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>Of utmost importance in these guidelines will be the framework for Value-up disclosure. Local authorities aim to encourage proactive disclosure, starting with companies that are well-prepared.</li>
<li>Two companies are being closely watched as potential candidates for the first Value-up disclosure: CJ Cheiljedang (097950 KS) and Koh Young Technology (098460 KS).</li>
<li>The rationale for us to actively engage in alpha trading with these two names stems from the strong probability that they will emerge as cornerstone constituents of the Value-up index</li>
</ul>


Of utmost importance in these guidelines will be the framework for Value-up disclosure. Local authorities aim to encourage proactive disclosure, starting with companies that are well-prepared.
Two companies are being closely watched as potential candidates for the first Value-up disclosure: CJ Cheiljedang (097950 KS) and Koh Young Technology (098460 KS).
The rationale for us to actively engage in alpha trading with these two names stems from the strong probability that they will emerge as cornerstone constituents of the Value-up index


Leading Candidates for the First Value-Up Disclosure

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>We have a positive view of both CJ Cheiljedang (097950 KS) and CJ Cheiljedang Pref (097955 KS). </li>
<li>We think that the company's business is likely to turn around in 2024, with more moderate inflation rates and raw material costs leading to improving earnings next year.</li>
<li>CJ Cheiljedang Pref is trading at a 58% discount to CJ Cheiljedang common shares, which we believe to be excessive. CJ Cheiljedang Pref also has higher dividend yield (4.2%).</li>
</ul>


We have a positive view of both CJ Cheiljedang (097950 KS) and CJ Cheiljedang Pref (097955 KS). 
We think that the company's business is likely to turn around in 2024, with more moderate inflation rates and raw material costs leading to improving earnings next year.
CJ Cheiljedang Pref is trading at a 58% discount to CJ Cheiljedang common shares, which we believe to be excessive. CJ Cheiljedang Pref also has higher dividend yield (4.2%).


CJ Cheiljedang Pref: Profits to Turn Around with Moderating Inflation + Big Discount to Common

Douglas Research Advisory

<ul>
<li>In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.</li>
<li>Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. </li>
<li>Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. </li>
</ul>


In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.
Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. 
Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. 


Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

<ul>
<li>In this insight, we discuss how Warren Buffett's recent investment in Ulta Beauty is likely to have a positive impact on CJ Corp's valuation. </li>
<li>CJ Olive Young (largest shareholder is CJ Corp) is the dominant health &amp; beauty cosmetics chain in Korea. CJ Olive Young has a similar business model to Ulta Beauty.</li>
<li>Our NAV analysis suggests an implied market cap of 4.7 trillion won or implied price of 160,977 won per share for CJ Corp, representing a 38% upside from current levels.</li>
</ul>


In this insight, we discuss how Warren Buffett's recent investment in Ulta Beauty is likely to have a positive impact on CJ Corp's valuation. 
CJ Olive Young (largest shareholder is CJ Corp) is the dominant health &amp; beauty cosmetics chain in Korea. CJ Olive Young has a similar business model to Ulta Beauty.
Our NAV analysis suggests an implied market cap of 4.7 trillion won or implied price of 160,977 won per share for CJ Corp, representing a 38% upside from current levels.


Warren Buffett Invests in Ulta Beauty - Positive Impact on CJ Corp?

<ul>
<li>On 4 July, NPS disclosed the details of the ownership changes for 112 listed companies in Korea, of which 87 were listed in KOSPI and 25 in KOSDAQ. </li>
<li>In 2Q 2024, the NPS reduced its investments in defense and military stocks and increased investments in cosmetics, shipbuilding, and food companies in Korea.</li>
<li>NPS reduced its capital allocation to the military &amp; defense sector. NPS reduced its stake in LIG Nex1 (-2.32%), Poongsan Corp (-2.24%), and Hanwha Aerospace (-1.02%). </li>
</ul>


On 4 July, NPS disclosed the details of the ownership changes for 112 listed companies in Korea, of which 87 were listed in KOSPI and 25 in KOSDAQ. 
In 2Q 2024, the NPS reduced its investments in defense and military stocks and increased investments in cosmetics, shipbuilding, and food companies in Korea.
NPS reduced its capital allocation to the military &amp; defense sector. NPS reduced its stake in LIG Nex1 (-2.32%), Poongsan Corp (-2.24%), and Hanwha Aerospace (-1.02%). 


What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?

South Korea

CJ CheilJedang Corp. manufactures processed food products.  The Company's products include refined sugar, monosodium glutamate (MSG), condiment, wheat powder, flour, cooking oil, processed meats, and animal feed.  CJ CheilJedang also manufactures pharmaceutical and household products.

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CJ Cheiljedang (097950 KS)

Leading Candidates for the First Value-Up Disclosure

This post delves into the anticipated contents of the initial Value-up guidelines on May 2nd and identifies potential frontrunners for the...

Sanghyun Park

CJ Cheiljedang Pref: Profits to Turn Around with Moderating Inflation + Big Discount to Common

We think that CJ Cheiljedang's business is likely to turn around in 2024, with more moderate inflation rates and raw material costs leading to...

Douglas Kim

Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in...

Douglas Kim

Warren Buffett Invests in Ulta Beauty - Positive Impact on CJ Corp?

In this insight, we discuss how Warren Buffett's recent investment in Ulta Beauty is likely to have a positive impact on CJ Corp's valuation.

Douglas Kim

What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?

In 2Q 2024, the NPS reduced its investments in defense and military stocks and increased investments in cosmetics, shipbuilding, and food companies...

Douglas Kim

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