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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Korea Exchange (KRX) will announce the results of the June 2021 review of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> in May with the changes becoming effective after the close of trading on 10 June.We currently see <a href="https://www.smartkarma.com/entities/taihan-electric-wire-co-ltd" target="_blank" data-smartkarma-citation="entities:11551:1" rel="noopener">Taihan Electric Wire (001440 KS)</a>, <a href="https://www.smartkarma.com/entities/dongwon-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:1783:1" rel="noopener">Dongwon Industries (006040 KS)</a>, <a href="https://www.smartkarma.com/entities/hyosung-advanced-materials-c" target="_blank" data-smartkarma-citation="entities:27751:1" rel="noopener">Hyosung Advanced Materials C (298050 KS)</a> and <a href="https://www.smartkarma.com/entities/hyosung-tnc-co-ltd" target="_blank" data-smartkarma-citation="entities:27749:1" rel="noopener">Hyosung TNC Co Ltd (298020 KS)</a> as potential inclusions in the index, with <a href="https://www.smartkarma.com/entities/taeyoung-engineering-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:18740:1" rel="noopener">Taeyoung Engineering &amp; Construction (009410 KS)</a>, <a href="https://www.smartkarma.com/entities/namsun-aluminum-co-ltd" target="_blank" data-smartkarma-citation="entities:17514:1" rel="noopener">Namsun Aluminum (008350 KS)</a>, <a href="https://www.smartkarma.com/entities/hanil-hyundai-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:14406:1" rel="noopener">Hanil Hyundai Cement (006390 KS)</a> and <a href="https://www.smartkarma.com/entities/binggrae-co-ltd" target="_blank" data-smartkarma-citation="entities:16424:1" rel="noopener">Binggrae Co Ltd (005180 KS)</a> as the corresponding exclusions.<a href="https://www.smartkarma.com/entities/sk-bioscience-co-ltd" target="_blank" data-smartkarma-citation="entities:31484:1" rel="noopener">SK Bioscience (302440 KS)</a> is expected to list on the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-index" target="_blank" data-smartkarma-citation="entities:22911:1" rel="noopener">Korea Stock Exchange Kospi Index (KOSPI INDEX)</a> market in March and there is a possibility that the stock gets Fast Entry into the index. That could see <a href="https://www.smartkarma.com/entities/sebang-global-battery-co-ltd" target="_blank" data-smartkarma-citation="entities:9618:1" rel="noopener">Sebang Global Battery (004490 KS)</a> being deleted from the index.<a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (1486402D KS)</a> is another possible Fast Entry into the index though there are few details available on when the stock is expected to list.The short sell ban in Korea has been extended to 2 May. Stocks that are constituents of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> can be short sold from 3 May. The commencement of short selling on these stocks prior to the announcement of the June review changes could result in the expected inclusions outperforming the expected exclusions and opening up other interesting trading strategies.

The Korea Exchange (KRX) will announce the results of the June 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in May with the changes becoming effective after the close of trading on 10 June.We currently see Taihan Electric Wire (001440 KS), Dongwon Industries (006040 KS), Hyosung Advanced Materials C (298050 KS) and Hyosung TNC Co Ltd (298020 KS) as potential inclusions in the index, with Taeyoung Engineering &amp; Construction (009410 KS), Namsun Aluminum (008350 KS), Hanil Hyundai Cement (006390 KS) and Binggrae Co Ltd (005180 KS) as the corresponding exclusions.SK Bioscience (302440 KS) is expected to list on the Korea Stock Exchange Kospi Index (KOSPI INDEX) market in March and there is a possibility that the stock gets Fast Entry into the index. That could see Sebang Global Battery (004490 KS) being deleted from the index. Krafton Inc (1486402D KS) is another possible Fast Entry into the index though there are few details available on when the stock is expected to list.The short sell ban in Korea has been extended to 2 May. Stocks that are constituents of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) can be short sold from 3 May. The commencement of short selling on these stocks prior to the announcement of the June review changes could result in the expected inclusions outperforming the expected exclusions and opening up other interesting trading strategies.

