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

I added three new single-subsidiary holding companies to my Korea stub list. They are Green Cross Holdings, Hitejinro Holdings, and Seah Holdings.







Korea stubs (single-subsidiary)

Holdco
Ticker
Subsidiary
Ticker


Amorepacific Group
002790
Amorepacific Corp
090430


BGF Co Ltd
027410
BGF Retail Co Ltd
282330


Halla Holdings Corp
060980
Mando Corp
204320


Hanjin Kal
180640
Korean Air Lines Co Ltd
003490


Hankook &amp; Company Co Ltd
000240
Hankook Tire &amp; Technology Co Ltd
161390


HANSAE YES24 HOLDINGS CO., LTD.
016450
Hansae Co., Ltd.
105630


HDC Holdings Co Ltd
012630
HDC Hyundai Development Co
294870


Nexen Corporation
005720
Nexen Tire Corp
002350


Nongshim Holdings Co Ltd
072710
Nongshim Co Ltd
004370


ORION Holdings Corp
001800
Orion Corp
271560


Poongsan Holdings Corporation
005810
POONGSAN CORPORATION
103140


Youngone Holdings Co Ltd
009970
Youngone Corporation
111770


* Green Cross Holdings
005250
* Green Cross Corp
006280


* Hitejinro Holdings Co Ltd
000140
* HiteJinro Co Ltd
000080


* Seah Holdings Corp
058650
* Seah Besteel Corporation
001430

Source: KRX

Halla Holdings and Seah Holdings have the widest discount to their respective NAV, 66.50% and 63.26%, respectively. Nongshim Holdings and BGF closely follow. Hanjin Kal








Korea stubs (single-subsidiary)
NAV discount
Single subsidiary weight in NAV
Single subsidiary weight in GAV


Amorepacific Group
15.23%
95.10%
92.71%


BGF Co Ltd
58.33%
71.57%
84.19%


Halla Holdings Corp
66.50%
70.10%
50.91%


Hanjin Kal
-10.55%
83.08%
83.96%


Hankook &amp; Company Co Ltd
15.04%
89.41%
97.86%


HANSAE YES24 HOLDINGS CO., LTD.
41.51%
75.59%
67.16%


HDC Holdings Co Ltd
37.19%
63.29%
55.47%


Nexen Corporation
46.91%
73.79%
73.89%


Nongshim Holdings Co Ltd
58.79%
69.97%
70.45%


ORION Holdings Corp
45.25%
96.61%
87.61%


Poongsan Holdings Corporation
53.23%
82.21%
86.59%


Youngone Holdings Co Ltd
51.42%
81.28%
86.72%


Green Cross Holdings
48.90%
174.03%
91.25%


Hitejinro Holdings Co Ltd
16.99%
104.18%
82.30%


Seah Holdings Corp
63.26%
57.92%
52.84%

Source: KRX



Korea Stubs Status Check: 15 in Total Incl. 3 New Ones

With short-selling in full action now, the attention is growing on the local single-subsidiary holding company stocks. I track the following 12 pairs. Currently, three holding companies are at a negative sigma on a 20-day moving average.







Holdco
Subsidiary
Sigma (σ) on a 20-day moving average


Amorepacific Group
Amorepacific Corp
1.04


BGF Co Ltd
BGF Retail Co Ltd
0.24


Halla Holdings Corp
Mando Corp
0.62


Hanjin Kal
Korean Air Lines Co Ltd
-1.64


Hankook &amp; Company Co Ltd
Hankook Tire &amp; Technology Co Ltd
0.69


HANSAE YES24 HOLDINGS CO., LTD.
Hansae Co., Ltd.
-1.57


HDC Holdings Co Ltd
HDC Hyundai Development Co
1.52


Nexen Corporation
Nexen Tire Corp
-0.71


Nongshim Holdings Co Ltd
Nongshim Co Ltd
1.16


ORION Holdings Corp
Orion Corp
1.24


Poongsan Holdings Corporation
POONGSAN CORPORATION
1.07


Youngone Holdings Co Ltd
Youngone Corporation
1.16

Source: KRX

In a longer horizon (180-days), Hanjin Kal (again), Hankook &amp; Co, and Nexen appear to be in an undervalued territory relative to their respective counterpart.








Holdco
%Δ to 180-day mean
%Δ to 180-day high
%Δ to 180-day low


Amorepacific Group
-3.76%
-16.86%
9.99%


BGF Co Ltd
24.29%
-5.08%
47.30%


Halla Holdings Corp
-8.97%
-32.41%
22.01%


Hanjin Kal
-42.64%
-65.21%
2.65%


Hankook &amp; Company Co Ltd
-12.17%
-32.20%
9.18%


HANSAE YES24 HOLDINGS CO., LTD.
-1.84%
-30.55%
38.10%


HDC Holdings Co Ltd
-1.41%
-15.67%
18.40%


Nexen Corporation
-15.93%
-25.30%
3.63%


Nongshim Holdings Co Ltd
11.01%
-0.72%
32.78%


ORION Holdings Corp
38.24%
-1.97%
72.32%


Poongsan Holdings Corporation
3.45%
-24.96%
14.58%


Youngone Holdings Co Ltd
-1.02%
-15.07%
20.33%

Source: KRX

Unfortunately, their NAV discount tells a different story. High-NAV discount holdco stocks are BGF, Halla Holdings, Nongshim Holdings, and Youngone Holdings. In contrast, Hanjin Kal and Hankook &amp; Co still have substantial room for further deflation relative to their local peers in NAV discount.* FYI, only Halla Holdings has significant operating operations. 









