Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.</li>
<li>The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone. </li>
<li>We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire. </li>
</ul>


On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone. 
We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire. 


Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger

Equity Bottom-Up

<ul>
<li>Doosan Robotics reported disappointing 2Q 2024 results. It generated sales of 14.4 billion won (up 10.1% YoY) and operating loss of 7.9 billion won in 2Q 2024.</li>
<li>After the disappointing results in 2Q 2024, it is likely that the consensus will lower their sales and profit estimates of Doosan Robotics for the next three years.</li>
<li>The consensus is likely to lower sales estimates by at least 15-20%+ in the next two years. In addition, the profit margin estimates are likely to be reduced materially. </li>
</ul>


Doosan Robotics reported disappointing 2Q 2024 results. It generated sales of 14.4 billion won (up 10.1% YoY) and operating loss of 7.9 billion won in 2Q 2024.
After the disappointing results in 2Q 2024, it is likely that the consensus will lower their sales and profit estimates of Doosan Robotics for the next three years.
The consensus is likely to lower sales estimates by at least 15-20%+ in the next two years. In addition, the profit margin estimates are likely to be reduced materially. 


Doosan Robotics: 2Q 2024 Results Analysis

<ul>
<li>On 24 July, the Financial Supervisory Service (FSS) ordered the Doosan Group to resubmit the merger plan. </li>
<li>It is rare for FSS to reject companies' merger reports but there has been an exception this time since this deal is egregiously negative to many minority investors.</li>
<li>Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the Doosan Group companies will be considered withdrawn. </li>
</ul>


On 24 July, the Financial Supervisory Service (FSS) ordered the Doosan Group to resubmit the merger plan. 
It is rare for FSS to reject companies' merger reports but there has been an exception this time since this deal is egregiously negative to many minority investors.
Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the Doosan Group companies will be considered withdrawn. 


FSS Orders Doosan Group to Resubmit the Merger Plan - "Merger Plan Is Not Illegal, But Is It Fair?"

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of KRX stocks as of Jul 19th which has an aggregated short interest worth USD5.8bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in Doosan Enerbility (034020 KS).</li>
</ul>


We analyzed the changes in short interest of KRX stocks as of Jul 19th which has an aggregated short interest worth USD5.8bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in Doosan Enerbility (034020 KS).


KRX Short Interest Weekly (Jul 19th): Doosan Enerbility

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>During Kim Byung-hwan's hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan's ability to maintain the original merger ratio.</li>
<li>Calculating Bobcat's net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.</li>
<li>Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.</li>
</ul>


During Kim Byung-hwan's hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan's ability to maintain the original merger ratio.
Calculating Bobcat's net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.


Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

South Korea

Doosan Enerbility Co., Ltd. manufactures and distributes construction machines. The Company produces gas turbines, engines, turbine generators, boilers, power plant equipment, and other related products. Doosan Enerbility also offers energy solutions for thermal power, nuclear power, and renewable energy.

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Doosan Enerbility (034020 KS)

Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger

On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.

Douglas Kim

Doosan Robotics: 2Q 2024 Results Analysis

Doosan Robotics reported disappointing 2Q 2024 results which is likely to lead to consensus lowering sales and profit estimates for the next three...

Douglas Kim

FSS Orders Doosan Group to Resubmit the Merger Plan - "Merger Plan Is Not Illegal, But Is It Fair?"

Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the...

Douglas Kim

KRX Short Interest Weekly (Jul 19th): Doosan Enerbility

We analyzed KRX short interest report for the past week and highlighted short interest changes in Doosan Enerbility (034020 KS).

Ke Yan, CFA, FRM

Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

On July 11, Bobcat announced an EGM on September 25 to address the merger approval and capital reduction. Initially, details about the capital...

Sanghyun Park

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52-week Range

Market Cap (USDm)

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Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger

On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.

Douglas Kim

Doosan Robotics: 2Q 2024 Results Analysis

​Doosan Robotics reported disappointing 2Q 2024 results which is likely to lead to consensus lowering sales and profit estimates for the next three...

Douglas Kim

FSS Orders Doosan Group to Resubmit the Merger Plan - "Merger Plan Is Not Illegal, But Is It Fair?"

Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the...

Douglas Kim

KRX Short Interest Weekly (Jul 19th): Doosan Enerbility

We analyzed KRX short interest report for the past week and highlighted short interest changes in Doosan Enerbility (034020 KS).

Ke Yan, CFA, FRM

Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

On July 11, Bobcat announced an EGM on September 25 to address the merger approval and capital reduction. Initially, details about the capital...

Sanghyun Park

Doosan Robotics reported disappointing 2Q 2024 results which is likely to lead to consensus lowering sales and profit estimates for the next three...