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.

Equity Capital Markets

HD Hyundai Infracore / Equity Capital Markets

<h2>Regulatory filing summary</h2><p>In a regulatory filing, Doosan Infracore unveiled its plan for a capital increase of about ₩800B after the close of the market yesterday.</p><p>At the same time, Doosan Infracore conducts a par-value capital reduction without any refund. So, the par value of an ordinary stock is reduced from ₩5,000 to ₩1,000. The ratio of this capital reduction is 80%.</p><div class="content-highlight">
<p>Below is the regulatory filing at DART.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/226/111/original/Screen+Shot+2021-08-25+at+2.45.22+PM.png?1629917573" class="editor-image img-responsive" data-smartkarma-image-id="226111"></figure></section>
</div><section class="figure"><p><strong>Here are the key points of the regulatory filing:</strong></p></section><ul><li>
<strong>Capital reduction: Doosan Infracore will seek shareholder approval for the capital reduction at the extraordinary general shareholders meeting scheduled for September 10. </strong>→ A capital reduction is subject to shareholder approval at the general meeting of shareholders.</li></ul><div class="content-highlight"><p>This is a par-value capital reduction without any refund. Reducing the par value without any refund simply moves capital to earnings surplus to avoid capital impairment while the total issued shares remain unchanged. Just like the previous case of Samsung Heavy Industries, Doosan Infracore also needs this capital reduction to prevent capital impairment.</p></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital reduction details"}'>Capital reduction details</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Current"}'>Current</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"After capital reduction"}'>After capital reduction</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ordinary shares"}'><strong>Ordinary shares</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":78309228}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>78,309,228</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":78309228}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>78,309,228</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Par value"}'><strong>Par value</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩5,000"}'><strong>₩5,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩1,000"}'><strong>₩1,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital"}'><strong>Capital</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":391.54614}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩391.5B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":78.309228}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩78.3B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Record date"}'>Record date</td>
<td colspan="2" rowspan="1" style="text-align: right;" data-sheets-value='{"1":3,"3":44481}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 10. 12</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shareholder meeting"}'>Shareholder meeting</td>
<td colspan="2" rowspan="1" style="text-align: right;" data-sheets-value='{"1":3,"3":44449}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 09. 10</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension"}'>Trade suspension</td>
<td colspan="2" rowspan="1" style="text-align: right;" data-sheets-value='{"1":2,"2":"2021. 10. 08 ~ 10. 25"}'>2021. 10. 08 ~ 10. 25</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><ul><li>
<strong>Doosan Infracore plans to decide on the details of a capital increase at the board of directors after obtaining shareholder approval for the capital reduction on September 10. </strong>→ A capital increase is subject to the resolution of the board of directors.</li></ul>

Regulatory filing summaryIn a regulatory filing, Doosan Infracore unveiled its plan for a capital increase of about ₩800B after the close of the market yesterday.At the same time, Doosan Infracore conducts a par-value capital reduction without any refund. So, the par value of an ordinary stock is reduced from ₩5,000 to ₩1,000. The ratio of this capital reduction is 80%.
Below is the regulatory filing at DART.

Here are the key points of the regulatory filing:
Capital reduction: Doosan Infracore will seek shareholder approval for the capital reduction at the extraordinary general shareholders meeting scheduled for September 10. → A capital reduction is subject to shareholder approval at the general meeting of shareholders.This is a par-value capital reduction without any refund. Reducing the par value without any refund simply moves capital to earnings surplus to avoid capital impairment while the total issued shares remain unchanged. Just like the previous case of Samsung Heavy Industries, Doosan Infracore also needs this capital reduction to prevent capital impairment.







Capital reduction details
Current
After capital reduction


Ordinary shares
78,309,228
78,309,228


Par value
₩5,000
₩1,000


Capital
₩391.5B
₩78.3B


Record date
2021. 10. 12


Shareholder meeting
2021. 09. 10


Trade suspension
2021. 10. 08 ~ 10. 25

Source: DART


Doosan Infracore plans to decide on the details of a capital increase at the board of directors after obtaining shareholder approval for the capital reduction on September 10. → A capital increase is subject to the resolution of the board of directors.

