Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>Our base case valuation of SK Inc is NAV of 17.5 trillion won (NAV per share of 239,095 won), representing a 60% upside from current levels.</li>
<li>SK Inc has underperformed most other SK Group related companies YTD but this underperformance may be excessive and SK Inc could outperform as more value investors seek deeply discounted companies.</li>
<li>SK Inc's dividend yield is 3.3%, which is higher than the dividend yields of most other major SK Group companies excluding SK Telecom which has a dividend yield of 6.5%.</li>
</ul>


Our base case valuation of SK Inc is NAV of 17.5 trillion won (NAV per share of 239,095 won), representing a 60% upside from current levels.
SK Inc has underperformed most other SK Group related companies YTD but this underperformance may be excessive and SK Inc could outperform as more value investors seek deeply discounted companies.
SK Inc's dividend yield is 3.3%, which is higher than the dividend yields of most other major SK Group companies excluding SK Telecom which has a dividend yield of 6.5%.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Back on the 7 June, <strong><a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata Group (CD US)</a></strong> announced Bain Capital's NBIO to buy all shares of the Chinese data center provider it does not already own for $8/ADS.</li>
<li>On the <a href="https://investor.chindatagroup.com/news-releases/news-release-details/chindata-group-receives-non-binding-take-private-proposal-cmc" target="_blank" rel="noopener">13 July</a>, Chindata announced that China Merchants Capital has made an NBIO at $9.20/ADS.</li>
<li>Now Bain has entered into a definitive agreement with Chindata at US$8.60/ADS. Bain holds more than 2/3s of Chindata to vote this through. And there is no PRC regulator approval.</li>
</ul>


Back on the 7 June, Chindata Group (CD US) announced Bain Capital's NBIO to buy all shares of the Chinese data center provider it does not already own for $8/ADS.
On the 13 July, Chindata announced that China Merchants Capital has made an NBIO at $9.20/ADS.
Now Bain has entered into a definitive agreement with Chindata at US$8.60/ADS. Bain holds more than 2/3s of Chindata to vote this through. And there is no PRC regulator approval.


IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata Group (CD US)</a> has entered a definite agreement with Bain Capital at US$8.60 per ADS, 7.5% higher than its previous offer of US$8.00 per ADS.</li>
<li>Completion is conditional on shareholder approval, dissenting shareholders representing less than 12% of outstanding shares and any applicable regulatory approvals. The completion conditions should be met.</li>
<li>CMC’s offer, while higher, does not meet the "<em>superior proposal</em>" criterion. At the last close price and December-end completion, the gross and annualised spread is 6.0% and 16.6%, respectively.</li>
</ul>



Chindata Group (CD US) has entered a definite agreement with Bain Capital at US$8.60 per ADS, 7.5% higher than its previous offer of US$8.00 per ADS.
Completion is conditional on shareholder approval, dissenting shareholders representing less than 12% of outstanding shares and any applicable regulatory approvals. The completion conditions should be met.
CMC’s offer, while higher, does not meet the "superior proposal" criterion. At the last close price and December-end completion, the gross and annualised spread is 6.0% and 16.6%, respectively.


Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS

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>In a surprising move, SK Inc confirmed the interim dividend amount (₩1,500) on July 26, and the ex-dividend date is set for August 10.</li>
<li>As a result, this enables risk-free dividend arb trading in Korea as SK Inc carries single-stock futures, whose liquidity level is around 70% of the spot since July 26.</li>
<li>The backwardation level has not yet pushed this arbitrage to a profitable level. Nevertheless, it's still possible to observe the basis spread moving to a meaningful extent before the ex-date.</li>
</ul>


In a surprising move, SK Inc confirmed the interim dividend amount (₩1,500) on July 26, and the ex-dividend date is set for August 10.
As a result, this enables risk-free dividend arb trading in Korea as SK Inc carries single-stock futures, whose liquidity level is around 70% of the spot since July 26.
The backwardation level has not yet pushed this arbitrage to a profitable level. Nevertheless, it's still possible to observe the basis spread moving to a meaningful extent before the ex-date.


Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc

Private Capital Markets

<ul>
<li>SK Ecoplant is getting ready to complete its IPO sometime in late 2023/1H 2024.</li>
<li>Local media have mentioned that SK Ecoplant's market cap could range from 5 trillion won to 10 trillion won.</li>
<li>At the end of 2022, SK Inc's 44.5% stake in SK Ecoplant had a book value of 545 billion won, which is much less the market value of SK Ecoplant.</li>
</ul>


SK Ecoplant is getting ready to complete its IPO sometime in late 2023/1H 2024.
Local media have mentioned that SK Ecoplant's market cap could range from 5 trillion won to 10 trillion won.
At the end of 2022, SK Inc's 44.5% stake in SK Ecoplant had a book value of 545 billion won, which is much less the market value of SK Ecoplant.


Initial Thoughts on the SK Ecoplant IPO - Impact on SK Inc

South Korea

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)

SK Inc: Updated NAV Valuation Analysis

Our base case valuation of SK Inc is NAV of 17.5 trillion won (NAV per share of 239,095 won), representing a 60% upside from current levels.

Douglas Kim

Chindata Backs Bain's Revised Terms

Chindata is still cheap. But Bain & Co have the necessary votes to push this through. Trading at a 6% gross spread to terms, or ~13% annualised...

David Blennerhassett

Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS

Bain's revised offer is still unattractive, but the completion conditions should be met. At the last close price and December-end completion, the...

Arun George

Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc

This post discusses Korea's practically first risk-free dividend arbitrage trading opportunity, presented by SK Inc, which declares its interim...

Sanghyun Park

Initial Thoughts on the SK Ecoplant IPO - Impact on SK Inc

SK Ecoplant is getting ready to complete its IPO sometime in late 2023/1H 2024. Local media have mentioned that SK Ecoplant's market cap could...

Douglas Kim

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