Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>The total amount of share cancellations by Korean companies increased sharply in the past three years. Share cancellations of 6.1 trillion won in 2023 represented a 140% increase from 2021.</li>
<li>Although the total amount of share cancellations of 6.1 trillion won in 2023 seems fairly large, this represented only 0.24% of total market caps of Korean companies. </li>
<li>We also provide a list of seven Korean companies that have been targeted by activist investors  to cancel more shares and improve corporate governance. </li>
</ul>


The total amount of share cancellations by Korean companies increased sharply in the past three years. Share cancellations of 6.1 trillion won in 2023 represented a 140% increase from 2021.
Although the total amount of share cancellations of 6.1 trillion won in 2023 seems fairly large, this represented only 0.24% of total market caps of Korean companies. 
We also provide a list of seven Korean companies that have been targeted by activist investors  to cancel more shares and improve corporate governance. 


A 140% Increase in Share Cancellations by Korean Companies from 2021 to 2023

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.

<ul>
<li>The data is crucial for year-end dividend arbitrage. We can strategically target Single-stock futures' spread basis widening due to information timeliness disparities, focusing on companies with high dividend yields.</li>
<li>Furthermore, it offers valuable insights into assessing the December-March spread levels, potentially leading to a rollover distortion in KOSPI 200 futures' calendar spread trading.</li>
<li>Postponed yearend dividend record dates to March may clash with first-quarter dividends, offering a new trading opportunity. this unique situation could significantly impact spot and futures prices.</li>
</ul>


The data is crucial for year-end dividend arbitrage. We can strategically target Single-stock futures' spread basis widening due to information timeliness disparities, focusing on companies with high dividend yields.
Furthermore, it offers valuable insights into assessing the December-March spread levels, potentially leading to a rollover distortion in KOSPI 200 futures' calendar spread trading.
Postponed yearend dividend record dates to March may clash with first-quarter dividends, offering a new trading opportunity. this unique situation could significantly impact spot and futures prices.


Comprehensive List: 359 Companies on KOSPI & KOSDAQ Deferring Yearend Dividend Record Dates

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Equity Bottom-Up

<ul>
<li>Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction</li>
<li>Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23</li>
<li>Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.</li>
</ul>


Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction
Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23
Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.


KakaoBank - Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc

Lotte Non Life Insurance Co / Event-Driven

<ul>
<li>It was reported in numerous local media that the sale process of Lotte Non Life Insurance Co (000400 KS) could start in October 2023.</li>
<li>There are four companies including Shinhan Financial (055550 KS), Hana Financial (086790 KS), Woori Financial Group (316140 KS), and Kyobo Life Insurance that may be interested in acquiring Lotte Non-Life Insurance. </li>
<li>Minority shareholders are not likely to benefit from this potential huge management M&amp;A premium of Lotte Non-Life Insurance. </li>
</ul>


It was reported in numerous local media that the sale process of Lotte Non Life Insurance Co (000400 KS) could start in October 2023.
There are four companies including Shinhan Financial (055550 KS), Hana Financial (086790 KS), Woori Financial Group (316140 KS), and Kyobo Life Insurance that may be interested in acquiring Lotte Non-Life Insurance. 
Minority shareholders are not likely to benefit from this potential huge management M&amp;A premium of Lotte Non-Life Insurance. 


Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Korea Stock Exchange KOSPI 200 / Event-Driven

<ul>
<li>The KOSPI 200 index last week closed down (CC=-1). This particular pattern is very bullish: 78% of the time the index closes the week up after -1 week down.</li>
<li>The index has been stuck sideways between 348 and 330 for weeks, we still see a buy-the-dip opportunity to ride the continuation of the Bull run from here.</li>
<li>
Main support area to go LONG, based on the Market Reversal Matrix's readings, is between 337 and 335. Time+space estimated probability of success is between 64% and 76%.</li>
</ul>


The KOSPI 200 index last week closed down (CC=-1). This particular pattern is very bullish: 78% of the time the index closes the week up after -1 week down.
The index has been stuck sideways between 348 and 330 for weeks, we still see a buy-the-dip opportunity to ride the continuation of the Bull run from here.

Main support area to go LONG, based on the Market Reversal Matrix's readings, is between 337 and 335. Time+space estimated probability of success is between 64% and 76%.


EQD | KOSPI 200 Index WEEKLY Trend Analysis

South Korea

Woori Financial Group Inc. provides commercial banking services. The Company offers deposit services, loan services, bill services, settlement services, credit card, international, online banking, and other related services. Woori Financial Group also operates banking and retail banking businesses.

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Woori Financial Group (316140 KS)

Comprehensive List: 359 Companies on KOSPI & KOSDAQ Deferring Yearend Dividend Record Dates

I've obtained the latest list of companies rescheduling dividend record dates to next year. Please check the attached Excel file. In the KOSPI, 119...

Sanghyun Park

KakaoBank - Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc

Major net interest income pressure, NIM down sharply in past 6 months. Operating costs not supporting ROA. Credit metrics worsening: LLP from 10%...

Daniel Tabbush

Lotte Non-Life Insurance: Who Will Buy?

There are four companies including Shinhan Financial, Hana Financial, Woori Financial Group, and Kyobo Life Insurance that may be interested in...

Douglas Kim

EQD | KOSPI 200 Index WEEKLY Trend Analysis

The KOSPI 200 Index got stuck in a range during the last few weeks, but it may be readying to resume its Bull run. Read the latest Market Reversal...

Nico Rosti

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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A 140% Increase in Share Cancellations by Korean Companies from 2021 to 2023

The total amount of share cancellations by Korean companies increased sharply in the past three years. Share cancellations of 6.1 trillion won in...

Douglas Kim

Comprehensive List: 359 Companies on KOSPI & KOSDAQ Deferring Yearend Dividend Record Dates

I've obtained the latest list of companies rescheduling dividend record dates to next year. Please check the attached Excel file. In the KOSPI, 119...

Sanghyun Park

KakaoBank - Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc

Major net interest income pressure, NIM down sharply in past 6 months. Operating costs not supporting ROA. Credit metrics worsening: LLP from 10%...

Daniel Tabbush

Lotte Non-Life Insurance: Who Will Buy?

There are four companies including Shinhan Financial, Hana Financial, Woori Financial Group, and Kyobo Life Insurance that may be interested in...

Douglas Kim

EQD | KOSPI 200 Index WEEKLY Trend Analysis

The KOSPI 200 Index got stuck in a range during the last few weeks, but it may be readying to resume its Bull run. Read the latest Market Reversal...

Nico Rosti