Holdco
Subsidiary
NAV discount
Single subsidiary weight in NAV
Single subsidiary weight in GAV


Amorepacific Group
Amorepacific Corp
11.39%
94.87%
92.47%


BGF Co Ltd
BGF Retail Co Ltd
53.56%
68.45%
82.11%


Halla Holdings Corp
Mando Corp
67.04%
68.92%
49.55%


Hanjin Kal
Korean Air Lines Co Ltd
-1.76%
81.57%
82.50%


Hankook &amp; Company Co Ltd
Hankook Tire &amp; Technology Co Ltd
17.91%
89.46%
97.87%


HANSAE YES24 HOLDINGS CO., LTD.
Hansae Co., Ltd.
34.88%
74.72%
64.86%


HDC Holdings Co Ltd
HDC Hyundai Development Co
43.85%
62.61%
55.20%


Nexen Corporation
Nexen Tire Corp
48.07%
73.44%
73.67%


Nongshim Holdings Co Ltd
Nongshim Co Ltd
61.52%
68.01%
68.49%


ORION Holdings Corp
Orion Corp
45.33%
95.84%
87.02%


Poongsan Holdings Corporation
POONGSAN CORPORATION
49.59%
80.11%
84.91%


Youngone Holdings Co Ltd
Youngone Corporation
52.20%
79.12%
85.07%

Source: KRX



Korea Single-Subsidiary Holdcos NAV Discount & Short Interest: Quick Thoughts on Trade

<p>This is the complete list of Korea's single-sub holding companies. They are typically direct targets of holdco pair trades.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Holdco"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Holdco</td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"Ticker"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Ticker</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Sub"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Sub</td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"Ticker"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Ticker</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Amorepacific Group"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Amorepacific Group</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"002790"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">002790</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Amorepacific Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Amorepacific Corp</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"090430"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">090430</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"BGF Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>BGF Co Ltd</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"027410"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">027410</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"BGF Retail Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>BGF Retail Co Ltd</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"282330"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">282330</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Halla Holdings Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Halla Holdings Corp</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"060980"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">060980</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Mando Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Mando Corp</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"204320"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">204320</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Hanjin Kal"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Hanjin Kal</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"180640"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">180640</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Korean Air Lines Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Korean Air Lines Co Ltd</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"003490"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">003490</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Hankook &amp; Company Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Hankook &amp; Company Co Ltd</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"000240"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">000240</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Hankook Tire &amp; Technology Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Hankook Tire &amp; Technology Co Ltd</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"161390"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">161390</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"HANSAE YES24 HOLDINGS CO., LTD."}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>HANSAE YES24 HOLDINGS CO., LTD.</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"016450"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">016450</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Hansae Co., Ltd."}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Hansae Co., Ltd.</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"105630"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">105630</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"HDC Holdings Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>HDC Holdings Co Ltd</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"012630"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">012630</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"HDC Hyundai Development Co"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>HDC Hyundai Development Co</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"294870"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">294870</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Nexen Corporation"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Nexen Corporation</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"005720"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">005720</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Nexen Tire Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Nexen Tire Corp</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"002350"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">002350</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Nongshim Holdings Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Nongshim Holdings Co Ltd</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"072710"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">072710</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Nongshim Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Nongshim Co Ltd</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"004370"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">004370</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"ORION Holdings Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>ORION Holdings Corp</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"001800"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">001800</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Orion Corp"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Orion Corp</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"271560"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">271560</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Poongsan Holdings Corporation"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Poongsan Holdings Corporation</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"005810"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">005810</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"POONGSAN CORPORATION"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>POONGSAN CORPORATION</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"103140"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">103140</td>
</tr>
<tr>
<td style="width: 255.455px;" data-sheets-value='{"1":2,"2":"Youngone Holdings Co Ltd"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-7]"><strong>Youngone Holdings Co Ltd</strong></td>
<td style="width: 61.8182px;" data-sheets-value='{"1":2,"2":"009970"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[0]C[-3]">009970</td>
<td style="width: 265.455px;" data-sheets-value='{"1":2,"2":"Youngone Corporation"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-9]"><strong>Youngone Corporation</strong></td>
<td style="width: 78.1818px;" data-sheets-value='{"1":2,"2":"111770"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[14]C[-5]">111770</td>
</tr>
<tr><td colspan="4" style="width: 255.455px;">Source: KRX</td></tr>
</tbody>
</table><hr><p>Hansae Yes24, Nexen Corp, and Youngone Holdings are currently at less than -1.0σ on a 20-day moving average.</p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/203/362/original/Sigma+%28%CF%83%29+on+a+20D+moving+average+%281%29.png?1619664700" class="editor-image img-responsive" data-smartkarma-image-id="203362"></figure></section><p>Again, Nexen Corp and Hansae Yes24 have the widest price-ratio diversion to YTD average. Hanjin Kal and Hankook &amp; Co follow. On the other hand, Orion Holdings has wildly outperformed its subsidiary, Orion Corp. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/203/364/original/Price+ratio+%CE%94%25+to+YTD+average.png?1619664934" class="editor-image img-responsive" data-smartkarma-image-id="203364"></figure></section><p>We have 6 holding companies with an average daily trading value of +₩5.0B, including Hansae Yes24, which recently saw a hike in trading value.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/203/367/original/Average+daily+trading+value+%28%E2%82%A9B%29.png?1619665335" class="editor-image img-responsive" data-smartkarma-image-id="203367"></figure></section></section>

