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>The market's attention has shifted to the second part, which is the additional utilization of a portion of the harvest result for shareholder returns.</li>
<li>There is a significant possibility that the timing to allocate the ₩200B for shareholder returns will be advanced to late July or early August.</li>
<li>We should set up a position aiming for the potential for a special dividend, which may lead to momentum trading flow just before the quarterly ex-div date later this month.</li>
</ul>


The market's attention has shifted to the second part, which is the additional utilization of a portion of the harvest result for shareholder returns.
There is a significant possibility that the timing to allocate the ₩200B for shareholder returns will be advanced to late July or early August.
We should set up a position aiming for the potential for a special dividend, which may lead to momentum trading flow just before the quarterly ex-div date later this month.


SK Square's Special Dividend Momentum Trading: Entry Timing at Month End.

<ul>
<li>The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week's seminar served as a proactive way to inform the market about it.</li>
<li>The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies' treasury stock holdings.</li>
<li>Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.</li>
</ul>


The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week's seminar served as a proactive way to inform the market about it.
The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies' treasury stock holdings.
Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.


Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Chinese data centre outfit <a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata (CD US)</a> has no end of alleged suitors, rumoured to include SOE-backed China Merchants, <a href="https://www.smartkarma.com/entities/gds-holdings-adr" target="_blank" data-smartkarma-citation="entities:23649:1" rel="noopener">GDS (GDS US)</a>, PE outfit PAG, and <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT (EQT SS)</a>-backed EdgeConneX.</li>
<li>Now Bain Capital, Chindata's largest shareholder with 42.17% (and 87.39% of the voting power) has made a non-binding proposal of $8/share per ADS, a 33% premium to last close.</li>
<li>Chindata's board has made no decision on the proposal. It's hardly a knockout Offer. But the key question is whether Bain will get regular approval to take Chindata private. </li>
</ul>


Chinese data centre outfit Chindata (CD US) has no end of alleged suitors, rumoured to include SOE-backed China Merchants, GDS (GDS US), PE outfit PAG, and EQT (EQT SS)-backed EdgeConneX.
Now Bain Capital, Chindata's largest shareholder with 42.17% (and 87.39% of the voting power) has made a non-binding proposal of $8/share per ADS, a 33% premium to last close.
Chindata's board has made no decision on the proposal. It's hardly a knockout Offer. But the key question is whether Bain will get regular approval to take Chindata private. 


Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<ul>
<li>SK Pharmteco is currently 100% owned by SK Inc. It is one of the largest CMO players in Korea. SK Pharmteco is trying to raise nearly 600 billion won. </li>
<li>SK Pharmteco is seeking valuation of about 5 trillion won which is much higher than its book value of 1.65 trillion won.</li>
<li>Our NAV valuation of SK Inc suggests an implied NAV of 21.2 trillion won or 286,636 won per share, representing 75% upside from current levels.</li>
</ul>


SK Pharmteco is currently 100% owned by SK Inc. It is one of the largest CMO players in Korea. SK Pharmteco is trying to raise nearly 600 billion won. 
SK Pharmteco is seeking valuation of about 5 trillion won which is much higher than its book value of 1.65 trillion won.
Our NAV valuation of SK Inc suggests an implied NAV of 21.2 trillion won or 286,636 won per share, representing 75% upside from current levels.


SK Pharmteco Pre-IPO Funding & Impact on SK Inc

<ul>
<li>646 listed companies (28.5%) in Korea have modified their articles of incorporation this March to prioritize determining the dividend amount before setting the dividend record date.</li>
<li>New practices will arise involving the use of single-stock futures for arbitrage trading through baskets among major high-dividend companies whose dates of the dividend records overlap.</li>
<li>It will be crucial to keep track of the dividend record dates with precision. In this connection, KLCA and KOSDAQCA will create a website monitoring this information.</li>
</ul>


646 listed companies (28.5%) in Korea have modified their articles of incorporation this March to prioritize determining the dividend amount before setting the dividend record date.
New practices will arise involving the use of single-stock futures for arbitrage trading through baskets among major high-dividend companies whose dates of the dividend records overlap.
It will be crucial to keep track of the dividend record dates with precision. In this connection, KLCA and KOSDAQCA will create a website monitoring this information.


Where Are We Now Regarding New Dividend Distribution Procedure in Korea?

South Korea

Posco DX Company Ltd. provides information and technology services. The Company provides computer systems design, computer and server merchant wholesale, computer and office machine repair and maintenance services. Posco DX also offers eic engineering, smart factory, wireless networking equipment, steel manufacturing, and digital video recorder manufacturing services.