Yes, We Can Short Doosan Infracore for Arb Setup Even Now with Offering Pre-Announcement

APAC IPOs & Placements

Zhen Zhou, Toh

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Contemporary Amperex Technology (CATL) / Equity Capital Markets

Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.
Events next week:

Nuvoco Vistas IPO Trading - Tepid Demand 
It has been a fairly slow week for Asia ECM but the deal pipeline is building up for a busy Q4. This week, we had eight India IPO filings with expected deal size of more than US$100m. Whereas in Hong Kong, more healthcare and AI tech companies, such as Samoyed, Medlinker, Sensetime, are getting closer to filing their draft prospectus with the exchange. 
This week, we initiated on a handful of  upcoming Hong Kong IPOs; Biel Crystal, EDDA, Neusoft Xikang, and Neusofit Medical are looking to raise up to US$2bn, US$300m, US$400m, and US$400m, respectively. 


Biel Crystal (伯恩光学) Pre-IPO - Cash Flow Generative Business but Underlying Trend Is Worrying 

EDDA Healthcare Pre-IPO - RoboDoc - Has Been Around for a While but Is Just Getting the Robo Going 
Neusoft Xikang (东软熙康) Pre-IPO: A Long Way to Profit

Neusoft Medical Systems (东软医疗系统) Pre-IPO: Unattractive Fundamentals 

For upcoming IPOs, RL Commercial REIT opened its books on Monday and closed on Friday with an expected debut date of 14th September. We think it should be able to trade in line with, at best, AREIT so to get some upside, the IPO needs to be priced at a discount.


RL Commercial REIT IPO - Needs to Come at a Discount 

RL Commercial REIT and MREIT Peer Comparison - One Is Much Better Shape 

Most IPO debuts this week such as, CarTrade (CARTRADE IN), Lotte Rental (089860 KS), Shanghai HeartCare Medical Technology (6609 HK), had been a disappointment, breaking IPO price on debut with the exception of Devyani International (DEVYANI IN). 


Cartrade Tech IPO Trading - Decent Demand but It Remains Expensive 

Devyani IPO Trading - Strongest of the Lot 

Lotte Rental IPO Trading - Good 1H21 Results, but Relatively Pricey 

Heartcare (心玮医疗) IPO Trading: Risk-Off for Institutional Investors 

Placement activity is also looking up. Daiwa House Reit Investment (8984 JP) and Obic Business Consultants (4733 JP) launched their bookbuilds this week and will be pricing on the 24th and 30th of August, respectively. We also took a brief look at fundamentals and deal dynamics of CATL (A) (300750 CH)'s  planned US$9bn placement, which will still need shareholder and CSRC approval before it can launch. 


Daiwa House REIT Placement - A Little Late for Its Annual Offering but Still an Accretive One 

OBIC Business Consultants Placement - Large Deal Needs a Large Correction - Remains in Transition 

CATL (宁德时代) Placement - Back in the Market Again to Fund Expansion 

Steadfast Group Placement - An Immediately Accretive Acquisition 

Pipeline is also building up as there are news of Prudential PLC (2378 HK), Samsung Heavy Industries (010140 KS), Synergy Grid &amp; Development Philippines (SGP PM) and PH Resorts Group (PHR PM) looking to launch their respective share sale soon.
Accuracy Rate:Our overall accuracy rate is 73.8% for IPOs and 67.5% for Placements (Performance measurement criteria is explained at the end of the note)New IPO filings this week  

Infervision (Hong Kong, US$300m)
Insight Lifetech (Hong Kong, &gt;US$100m)
Emcure Pharma (India, US$700m)
CMS Info (India, US$269m, re-filed)
Sterlite Power (India, US$229m)
RateGain Travel (India, US$161m)
AGS Transact (India, US$146m, refiled)
MedPlus Health Services (India, US$110m)
Inspira (India, US$108m)
Tega Industries (India, US$100m)
News on Upcoming IPOs  
Hong Kong/China