KOSPI200 Index Rebalance Preview: Increasing Number of Potential Changes

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

In this report, we provide an analysis of our pair trade idea between <a href="https://www.smartkarma.com/entities/20712" target="_blank" data-smartkarma-citation="entities:20712:1">Hyosung Corporation (004800 KS)</a> (market cap of 1,612 billion won) and <a href="https://www.smartkarma.com/entities/27749" target="_blank" data-smartkarma-citation="entities:27749:1">Hyosung TNC Co Ltd (298020 KS)</a> (market cap of 712 billion won). Our strategy will be to be long Hyosung TNC and be short Hyosung Corp. In the past six months, Hyosung Corp is up 62% while Hyosung TNC is down 12%. We believe this price divergence has been excessive. The four major reasons why Hyosung Corp's share price has surged in the past six months are mentioned below. There is a case to be made that the market has already factored into Hyosung Corp's share price many of the positive factors mentioned below. <ul>
<li>Excellent dividends </li>
<li>Corporate activism related stock </li>
<li>Strong financial results </li>
<li>Timing of the increased insider ownerships/Completion of tender offers</li>
</ul>Hyosung TNC has underperformed the market as well as Hyosung Corp in the past six months. However, Hyosung TNC appears to be a turnaround story driven by the following factors: <ul>
<li>Decline in raw material prices </li>
<li>Aggressive spandex investment in India </li>
<li>Stabilization of spandex prices in 2H19 </li>
<li>Consolidation of the global spandex industry</li>
</ul>

In this report, we provide an analysis of our pair trade idea between Hyosung Corporation (004800 KS) (market cap of 1,612 billion won) and Hyosung TNC Co Ltd (298020 KS) (market cap of 712 billion won). Our strategy will be to be long Hyosung TNC and be short Hyosung Corp. In the past six months, Hyosung Corp is up 62% while Hyosung TNC is down 12%. We believe this price divergence has been excessive. The four major reasons why Hyosung Corp's share price has surged in the past six months are mentioned below. There is a case to be made that the market has already factored into Hyosung Corp's share price many of the positive factors mentioned below. 
Excellent dividends 
Corporate activism related stock 
Strong financial results 
Timing of the increased insider ownerships/Completion of tender offers
Hyosung TNC has underperformed the market as well as Hyosung Corp in the past six months. However, Hyosung TNC appears to be a turnaround story driven by the following factors: 
Decline in raw material prices 
Aggressive spandex investment in India 
Stabilization of spandex prices in 2H19 
Consolidation of the global spandex industry


Korean Stubs Spotlight: A Pair Trade Between Hyosung Corp and Hyosung TNC

Hyosung Advanced Materials / Event-Driven

In this report, we provide the one year share price comparisons of the holdcos and the opcos in both table and chart formats as well as changes to the foreign ownership stakes of these companies YTD. Significant, rapid changes to the foreign shareholdings of these companies sometimes lead to opportunities in the holdco/opco pair trades. Among these 30 pair of companies, five pairs in particular are interesting where the difference in their share prices have diverged significantly in the past year (by 30% or more). These five pairs of companies include the following:  <ul>
<li>Hyosung Corp vs. Hyosung Advanced Materials  </li>
<li>BGF Retail vs. BGF Co.  </li>
<li>Doosan Corp vs. Doosan Heavy Industries Corp.  </li>
<li>Cuckoo Holdings vs. Cuckoo Homesys  </li>
<li>Orion Holdings vs. Orion Corp</li>
</ul>

In this report, we provide the one year share price comparisons of the holdcos and the opcos in both table and chart formats as well as changes to the foreign ownership stakes of these companies YTD. Significant, rapid changes to the foreign shareholdings of these companies sometimes lead to opportunities in the holdco/opco pair trades. Among these 30 pair of companies, five pairs in particular are interesting where the difference in their share prices have diverged significantly in the past year (by 30% or more). These five pairs of companies include the following:  
Hyosung Corp vs. Hyosung Advanced Materials  
BGF Retail vs. BGF Co.  
Doosan Corp vs. Doosan Heavy Industries Corp.  
Cuckoo Holdings vs. Cuckoo Homesys  
Orion Holdings vs. Orion Corp


Korean Stubs Spotlight: Focus on Diverging Share Prices and Changes to Foreign Ownership

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

<ul>
<li>Local institutions are busy scooping up <a href="https://www.smartkarma.com/entities/20712" target="_blank" data-smartkarma-citation="entities:20712:1">Hyosung Corporation (004800 KS)</a> shares lately. The owner risk is now gone. There are increasing signs of improving fundamentals on all of the four major subs. Some are already expecting ₩5,000 per share. This is a 9.2% annual div yield at the last closing price.</li>
<li>Discount is also attractive. It is now at 46% to NAV. With this much div yield, discount should be much below the local peer average of 40%.</li>
<li>I'd continue to long Holdco. Hedge would be tricky. Heavy is up 15% YTD. I admit that there is no clear cointegrated relationship between them. But Heavy's recent rally is more of a speculative money pushing up on the hydrogen vehicle theme. I'd pick Heavy for a hedge.</li>
</ul>


Local institutions are busy scooping up Hyosung Corporation (004800 KS) shares lately. The owner risk is now gone. There are increasing signs of improving fundamentals on all of the four major subs. Some are already expecting ₩5,000 per share. This is a 9.2% annual div yield at the last closing price.
Discount is also attractive. It is now at 46% to NAV. With this much div yield, discount should be much below the local peer average of 40%.
I'd continue to long Holdco. Hedge would be tricky. Heavy is up 15% YTD. I admit that there is no clear cointegrated relationship between them. But Heavy's recent rally is more of a speculative money pushing up on the hydrogen vehicle theme. I'd pick Heavy for a hedge.


