHAP INFOMAX) shows that the combined AUM of these funds amounted to about ₩17~18T.Given the relatively flat yearly growth among the local insurance companies, I don't expect to see a substantial change in the combined AUM last year. So, ₩18T would be a safe estimate.Adding all four spits out ₩80.4T, supposedly total local passive money mirroring KOSPI 200 at this point.
₩80T estimation breakdown

ETFs
₩16.5T


Index funds
₩3.7T


National Pension Service - Passive
₩42.2T


Variable Insurance Index funds
₩18.0T


 - Total
₩80.4T

Source: KG Zeroin, KRX, NPS, &amp; YONHAP INFOMAX


Why I Estimate Total Local Passive Money Tracking KOSPI 200 at ₩80T? Here Is a Breakdown

South Korea

Hyosung Advanced Materials Corporation operates as an advanced materials production company. The Company manufactures and sells high-strength industrial yarns, fabric, steel wire materials, and other products. Hyosung Advanced Materials markets its products worldwide.

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Hyosung Advanced Materials (298050 KS)

Korean Holdcos Vs Opcos Gap Spreads Opportunities in 1Q 2023

In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 1Q 2023. We highlight 33 pair trades that...

Douglas Kim

Korea Short 350 New Members: KOSPI 200 & KOSDAQ 150 Adds

We now have new members of the so-called Korea Short 350 for short-selling eligibility. They are new additions to KOSPI 200 and KOSDAQ 150. This...

Sanghyun Park

Why I Estimate Total Local Passive Money Tracking KOSPI 200 at ₩80T? Here Is a Breakdown

This post provides a detailed breakdown of how I arrive at an estimated ₩80 trillion for the passive money tracking KOSPI 200.

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Korean Holdcos Vs Opcos Gap Spreads Opportunities in 1Q 2023

In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 1Q 2023. We highlight 33 pair trades that...

Douglas Kim

Hyosung Advanced Materials: Market Share Gains in Global Carbon Fiber Could Result in a Re-Rating

There is an opportunity for Hyosung Advanced Materials to be re-rated going forward if the company succeeds in grabbing higher share in the global...

Douglas Kim

Hyosung TNC: 10x Increase in Dividends Per Share

Hyosung TNC announced 50,000 won in DPS in 2021, up 10x from 2020, representing dividend yield of 10.5%. We believe Hyosung TNC is well positioned...

Douglas Kim

Korea Short 350 New Members: KOSPI 200 & KOSDAQ 150 Adds

We now have new members of the so-called Korea Short 350 for short-selling eligibility. They are new additions to KOSPI 200 and KOSDAQ 150. This...

Sanghyun Park

Why I Estimate Total Local Passive Money Tracking KOSPI 200 at ₩80T? Here Is a Breakdown

This post provides a detailed breakdown of how I arrive at an estimated ₩80 trillion for the passive money tracking KOSPI 200.

Sanghyun Park