Goldman Sachs-Backed InferVision Picks Banks for Hong Kong IPO

Insight Lifetech Files HK Listing Application
Wanda’s Mall Unit Is Said to Boost Pre-IPO Round to $6 Billion
AI Firm Yitu Said to Mull Hong Kong IPO After Shanghai Plan Halt
China Tech Stocks Slump as Nation Issues Draft Competition Rules
Beijing Tightens Grip on ByteDance With Rare China Board Seat
AI Firm SenseTime Said to Tap HSBC For $2 Billion Hong Kong IPO
Chervon Holdings Said to Target Up to $800 Million in H.K. IPO
Samoyed plans HK IPO
Medlinker plans HK IPO
HeMo Bioengineering plans IPO
Yuanxin Tech plans IPO filing
Prudential picks banks for up to US$3bn equity raising in September
TPG-backed Novotech Health wins HK listing approval
US/China ADRs
SEC Leans Hard on China IPOs to Show How They’re Set Up Offshore
China’s New Ruipeng files confidentially for US IPO
FWD plans September launch for US IPO
Vietnam Delivery Startup Loship Eyes Rare US IPO 
India

Tega Industries files draft papers with Sebi to launch IPO; TA Associates to exit

AGS Transact Technologies plans IPO of up to ₹800 crore
Travel tech services firm RateGain plans ₹1,200 crore IPO
Warburg-Backed MedPlus Seeks SEBI Nod For Rs 1,640 Crore-IPO
Inspira files for Rs8bn IPO
Sterlite Power files for IPO
CMS Info Systems files draft papers with Sebi for Rs 2,000 crore IPO
Paradeep Phosphates files draft papers to raise funds via IPO
India’s Overseas Listing Rules Delayed Due to Tax Concerns
Emcure Pharma files for up to US$700m IPO
Japan/Korea
Hyundai Oilbank Hires NH, KB, Credit Suisse for IPO
 Korean Firm Moves With IPO to Fund Eco-Friendly Ships
SK REIT eyes stock market debut in Sept
Samsung Heavy to raise 1.23 tln won by selling shares
Others
GoTo Nears $2b Funding Round; IPO Faces Delays
 Philippines’ Supermarket Chain AllDay Seeks 5.5b Pesos IPO
MREIT to pre-market Ps23.7bn IPO this week
 Australian Crypto Firm Iris Energy Files for U.S. Direct Listing
KFC Operator to Test Hunger for Big IPOs in Malaysia
Synergy Grid to offer 1.05 B common shares
PH Resorts moves to raise capital for casino venture
Synergy Grid Seeks as Much as 26.3b Pesos in Share Sale
ComfortDelGro Seeks ASX Listing for Australian Unit by 4Q
GLP weighs US$1bn–$1.5bn SGX logistics REIT IPO
MTT Shipping files for US$100m IPO
SG Lottery conducts NDR for potential ASX IPO
Jolibee investing in IPO bound industrial REIT CentralHub
Analysis on Upcoming IPOs

Name
Insight

Hong Kong

APM Monaco
APM Monaco Pre-IPO - China’s Resilience Shines 


Anjuke
Anjuke Pre-IPO - Mixed (Positive and Negative) Developments 


Biel Crystal
Biel Crystal (伯恩光学) Pre-IPO - Cash Flow Generative Business but Underlying Trend Is Worrying 


Broncus
Broncus (堃博医疗) Pre-IPO: Big Potential to Be Tested 


ByteDance
ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)


ByteDance
ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 


ByteDance
ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)


ByteDance
ByteDance (字节跳动) Pre-IPO: How Has It Done in 1H? 


ByteDance
ByteDance: The Unlisted Company’s Video Apps Leading the Market and Threatening Internet Giants 


ByteDance
ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 


ByteDance
ByteDance (字节跳动) Pre-IPO - Globally the Most Downloaded App for Jan 2020 Driven by India 


ByteDance
ByteDance (字节跳动) Pre-IPO: Global Ambition Meets Regulatory Challenges 


Cloud Village
Cloud Village (NetEase Music) Pre-IPO - Mixed PHIP Update, Updated Thoughts on Valuation 


Cloud Village
Cloud Village (NetEase Music) Pre-IPO - Initial Thoughts on Valuation 


