Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>CJ CGV announced a massive capital increase plan of nearly 1 trillion won which includes a rights offering of 570 billion won and 450 billion won of in-kind investments.</li>
<li>This capital increase is likely to negatively impact CJ CGV's share price in the coming months. Through this capital raise, the existing shareholders are likely to be diluted significantly. </li>
<li>The expected rights offering price is 7,630 won, which is 47% discount to its current price.</li>
</ul>


CJ CGV announced a massive capital increase plan of nearly 1 trillion won which includes a rights offering of 570 billion won and 450 billion won of in-kind investments.
This capital increase is likely to negatively impact CJ CGV's share price in the coming months. Through this capital raise, the existing shareholders are likely to be diluted significantly. 
The expected rights offering price is 7,630 won, which is 47% discount to its current price.


CJ CGV: A Rights Offering 74.7 Million Shares (Destroying Shareholder Value)

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

<ul>
<li>NPS said it would add 50 KOSPI stocks to KOSPI 200 for direct management. However, the key was when this would be implemented and which ones would be included.</li>
<li>SBS, one of Korea's major networks, exclusively reported that NPS finalized the constituent stocks of the NPS-KR250 and started rebalancing trading on the 50 additional KOSPI stocks from January.</li>
<li>Hence, tracing and identifying who these additional 50 KOSPI stocks are is becoming the hottest topic in Korea's local market at this point.</li>
</ul>


NPS said it would add 50 KOSPI stocks to KOSPI 200 for direct management. However, the key was when this would be implemented and which ones would be included.
SBS, one of Korea's major networks, exclusively reported that NPS finalized the constituent stocks of the NPS-KR250 and started rebalancing trading on the 50 additional KOSPI stocks from January.
Hence, tracing and identifying who these additional 50 KOSPI stocks are is becoming the hottest topic in Korea's local market at this point.


Korea NPS Reportedly Finalized Additional 50 KOSPI Stocks in Its BM for Direct Management

<ul>
<li>We discuss end of the mandatory lock-up periods for 57 stocks in Korea in January 2023, among which 5 are in KOSPI and 52 are in KOSDAQ.</li>
<li>These 57 stocks on average could be subject to further selling pressures in December and could underperform relative to the market. </li>
<li>Among these 57 stocks, the top 5 market cap stocks include Sungeel Hitech, HPSP, CJ CGV, Sillajen, and Eoflow. </li>
</ul>


We discuss end of the mandatory lock-up periods for 57 stocks in Korea in January 2023, among which 5 are in KOSPI and 52 are in KOSDAQ.
These 57 stocks on average could be subject to further selling pressures in December and could underperform relative to the market. 
Among these 57 stocks, the top 5 market cap stocks include Sungeel Hitech, HPSP, CJ CGV, Sillajen, and Eoflow. 


End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023

<ul>
<li>As expected, most of the KOSPI 200 deletions, except for Bukwang Pharm, significantly outperformed the KOSPI index today.</li>
<li>Those that fit the pattern shown in the last rebalancing are CJ CGV and Bukwang. The problem, however, is that they have potential events triggering their price to fall.</li>
<li>So, I suggest paying attention to Yungjin Pharm and SK Discovery, which also have a sizable level of short interest and are expected to have stable short-coverings by end-June.</li>
</ul>


As expected, most of the KOSPI 200 deletions, except for Bukwang Pharm, significantly outperformed the KOSPI index today.
Those that fit the pattern shown in the last rebalancing are CJ CGV and Bukwang. The problem, however, is that they have potential events triggering their price to fall.
So, I suggest paying attention to Yungjin Pharm and SK Discovery, which also have a sizable level of short interest and are expected to have stable short-coverings by end-June.


Short-Covering Trend of KOSPI 200 Deletions by Month-End

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>There are 7 adds and 7 deletes for 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> rebalance to be implemented at the close on 9 June.</li>
<li>There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.</li>
<li>The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.</li>
</ul>


There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.


KOSPI200 Index Rebalance: Float Changes, Flows & Trades

South Korea

CJ CGV Co., Ltd. develops and operates multi-screen movie theaters in South Korea.  The Company's theater complex also conducts stores and restaurants in theaters, and offers advertisement through screens.

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CJ CGV Co Ltd (079160 KS)

CJ CGV: A Rights Offering 74.7 Million Shares (Destroying Shareholder Value)

CJ CGV is conducting a rights offering worth 74.7 million shares which is 157% of its outstanding shares. We believe this rights offering is likely...

Douglas Kim

Korea NPS Reportedly Finalized Additional 50 KOSPI Stocks in Its BM for Direct Management

This post investigates the 50 additional KOSPI stocks that Korea NPS has reportedly chosen for its benchmark index for direct management, called...

Sanghyun Park

End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023

We discuss end of the mandatory lock-up periods for 57 stocks in Korea in January 2023, among which 5 are in KOSPI and 52 are in KOSDAQ.

Douglas Kim

Short-Covering Trend of KOSPI 200 Deletions by Month-End

This post investigates the pattern shown in the last KOSPI 200 rebalancing for short-covering on the deletions and applies it to this rebalancing...

Sanghyun Park

KOSPI200 Index Rebalance: Float Changes, Flows & Trades

There are significant flows and impact on some stocks that have float changes at the upcoming KOSPI2 rebalance. With over 5 days ADV to buy,...

Brian Freitas

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