Hyosung Holdings: Current Status & Trade Approach

<ul>
<li>
<a href="https://www.smartkarma.com/entities/20712" target="_blank" data-smartkarma-citation="entities:20712:1">Hyosung Corporation (004800 KS)</a> had fallen 16% just in two days. Holdco is now at a 50% discount to NAV. This is a 10%p drop from 10 days ago (Dec 19). Holdco price must have been overly corrected. The ongoing police investigation on Cho Hyun-joon's alleged crime won't lead to a delisting. 10%p drop in discount to NAV must be a price divergence, not a sensible price correction.</li>
<li>Trade volume remained steady. Local hedge funds led the selling on Dec 27. Even they changed their position the following day. No short selling spike has been seen either. Hyosung is one of the highest yielding div holdco stocks. Hyosung Capital liquidation and Anyang Plant revaluation would be another short-term plus.</li>
<li>I'd exploit this price divergence. It would soon revert to the Dec 19 discount level. It should at least stay at the peer average.</li>
</ul>



Hyosung Corporation (004800 KS) had fallen 16% just in two days. Holdco is now at a 50% discount to NAV. This is a 10%p drop from 10 days ago (Dec 19). Holdco price must have been overly corrected. The ongoing police investigation on Cho Hyun-joon's alleged crime won't lead to a delisting. 10%p drop in discount to NAV must be a price divergence, not a sensible price correction.
Trade volume remained steady. Local hedge funds led the selling on Dec 27. Even they changed their position the following day. No short selling spike has been seen either. Hyosung is one of the highest yielding div holdco stocks. Hyosung Capital liquidation and Anyang Plant revaluation would be another short-term plus.
I'd exploit this price divergence. It would soon revert to the Dec 19 discount level. It should at least stay at the peer average.


Hyosung Holdings: 10%p Drop in Discount to NAV Should Be Reverted Soon

South Korea

OCI Holdings Company Ltd. operates chemical business. The Company manufactures inorganic chemicals, petroleum and coal chemicals, fine chemicals, renewable energy and insulation materials. OCI Holdings markets its products primarily throughout Korea with limited overseas.

VT GMP Co.,Ltd. manufactures and markets laminating machines. The Company produces and sells pouch laminators, roll laminators, and other products. VT GMP also produces and sells laminating films.

Advanced Nano Products Co., Ltd. manufactures and supplies a wide range of nanomaterial products in the energy technology, nanotechnology, biotechnology, IT field.  The company mainly produces Memory/Non-memory semiconductors, solar cells, LCDs, PDPs and other material products.

Advanced Nano Products Co Ltd (121600 KS)

LOTTE Fine Chemical Co., Ltd. produces general and fine chemicals. The Company produces ammonia, epichlorohydrin, caustic soda, and dimethylformamide. LOTTE Fine Chemical also manufactures chemicals used in pharmaceutical and paint manufacturing areas.

Kolon Industries Inc. manufactures a variety of chemical fibers and textiles such as nylon yarns and fabrics, chamude, tire cord fabrics, and air bag fabrics.  The Company also produces films and media materials including polyester films, nylon films, and audio/video tapes.  In addition, Kolon makes engineering plastic products.

Hansol Chemical Co., Ltd. manufactures chemical products such as hydrogen peroxide, benzol peroxide, urea resin, polyacrylamide, trimethylolpropane, and latex.  The Company supplies its products to the paper, textile, and food industries.

Soulbrain Holdings Co., Ltd. manufactures, sells, and trades semiconductor related chemicals.  The Company's products include a line of Chemical Vapor Deposition (CVD) such as tetraethyl ortho-silicate (TEOS) and etchants.  TechnoSemiChem also produces and distributes chemicals used in liquid crystal display (LCD) and fiber optics processing.

Dongjin Semichem Co., Ltd. produces fine chemicals for semiconductor and liquid crystal display (LCD) manufacturing.  The Company's products include photoresist materials and epoxy molding compounds.  In addition, Dongjin Semichem also produces chemical foaming agents for plastic and rubber applications.

Hyosung Corporation specializes in general trading businesses.  The Company also produces nylon yarns and other synthetic and chemical products such as PET films, PET bottles and polypropylene resins.  In addition, Hyosung contracts electrical construction and information systems and manufactures industrial machinery.

Cosmochemical Co., Ltd. manufactures and markets titanium dioxide used in synthetic resins, rubber, paper, paint, and TV cathode-ray tubes.  The Company also produces titanium dioxide byproducts, ferrous sulfate, koferis, ferosol for wastewater treatment agent uses, and sports equipment.