Cloud Village
Cloud Village (NetEase Music) Pre-IPO - Tencent Music Peer Comp, Regulatory Impact 


Cloud Village
Cloud Village (NetEase Music) Pre-IPO - Was in the Slow Stream, Playing Catch-Up 


Edda 
EDDA Healthcare Pre-IPO - RoboDoc - Has Been Around for a While but Is Just Getting the Robo Going 


Intco Med
Intco Medical (英科医疗) A+H: From China No.1 to Global No. 1 


MicroPort Medbot
MicroPort MedBot Pre-IPO - RoboDoc - Pre-Revenue, Has a Large Competitor but a Large Market as Well 


Neusoft Xikang
Neusoft Xikang (东软熙康) Pre-IPO: A Long Way to Profit 


Neusoft Med
Neusoft Medical Systems (东软医疗系统) Pre-IPO: Unattractive Fundamentals 


Novotech
Novotech Pre-IPO: Biotech Focused CRO at Hefty Pre-IPO Valuation 


WeDoctor

WeDoctor (微医) Pre-IPO -App Walk Through - The Online Medical Directory and More 


WeDoctor

WeDoctor (微医) Pre-IPO - A More Focused Online Medical Svc Provider than Ping An Good Doctor 


WeDoctor

We Doctor (微医) Pre-IPO - Peer Comparison - Picking Its Battles Wisely 


WeDoctor

We Doctor (微医) Pre-IPO - Forecasts, Early Thoughts on Valuation, and Acquisition Gripes 


Weilong

Weilong Delicious Global Pre-IPO - The Positives - Fast Growth, Strong Backers 


Weilong

Weilong Delicious Global Pre-IPO - The Negatives - Spicy Valuation 


WM Tech

WM Tech Pre-IPO - Peer Comparison and Pre-IPO Valuation - Some Signs of Advantage 


WM Tech

WM Tech Pre-IPO - Digitalization Efforts Coming Through but Not Well Substantiated 

India

Aadhar Housing

Aadhar Housing Finance Pre-IPO - Decent past Growth but Comes with Weird Disclosures 


Anmol Ind
Anmol Industries Pre-IPO Quick Take - No Growth, Generous Payments to Founders


Bharat Hotel
Bharat Hotels Pre-IPO - Catching up with Peers 


Bajaj En
Bajaj Energy Pre-IPO - Supposed to Deliver Steady Performance if Only Its Sole Client Would Let It 


Crystal Crop
Crystal Crop Protection Pre-IPO - DRHP Raises More Questions than in Answers


ESAF SFB

ESAF Small Finance Bank Pre-IPO - Growing Fast but Remains Highly Dependant on a Related Party 


Flemingo 
Flemingo Travel Retail Pre-IPO - Its a Different Business in Every Country


Emami Cem

Emami Cement Pre-IPO - Still in Ramp Up Phase but Shares Pledge Might Lead to an Early IPO 


NSE
NSE IPO Preview- Not Only Fast..its Risky and Expensive


NSE
National Stock Exchange Pre-IPO Review - Bigger, Better, Stronger but a Little Too Fast for Some


LIC

Life Insurance Corporation of India Pre-IPO - Early Take on India's Largest IPO 


Penna Cem

Penna Cement - Aggressive Expansion Plans Even Though Past Performance Has Been Tepid 


PNB Met
PNB Metlife Pre-IPO Quick Take - Doesn't Stack up Well Versus Its Larger Peers

Malaysia

QSR
QSR Brands Pre-IPO - As Healthy as Fast Food

Philippines

RLC REIT

RL Commercial REIT Pre-IPO - Motley Crew of Assets Has Weathered COVID Well 


MREIT

MREIT Pre-IPO - Mediocre Performance, Convoluted Lease, Low Asset Yield 



ECM Weekly (22nd August 2021) - Biel Crystal, EDDA, Neusoft Xikang and Medical, CATL, RLC REIT

