APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

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.

Equity Capital Markets

<ul>
<li>Lee Seo-Hyun, via KEB Hana Bank, is looking to sell her entire stake in <a href="https://www.smartkarma.com/entities/samsung-sds-co-ltd" target="_blank" data-smartkarma-citation="entities:509:1" rel="noopener">Samsung Sds (018260 KS)</a> to raise US$132m.</li>
<li>While a relatively large one to digest, the deal is very flagged.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>


Lee Seo-Hyun, via KEB Hana Bank, is looking to sell her entire stake in Samsung Sds (018260 KS) to raise US$132m.
While a relatively large one to digest, the deal is very flagged.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


Samsung SDS Placement - Well Flagged and the Last One Did Well

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>Samsung SDS and Meritz Financial will welcome a 6%p and 30%p increase, respectively, in the upcoming rebalancing in June.</li>
<li>Assuming a K200 tracking fund size of 65 trillion won, they are expected to receive 2.69x and 5.47x ADTVs, respectively. This is enough for us to consider a preemptive position.</li>
<li>However, in the case of Samsung SDS, we need to consider potential price correction by the scheduled block deal (1.95%) and develop a multi-phased approach to minimize timing conflicts.</li>
</ul>


Samsung SDS and Meritz Financial will welcome a 6%p and 30%p increase, respectively, in the upcoming rebalancing in June.
Assuming a K200 tracking fund size of 65 trillion won, they are expected to receive 2.69x and 5.47x ADTVs, respectively. This is enough for us to consider a preemptive position.
However, in the case of Samsung SDS, we need to consider potential price correction by the scheduled block deal (1.95%) and develop a multi-phased approach to minimize timing conflicts.


KOSPI 200 Flow Trading: Those Subject to a Significant Float Rate Change

<ul>
<li>The target volume is 24,718,099 ordinary shares (13.2%) and 159,835 preferred shares (9.8%). That is, C&amp;T will cancel all of its treasury shares in the next five years.</li>
<li>C&amp;T's decision to cancel treasury shares clearly indicates that the family's fundraising strategy is focused on stake sales rather than dividend increases.</li>
<li>The number of shares inherited will be the volume Lee Seo-hyun will sell in the short term as this is within the range that minimizes the tax liability through LIFO.</li>
</ul>


The target volume is 24,718,099 ordinary shares (13.2%) and 159,835 preferred shares (9.8%). That is, C&amp;T will cancel all of its treasury shares in the next five years.
C&amp;T's decision to cancel treasury shares clearly indicates that the family's fundraising strategy is focused on stake sales rather than dividend increases.
The number of shares inherited will be the volume Lee Seo-hyun will sell in the short term as this is within the range that minimizes the tax liability through LIFO.


Samsung C&T Shareholder Return: Directly Related to Lee Family's Inheritax Tax Issue

<ul>
<li>The family devoted all their efforts to maintaining 33.4% of voting shares in Samsung C&amp;T, a level that can block a special resolution at the general shareholders' meeting.</li>
<li>The most likely scenario being speculated by the market at this point is to touch both Samsung C&amp;T and Samsung SDS. However, the C&amp;T stake sale is to be minimized. </li>
<li>The possibility currently circulating in the local market is that she has 0.40% (Hana Sec) and 0.62% (Hana Bank), which currently have the highest interest burden, on the table.</li>
</ul>


The family devoted all their efforts to maintaining 33.4% of voting shares in Samsung C&amp;T, a level that can block a special resolution at the general shareholders' meeting.
The most likely scenario being speculated by the market at this point is to touch both Samsung C&amp;T and Samsung SDS. However, the C&amp;T stake sale is to be minimized. 
The possibility currently circulating in the local market is that she has 0.40% (Hana Sec) and 0.62% (Hana Bank), which currently have the highest interest burden, on the table.


Both C&T & SDS Are Still on the Table for Block Deals by Lee Seo-Hyun, Here's Why

<ul>
<li>The term of Lee's trust contract with Hana Bank is from February 2nd to April 28th, and the volume is 1.95% of SO, the total remaining quantity owned by Lee.</li>
<li>The price movement on the day the previous block deals by the Lee family were executed was substantial. Of particular note is that SDS showed the most significant price impact.</li>
<li>We should focus on the possibility that a block deal will come to the market much earlier, as SDS is in short-term overbought territory from a valuation perspective.</li>
</ul>


The term of Lee's trust contract with Hana Bank is from February 2nd to April 28th, and the volume is 1.95% of SO, the total remaining quantity owned by Lee.
The price movement on the day the previous block deals by the Lee family were executed was substantial. Of particular note is that SDS showed the most significant price impact.
We should focus on the possibility that a block deal will come to the market much earlier, as SDS is in short-term overbought territory from a valuation perspective.


Discussing the Timing of the Samsung SDS Block Deal by Lee Seo-Hyun

South Korea

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.

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Samsung Sds (018260 KS)

Samsung SDS Placement - Well Flagged and the Last One Did Well

Lee Seo-Hyun, via KEB Hana Bank, is looking to sell her entire stake in Samsung Sds (018260 KS) to raise US$132m. In this note, we will run the...

Clarence Chu

KOSPI 200 Flow Trading: Those Subject to a Significant Float Rate Change

This post investigates two names (Samsung SDS & Meritz Financial) for KOSPI 200 flow trading opportunities resulting from a significant float rate...

Sanghyun Park

Both C&T & SDS Are Still on the Table for Block Deals by Lee Seo-Hyun, Here's Why

This post explains why both Samsung C&T and Samsung SDS are still on the table for block deals by Lee Seo-hyun, who needs to secure funds to pay...

Sanghyun Park

Discussing the Timing of the Samsung SDS Block Deal by Lee Seo-Hyun

This post details the latest disclosure by Lee Seo-hyun, the youngest daughter of the Lee family, about the disposal trust contract for her Samsung...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Samsung SDS Placement - Well Flagged and the Last One Did Well

Lee Seo-Hyun, via KEB Hana Bank, is looking to sell her entire stake in Samsung Sds (018260 KS) to raise US$132m. In this note, we will run the...

Clarence Chu

KOSPI 200 Flow Trading: Those Subject to a Significant Float Rate Change

This post investigates two names (Samsung SDS & Meritz Financial) for KOSPI 200 flow trading opportunities resulting from a significant float rate...

Sanghyun Park

Samsung C&T Shareholder Return: Directly Related to Lee Family's Inheritax Tax Issue

This post details Samsung C&T's latest shareholder return policy, announced this morning, and explains why this is directly related to the Lee...

Sanghyun Park

Both C&T & SDS Are Still on the Table for Block Deals by Lee Seo-Hyun, Here's Why

This post explains why both Samsung C&T and Samsung SDS are still on the table for block deals by Lee Seo-hyun, who needs to secure funds to pay...

Sanghyun Park

Discussing the Timing of the Samsung SDS Block Deal by Lee Seo-Hyun

This post details the latest disclosure by Lee Seo-hyun, the youngest daughter of the Lee family, about the disposal trust contract for her Samsung...

Sanghyun Park