This is the complete list of Korea's single-sub holding companies. They are typically direct targets of holdco pair trades.








Holdco
Ticker
Sub
Ticker


Amorepacific Group
002790
Amorepacific Corp
090430


BGF Co Ltd
027410
BGF Retail Co Ltd
282330


Halla Holdings Corp
060980
Mando Corp
204320


Hanjin Kal
180640
Korean Air Lines Co Ltd
003490


Hankook &amp; Company Co Ltd
000240
Hankook Tire &amp; Technology Co Ltd
161390


HANSAE YES24 HOLDINGS CO., LTD.
016450
Hansae Co., Ltd.
105630


HDC Holdings Co Ltd
012630
HDC Hyundai Development Co
294870


Nexen Corporation
005720
Nexen Tire Corp
002350


Nongshim Holdings Co Ltd
072710
Nongshim Co Ltd
004370


ORION Holdings Corp
001800
Orion Corp
271560


Poongsan Holdings Corporation
005810
POONGSAN CORPORATION
103140


Youngone Holdings Co Ltd
009970
Youngone Corporation
111770

Source: KRX

Hansae Yes24, Nexen Corp, and Youngone Holdings are currently at less than -1.0σ on a 20-day moving average.Again, Nexen Corp and Hansae Yes24 have the widest price-ratio diversion to YTD average. Hanjin Kal and Hankook &amp; Co follow. On the other hand, Orion Holdings has wildly outperformed its subsidiary, Orion Corp. 
We have 6 holding companies with an average daily trading value of +₩5.0B, including Hansae Yes24, which recently saw a hike in trading value.


Korea's Full List of Single-Subsidiary Holdcos with Current Sigma & Loan/Float Ratio

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a> is a company that was our 2021 high conviction call. We made this call in our insight <a href="https://www.smartkarma.com/insights/2021-high-conviction-in-korea-amorepacific-corp-turnaround-after-once-in-a-century-pandemic" target="_blank" data-smartkarma-citation="insights:45590" rel="noopener">2021 High Conviction in Korea: Amorepacific Corp - Turnaround After 'Once in a Century' Pandemic</a> (23 November 2020). The stock is up 39% since our call.</p>
<p>Today, the company reported better than expected earnings in 1Q 2021 and we believe the stock is well poised for further upside. Following the strong 1Q 2021, we continue to have a positive view of Amorepacific Corp and we believe the consensus will revise up their earnings estimates of the company by at least 10-15% in 2021.</p>
</div>


Amorepacific Corp (090430 KS) is a company that was our 2021 high conviction call. We made this call in our insight 2021 High Conviction in Korea: Amorepacific Corp - Turnaround After 'Once in a Century' Pandemic (23 November 2020). The stock is up 39% since our call.
Today, the company reported better than expected earnings in 1Q 2021 and we believe the stock is well poised for further upside. Following the strong 1Q 2021, we continue to have a positive view of Amorepacific Corp and we believe the consensus will revise up their earnings estimates of the company by at least 10-15% in 2021.


Amorepacific Corp: 2021 High Conviction - Highlights of Better than Expected 1Q 2021 Earnings

<div class="content-highlight"><p>In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.</p></div><p>Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. </p><p>Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. </p><div class="content-highlight">
<p>In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).</p>
<p>In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  </p>
</div><p>Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos. </p>

In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. 
In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).
In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  
Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos. 

Closing the Gap: Korean Holdcos Vs. Opcos

South Korea

Amorepacific Corp. develops, manufactures, and exports skin care, make-up, and fragrance products. The Company also produces and markets personal care and health-related products, such as shampoos, soaps, toothpastes, and health teas.

Amorepacific Corp (Preferred) (090435 KS)

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Amorepacific Corp (Preferred) (090435 KS)

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Amorepacific Corp: 2021 High Conviction - Highlights of Better than Expected 1Q 2021 Earnings

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Closing the Gap: Korean Holdcos Vs. Opcos

In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the...

Douglas Kim

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