Event-Driven

<p><span>Overview</span></p><p></p><p>This is an offering to the stockholders with forfeited shares going to a public offering. A total of 250 million new shares are issued, and the tentative issuance price is set at ₩4,950. So, the total issuance size is ₩1.2T.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Overview"}'>Overview</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target"}'>Target</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A public offering of forfeited shares after offering to stockholders"}'>A public offering of forfeited shares after offering to stockholders</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Transferability"}'>Transferability</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Renounceable"}'>Renounceable</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Volume"}'><strong>Volume</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":250000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>250,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary price"}'><strong>Preliminary price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4950}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>₩4,950</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary value"}'><strong>Preliminary value</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1237500000000}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-3]C[0]*R[-1]C[0]"><strong>₩1,237,500,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Oversubscription privilege"}'>Oversubscription privilege</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Banker"}'>Banker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"NH, KIS, Mirae Asset, KB, Shinhan, DB, Hanwha, Hana, &amp; Samsung"}'>NH, KIS, Mirae Asset, KB, Shinhan, DB, Hanwha, Hana, &amp; Samsung</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Underwriting type"}'>- Underwriting type</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Standby"}'>Standby</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><div class="content-highlight"><p>The tentative issuance price of ₩4,950 was calculated based on this formula: <strong>Average [1M VWAP, 1W VWAP, 1D Close], as of August 13, 2021</strong></p></div><h2>Allocation</h2><p>Currently, the number of issued common stock is 880 million. So the capital increase rate is 39.68%, and the dilution per share is 28.41%. Since 20% is allocated to the ESOP, the allocation ratio to stockholders is 0.3310434.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Allocation"}'>Allocation</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offer volume"}'><strong>Volume</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":250000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]"><strong>250,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase"}'>Capital increase</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3967530712595733}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-4]C[0]/R[-7]C[0]">39.68%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.284053838451049}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-5]C[0]/(R[-8]C[0]+R[-5]C[0])">28.41%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares after rights offer"}'>Total shares (ord) after the offering</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":880114845}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]">880,000,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP allocation"}'>ESOP allocation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":50000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>50,000,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - %"}'>- %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-17]C[0]">20.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stockholder allocation"}'><strong>Stockholder allocation</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":200000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-18]C[0]-R[-2]C[0]"><strong>200,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - %"}'><strong>- %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-19]C[0]"><strong>80.00%</strong></td>
</tr>
<tr>
<td><strong>Per-share allocation</strong></td>
<td style="text-align: right;"><strong><span data-sheets-value='{"1":3,"3":0.33104338704949265}' data-sheets-userformat='{"2":14529,"3":{"1":2,"2":"#,##0.0000000","3":1},"9":2,"10":1,"14":{"1":2,"2":0},"15":"Courier New","16":9}' data-sheets-formula="=R[15]C[0]/R[-4]C[0]">0.3310434</span></strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Schedule</h2><p>There is nothing special about the schedule of the rights offering event other than the addition of the short-selling ban period.</p><p>On September 14th, the first round price is decided, which becomes the ceiling of the offering price band. And ex-rights are on September 16th, and subscription rights will be traded for 5 business days from October 14th to 20th. And the final price will be confirmed on October 25th, and the listing date is November 19th.</p><div class="content-highlight"><p><strong>The short-selling ban period is from August 18 to October 25. Investors who short-sell during this period cannot participate in this capital increase unless they purchase the same quantity they shorted within this period.</strong></p></div><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Timetable"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"BOD meeting"}'>BOD meeting</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44425}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 08. 17</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary pricing"}'><strong>Preliminary pricing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44453}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'><strong>2021. 09. 14</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights date"}'><strong>Ex-rights date</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44455}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'><strong>2021. 09. 16</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Record date"}'>Record date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44456}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 09. 17</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade beginning"}'><strong>Subscription rights trade beginning</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44483}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 14</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade ending"}'><strong>Subscription rights trade ending</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44489}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 20</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Final pricing"}'><strong>Final pricing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44494}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 25</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stockholder subscription"}'>Stockholder subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44497}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 10. 28</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Public subscription"}'>Public subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44502}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 02</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44505}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 05</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44519}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 11. 19</td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Short restriction begins"}'><strong>Short restriction begins</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44519}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 08. 18</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Short restriction ends"}'><strong>Short restriction ends</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44519}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 25</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Pricing</h2><p>The procedure for determining the offering price is as follows. The usual discount rate for local rights offerings is 20%. However, this event offers a 15% discount. It seems to me that the discount rate is rather conservative for an offering worth ₩1.2T.</p><table class="table table-striped">
<colgroup>
<col width="400">
<col width="400">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1st round"}'><strong>1st round</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"RP × (1 - 15%) / [1 + (39.68% × 15%)]"}' data-sheets-formula='="RP × (1 - "&amp;(R[11]C[0]*100&amp;"%")&amp;") / [1 + ("&amp;(R[12]C[0]*100&amp;"%"&amp;" × "&amp;(R[11]C[0]*100&amp;"%"&amp;")]"))'><strong>RP × (1 - 15%) / [1 + (39.68% × 15%)]</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'><strong>- Reference price (RP)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]"}'><strong>Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'><strong>- Reference date</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44453}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}' data-sheets-formula="=Terms!R[41]C[0]"><strong>2021. 09. 14</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights base price"}'>Ex-rights base price</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"[RP + (1st × 39.68%)] / (1 + 39.68%)"}' data-sheets-formula='="[RP + (1st × "&amp;R[9]C[0]*100&amp;"%"&amp;")] / (1 + "&amp;R[9]C[0]*100&amp;"%"&amp;")"'>[RP + (1st × 39.68%)] / (1 + 39.68%)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'>- Reference price (RP)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Previous close"}'>Previous close</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44455}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}' data-sheets-formula="=Terms!R[39]C[0]">2021. 09. 16</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"2nd round"}'><strong>2nd round</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"RP × (1 - 15%)"}' data-sheets-formula='="RP × (1 - "&amp;(R[5]C[0]*100&amp;"%")&amp;")"'><strong>RP × (1 - 15%)</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'><strong>- Reference price (RP)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Min [Close, Avg (Close, 1W VWAP)]"}'><strong>Min [Close, Avg (Close, 1W VWAP)]</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'><strong>- Reference date</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44494}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}' data-sheets-formula="=Terms!R[40]C[0]"><strong>2021. 10. 25</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Final"}'>Final</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Max [Min (1st, 2nd), 3D VWAP × 60%]"}'>Max [Min (1st, 2nd), 3D VWAP × 60%]</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44494}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}' data-sheets-formula="=Terms!R[38]C[0]">2021. 10. 25</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Discount rate"}'><strong>Discount rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.15}' data-sheets-numberformat='[null,3,"0.00%",1]'><strong>15.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3968}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=LEFT(Terms!R[11]C[0],6)*100/100"><strong>39.68%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