LG Display Co., Ltd. develops and manufactures digital display products.  The Company's products include thin film transistor-liquid crystal displays (TFT-LCD) for notebook and desktop computer monitors, TVs, mobile phones, and medical equipment.  LG Display provides its products mainly to overseas markets.

LG Innotek Co., Ltd. develops and produces cellular phone parts such as mini vibration motors, LCD modules, light emitting diode (LED), camera modules, protection circuit modules. The Company also manufactures liquid crystal displays (LCD) and plasma display panels (PDP) parts such as inverters, intelligent power modules, multi chip modules, and tuners.

Samsung SDS Co., Ltd. provides information technology services, such as consulting and technical services. The Company also offers outsourcing services including application outsourcing, IT infrastructure outsourcing, and cloud computing.

Samsung Electro-Mechanics Co., Ltd. manufactures a variety of electronic components used in computers, audio and video products, industrial electronics, and telecommunication equipment. The Company's products include multi-layer boards and capacitors, optical Pick Ups, deflection yokes (DY), keyboards, speakers, and light emitting diode (LED) products.

Samsung Electro Mechanics Co, Ltd. (009150 KS)

IsuPetasys Co., Ltd. manufactures printed circuit boards (PCBs) specializing in high multilayer PCBs.  The Company exports its products to Cisco Systems, Brocade Communications Systems, and Sun Microsystems in the United States.

NCSOFT Corporation develops and markets on-line games that enable users to play over the Internet and computer software, such as web editing software.  The Company also designs and constructs databases, Intranet, and commercial Internet access systems.

COSMOAM&T Co., Ltd. manufactures, sells, and exports blank video & audio recording tapes including back-coated tapes, high speed recordable tapes, and video head cleaners.  The Company also produces recordable and rewritable optical discs, such as compact discs (CD), mini discs (MD), and digital video discs (DVD).

LEENO Industrial Inc. develops and manufactures various testers.  The Company's products include integrated circuit (IC) test sockets, test probe pins used in semiconductor industry.

Hyundai Autoever Corp. provides information technology services. The Company offers system integration, system management, information system development, and other services. Hyundai Autoever offers services worldwide.

Zhejiang Chint Electrics Co., Ltd. manufactures low voltage electric appliances. The Company's products include high, Medium and low voltage electrical apparatus, power transmission and distribution equipment, and measuring meters and instruments.

Mercury Systems, Inc. designs, manufactures, and markets real-time digital signal processing computer systems.  The Company's systems transform sensor generated data into information which can be displayed as images for human interpretation or subjected to additional computer analysis.  Products are marketed to the defense electronics and medical diagnostic imaging businesses.

Xinte Energy Co., Limited solar-grade polysilicon producer and PV project contractor. The Company provides polysilcon production, sales of electricity, engineering and construction contracting, inverter manufacturing, and PV wafer and module manufacturing.

SUMCO Corporation manufactures silicon wafers for the semiconductor industry. The Company produces silicon wafers used to produce solar batteries as well as ultra-high purity quartz used to produce vessels for silicon manufacturing process. SUMCO markets its products worldwide.

Yandex NV operates an Internet website in Russia.  The Company's website offers an Internet search engine, news, shopping information, blogs, photographs and videos.  Yandex earns its revenues from online advertising.

Kingsoft Corporation Ltd. develops and markets computer software.  The Company develops role-playing computer games and security, word processing, and spreadsheet software.

Technology One Limited is an Australian-based company that is engaged in the development, marketing, sales, implementation, support, and distribution of financial management and enterprise software solutions. The Company has operations in New Zealand, the United Kingdom, the South Pacific, and Malaysia.

Axcelis Technologies, Inc. manufactures components for the semiconductor industry. The Company designs, manufactures and services ion implantation, dry strip, thermal processing and curing equipment used in the fabrication of semiconductor chips. Axcelis Technologies sells their products to semiconductor chip manufacturers worldwide.

MA-COM Technology Solutions Holdings Inc. provides high performance analog semiconductor solutions. The Company supplies semiconductors, active and passive components, and sub-assemblies for use in radio frequency, microwave, and millimeter wave applications. MA-COM Technology Solutions serves customers throughout the United States.

GMO Payment Gateway, Inc. provides credit card transaction services for electronic commerce firms.

SK Holdings Co., Ltd. is a holdings company that is engaged in various industries including energy, chemicals, information technology, semiconductors, marketing, and services businesses in South Korea and internationally.

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SK Inc (034730 KS)

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Is Bain Permitted To Take Over Chindata?

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SK Pharmteco Pre-IPO Funding & Impact on SK Inc

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Where Are We Now Regarding New Dividend Distribution Procedure in Korea?

In this post, I will examine the latest developments regarding the implementation of the new dividend distribution process in Korea.

Sanghyun Park

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