Huabao International Holdings Ltd is an industrial holdings group based on China's fast-moving consumer goods market. The group mainly engages in the R&D, production and sales of flavors and fragrances, tobacco raw materials, aroma raw materials, as well as condiments. The Group also makes diversified investments around its core businesses through its subsidiaries.

China BlueChemical Ltd. operates as a developer and manufacturer of mineral fertilizers and chemicals. The Company produces urea, phosphate and compound fertilizers, and methanol, using proprietary research. China BlueChemical is a state-owned enterprise.

Nufarm Limited manufactures and supplies a range of agricultural chemicals used by farmers to protect crops from damage caused by weeds, pests and disease. The Company has worldwide operations.

C. Uyemura & Co., Ltd. manufactures and sells plating chemicals.  The Company also manufactures plating machinery.  C. Uyemura markets its products in North America and Asia.

Gujarat State Fertilizers & Chemicals Ltd manufactures fertilizers and chemicals in four product areas:  Finished Products, Intermediate Products, Polymers and Fibre Products.  The Company also maintains trading activities in nylon products, petrochemicals, industrial gases and plastics.

Gujarat State Fertilizers&Chemicals (GSFC IN)

Denka Co., Ltd. is a diversified manufacturer and supplier of chemical products, including basic chemicals, agrochemicals, petrochemicals, pharmaceuticals, and construction materials.  The Company's primary products include styrene resins, polyvinyl chloride, and other synthetic resins.

Hubei Biocause Pharmaceutical Co., Ltd. develops and produces pharmaceuticals focusing on the treatment of colonitis, high blood pressure, and infectious diseases.  The Company also manufactures and markets carbinol and polypropylene chemical products.

Hubei Biocause Pharmaceutical Co (000627 CH)

Anhui Wanwei Updated High-Tech Material Industry Co., Ltd. manufactures polyvinyl alcohol, chemical fibers, and other chemical products.  The Company also produces cement and adhesives.

Impack Pratama Industri Tbk PT produces plastic products in Asia and distributes them worldwide. The Company and it's subsidiaries manufacture building material plastics, PVC products, and fiberglass roofing, among other products.

Zhuzhou Times New Material Technology Co., Ltd. manufactures high polymer anti-vibration and noise reduction elastic components, high polymer composite modified materials, coating materials, and insulation materials. The Company also retails electromechanical products and provides highway construction.

Zhuzhou Times New Material Tech Co. (600458 CH)

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)

KOSPI200 Index Rebalance Preview: Increasing Number of Potential Changes

We see 4 potential changes to the KOSPI200 index at the June review (up from 1 change in Nov). With the short sell ban expiring on 2 May for...

Brian Freitas

Korean Stubs Spotlight: A Pair Trade Between Hyosung Corp and Hyosung TNC

In this report, we provide an analysis of our pair trade idea between Hyosung Corporation (004800 KS) (market cap of 1,612 billion won) and Hyosung...

Douglas Kim

Hyosung Holdings: Current Status & Trade Approach

Local institutions are busy scooping up Hyosung Corporation (004800 KS) shares lately. The owner risk is now gone. There are increasing signs of...

Sanghyun Park

Hyosung Holdings: 10%p Drop in Discount to NAV Should Be Reverted Soon

Hyosung Corporation (004800 KS) had fallen 16% just in two days. Holdco is now at a 50% discount to NAV. This is a 10%p drop from 10 days ago...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

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KOSPI200 Index Rebalance Preview: Increasing Number of Potential Changes

We see 4 potential changes to the KOSPI200 index at the June review (up from 1 change in Nov). With the short sell ban expiring on 2 May for...

Brian Freitas

Korean Stubs Spotlight: A Pair Trade Between Hyosung Corp and Hyosung TNC

In this report, we provide an analysis of our pair trade idea between Hyosung Corporation (004800 KS) (market cap of 1,612 billion won) and Hyosung...

Douglas Kim

Korean Stubs Spotlight: Focus on Diverging Share Prices and Changes to Foreign Ownership

In this report, we provide the one year share price comparisons of the holdcos and the opcos in both table and chart formats as well as changes to...

Douglas Kim

Hyosung Holdings: Current Status & Trade Approach

Local institutions are busy scooping up Hyosung Corporation (004800 KS) shares lately. The owner risk is now gone. There are increasing signs of...

Sanghyun Park

Hyosung Holdings: 10%p Drop in Discount to NAV Should Be Reverted Soon

Hyosung Corporation (004800 KS) had fallen 16% just in two days. Holdco is now at a 50% discount to NAV. This is a 10%p drop from 10 days ago...

Sanghyun Park