OverviewThis is an offering to the stockholders with forfeited shares going to a public offering. A total of 250 million new shares are issued, and the tentative issuance price is set at ₩4,950. So, the total issuance size is ₩1.2T.





Overview

Target
A public offering of forfeited shares after offering to stockholders


Transferability
Renounceable


Volume
250,000,000


Preliminary price
₩4,950


Preliminary value
₩1,237,500,000,000


Oversubscription privilege
20.00%


Banker
NH, KIS, Mirae Asset, KB, Shinhan, DB, Hanwha, Hana, &amp; Samsung


- Underwriting type
Standby

Source: DART

The tentative issuance price of ₩4,950 was calculated based on this formula: Average [1M VWAP, 1W VWAP, 1D Close], as of August 13, 2021AllocationCurrently, the number of issued common stock is 880 million. So the capital increase rate is 39.68%, and the dilution per share is 28.41%. Since 20% is allocated to the ESOP, the allocation ratio to stockholders is 0.3310434.





Allocation

Volume
250,000,000


Capital increase
39.68%


Dilution
28.41%


Total shares (ord) after the offering
880,000,000


ESOP allocation
50,000,000


- %
20.00%


Stockholder allocation
200,000,000


- %
80.00%


Per-share allocation
0.3310434

Source: DART

ScheduleThere is nothing special about the schedule of the rights offering event other than the addition of the short-selling ban period.On September 14th, the first round price is decided, which becomes the ceiling of the offering price band. And ex-rights are on September 16th, and subscription rights will be traded for 5 business days from October 14th to 20th. And the final price will be confirmed on October 25th, and the listing date is November 19th.The short-selling ban period is from August 18 to October 25. Investors who short-sell during this period cannot participate in this capital increase unless they purchase the same quantity they shorted within this period.





Schedule

BOD meeting
2021. 08. 17


Preliminary pricing
2021. 09. 14


Ex-rights date
2021. 09. 16


Record date
2021. 09. 17


Subscription rights trade beginning
2021. 10. 14


Subscription rights trade ending
2021. 10. 20


Final pricing
2021. 10. 25


Stockholder subscription
2021. 10. 28


Public subscription
2021. 11. 02


Payment
2021. 11. 05


Listing
2021. 11. 19



Short restriction begins
2021. 08. 18


Short restriction ends
2021. 10. 25

Source: DART

PricingThe procedure for determining the offering price is as follows. The usual discount rate for local rights offerings is 20%. However, this event offers a 15% discount. It seems to me that the discount rate is rather conservative for an offering worth ₩1.2T.





Pricing

1st round
RP × (1 - 15%) / [1 + (39.68% × 15%)]


- Reference price (RP)
Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]


- Reference date
2021. 09. 14


Ex-rights base price
[RP + (1st × 39.68%)] / (1 + 39.68%)


- Reference price (RP)
Previous close


- Reference date
2021. 09. 16


2nd round
RP × (1 - 15%)


- Reference price (RP)
Min [Close, Avg (Close, 1W VWAP)]


- Reference date
2021. 10. 25


Final
Max [Min (1st, 2nd), 3D VWAP × 60%]


- Reference date
2021. 10. 25


Discount rate
15.00%


Capital increase rate
39.68%

Source: DART



Samsung Heavy Industries ₩1.2T Rights Offer Walkthrough & Trading Approach

Samsung Heavy Industries / Equity Capital Markets

<h2>Korea’s shorting restriction to close the loophole for arb trading on a rights offer</h2><div><p>Korea used to allow short sellers to participate in a rights offering. It was one of the few markets that allowed it. That is, even if you shorted the shares of a company after it had announced a rights offer, you could still subscribe to new rights and repay the shorted shares with new rights.</p></div><div>
<p>Starting April 6 this year, this practice is no longer allowed.</p>
<p><a href="https://www.korea.kr/news/pressReleaseView.do?newsId=156443917" target="_blank" rel="noopener">Here is the link to the Capital Market and Financial Investment Business Act Enforcement Decree, containing the closing of this practice.</a></p>
<h2>Some confusion regarding the effective date triggering short restrictions</h2>
<p>This new rule is quite clear.</p>
<div><ul><li><strong>Those short-sellers having shorted between a day after an offering announcement day and an offering price-fixing day face the restrictions. In such a case, they are prevented from participating in an offering at all.</strong></li></ul></div>
<div>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/441/original/2.png?1629230887" class="editor-image img-responsive" data-smartkarma-image-id="224441"></figure></section><div class="content-highlight"><p><strong>→ But the confusion arises whether a pre-announcement qualifies as an official announcement of a rights offer.</strong></p></div>
<p><strong>Samsung Heavy Industries (SHI), which announced a capital increase yesterday, is a symbolic example. SHI made a pre-announcement on May 4 after this rule went into effect. Should this pre-announcement be regarded as an official announcement triggering short restrictions?</strong></p>
<h2>Korea FSC's initial interpretation was</h2>
<p>I initially believed that the preannouncement made on May 4 should not be considered an official offering announcement because it doesn't contain any definite detail approved by the board. That was my understanding.</p>
</div>
<div>
<p>But I wanted to be 100% sure, so I made several attempts to reach the FSC Capital Market Division (direct phone number: +82 2 2100 2655) to inquire about this issue, but to no avail.</p>
<div class="content-highlight"><p><strong>Then, after contacting the compliance teams of several brokerages, the general interpretation was that the pre-announcement date should be considered the announcement date triggering short restrictions. In particular, the compliance team of one brokerage inquired with the Korea FSC and said that they received a reply that the pre-announcement date should be regarded as the announcement date.</strong></p></div>
</div>
</div>

Korea’s shorting restriction to close the loophole for arb trading on a rights offerKorea used to allow short sellers to participate in a rights offering. It was one of the few markets that allowed it. That is, even if you shorted the shares of a company after it had announced a rights offer, you could still subscribe to new rights and repay the shorted shares with new rights.
Starting April 6 this year, this practice is no longer allowed.
Here is the link to the Capital Market and Financial Investment Business Act Enforcement Decree, containing the closing of this practice.
Some confusion regarding the effective date triggering short restrictions
This new rule is quite clear.
Those short-sellers having shorted between a day after an offering announcement day and an offering price-fixing day face the restrictions. In such a case, they are prevented from participating in an offering at all.

→ But the confusion arises whether a pre-announcement qualifies as an official announcement of a rights offer.
Samsung Heavy Industries (SHI), which announced a capital increase yesterday, is a symbolic example. SHI made a pre-announcement on May 4 after this rule went into effect. Should this pre-announcement be regarded as an official announcement triggering short restrictions?
Korea FSC's initial interpretation was
I initially believed that the preannouncement made on May 4 should not be considered an official offering announcement because it doesn't contain any definite detail approved by the board. That was my understanding.


But I wanted to be 100% sure, so I made several attempts to reach the FSC Capital Market Division (direct phone number: +82 2 2100 2655) to inquire about this issue, but to no avail.
Then, after contacting the compliance teams of several brokerages, the general interpretation was that the pre-announcement date should be considered the announcement date triggering short restrictions. In particular, the compliance team of one brokerage inquired with the Korea FSC and said that they received a reply that the pre-announcement date should be regarded as the announcement date.



Untrustworthy Korean Regulators: Short Restrictions Applicable Only from Aug 18 in SHI Rights Offer

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

HD Hyundai Heavy Industries  / Equity Capital Markets

<div class="content-highlight">
<p>Our base case valuation of Hyundai Heavy Industries is implied market cap of 5.9 trillion won or 66,573 won per share, which is 11% higher than the high end of the IPO price range of 60,000 won per share.</p>
<p>Typically, we like to rate an IPO positive if our base case valuation is at least 15% higher than the high end of the IPO price range and as such we have a NEGATIVE view of this IPO. The valuation sits on the borderline case and our base case valuation does not provide a big upside to the IPO price range. </p>
</div><p>Our base case valuation is based on 1x our estimated equity of 6.1 trillion won for the company at the end of 2021. Our valuation multiple of 1.0x P/B is based on the average P/B valuation multiple of the peers.</p><p>HHI had 22.7% market share of new orders for shipbuilding in 2020, rising to 24.1% in 1Q 2021. It had new orders of 3,2m GT in 1Q 2021, which was nearly 84% of total new orders in 2020. </p>


Our base case valuation of Hyundai Heavy Industries is implied market cap of 5.9 trillion won or 66,573 won per share, which is 11% higher than the high end of the IPO price range of 60,000 won per share.
Typically, we like to rate an IPO positive if our base case valuation is at least 15% higher than the high end of the IPO price range and as such we have a NEGATIVE view of this IPO. The valuation sits on the borderline case and our base case valuation does not provide a big upside to the IPO price range. 
Our base case valuation is based on 1x our estimated equity of 6.1 trillion won for the company at the end of 2021. Our valuation multiple of 1.0x P/B is based on the average P/B valuation multiple of the peers.HHI had 22.7% market share of new orders for shipbuilding in 2020, rising to 24.1% in 1Q 2021. It had new orders of 3,2m GT in 1Q 2021, which was nearly 84% of total new orders in 2020. 

Hyundai Heavy Industries IPO Valuation Analysis

South Korea

Samsung Heavy Industries Co., Ltd. manufactures crude oil tankers, container vessels, bulk carriers, cruisers, and passenger ferries.  The Company also produces steel and bridge structures, and material handling equipment.  In addition, Samsung Heavy Industries provides civil engineering, architectural, and plant construction services.

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Samsung Heavy Industries (010140 KS)

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