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 Bottom-Up

The biggest gainers this morning are:

Hansol Chemical (014680 KS): +8.00%

DL Co Ltd (000210 KS): +7.78%

Kcc Corp (002380 KS): +7.58%

Hanwha Solutions (009830 KS): +7.56%













Gainers
Daily Δ
Losers
Daily Δ
x Open
Value
TV/DTV (x)
Value


Hansol Chemical Co Ltd
8.00%
Dong Suh Companies Inc
-5.67%
Dongwon Systems Corp
10.87%
KCC Corp
3.26


DL Holdings Co Ltd
7.78%
Chong Kun Dang Pharmaceutical Corp
-3.90%
Hansol Chemical Co Ltd
10.00%
Doosan Infracore Co Ltd
2.96


KCC Corp
7.58%
Dongwon Systems Corp
-3.37%
Dong Suh Companies Inc
8.22%
LOTTE Himart Co Ltd
2.94


SKC Co Ltd
7.56%
Oci Co Ltd
-2.65%
KCC Corp
7.82%
Hanwha Solutions Corp
2.57


Hanwha Solutions Corp
7.11%
Lotte Tour Development Co., Ltd.
-2.48%
SKC Co Ltd
7.52%
CJ Logistics Corp
1.68


LOTTE Himart Co Ltd
6.49%
Green Cross Holdings
-2.46%
LOTTE Himart Co Ltd
6.88%
Samsung Heavy Industries Co.,Ltd
1.63


Doosan Infracore Co Ltd
5.24%
Hanssem Co Ltd
-2.30%
Hanwha Solutions Corp
6.76%
LG HAUSYS, LTD.
1.44


Hyundai Steel Co
4.95%
Green Cross Corp
-2.05%
Hyundai Steel Co
6.49%
Dongwon Systems Corp
1.42


SK Holdings Co Ltd
4.30%
Korea Aerospace Industries Ltd
-2.01%
HMM Co Ltd
6.20%
Doubleu Games Co Ltd
1.42


Samsung C&amp;T Corp
4.22%
Cuckoo Holdings Co Ltd
-2.00%
Chong Kun Dang Pharmaceutical Corp
5.71%
Lotte Chilsung Beverage Co Ltd
1.41


Lotte Shopping Co Ltd
4.13%
Cuckoo Homesys Co Ltd
-1.93%
DL Holdings Co Ltd
5.69%
DL Holdings Co Ltd
1.29


Lotte Chilsung Beverage Co Ltd
4.07%
Ilyang Pharmaceutical Co., Ltd
-1.90%
Kolon Industries Inc
5.59%
SKC Co Ltd
1.23


Posco International Corp
4.01%
Boryung Pharmaceutical Co., Ltd
-1.82%
Handsome Corp
5.51%
Hyundai Steel Co
1.13


Shinsegae Inc
3.89%
CJ Cheiljedang Corp
-1.75%
SK Holdings Co Ltd
5.33%
Kolon Industries Inc
1.08


Handsome Corp
3.76%
NCSoft Corp
-1.60%
Doosan Infracore Co Ltd
5.20%
Hansol Chemical Co Ltd
1.01


KB Financial Group Inc
3.73%
Naver Corp
-1.55%
Shinsegae Inc
5.19%
JW Pharmaceutical Corp
0.94


SK Innovation Co Ltd
2.93%
JW Pharmaceutical Corp
-1.50%
Dongkuk Steel Mill Co., Ltd
5.02%
Ssangyong Cement Industry Co Ltd
0.92


LG International Corp
2.83%
DB HiTek Co Ltd
-1.45%
KB Financial Group Inc
4.92%
KEPCO Plant Service &amp; Engineering Co Ltd
0.91


Shinhan Financial Group Co., Ltd.
2.71%
SK Biopharmaceuticals Co Ltd
-1.41%
Posco International Corp
4.71%
Handsome Corp
0.89


LG HAUSYS, LTD.
2.57%
Daewoong Pharmaceutical Co., Ltd.
-1.16%
Pan Ocean Co Ltd
4.69%
IS DONGSEO CO., LTD.
0.85

Source: KRX

















Top 20
52WH
52WH Date
MC (₩B)
Daily Δ
x Open
TV/DTV
x 52WL
U Wick
Body
L Wick


Kolon Industries Inc
1.04
3/23/21
1,678.1
1.97%
5.59%
1.08
2.59
-52.94%
41.18%
5.88%


KT Corp
1.02
2/17/21
7,285.0
0.72%
1.62%
0.55
1.45
-11.11%
44.44%
44.44%


Amorepacific Corp
1.02
1/25/21
15,082.3
0.78%
3.15%
0.68
1.73
-37.50%
50.00%
12.50%


Handsome Corp
1.01
3/17/21
1,018.5
3.76%
5.51%
0.89
2.30
-34.09%
65.91%
0.00%


Doosan Bobcat Inc
0.99
3/17/21
3,669.1
1.95%
2.64%
0.43
2.23
-5.26%
63.16%
31.58%


KB Financial Group Inc
0.99
3/11/21
21,996.2
3.73%
4.92%
0.55
1.73
-4.00%
84.00%
12.00%


Cosmax Inc
0.98
10/12/20
1,261.2
2.45%
4.51%
0.46
1.84
-18.18%
63.64%
18.18%


HMM Co Ltd
0.98
3/23/21
9,625.2
-0.17%
6.20%
0.72
11.59
-8.11%
-40.54%
51.35%


KCC Corp
0.97
1/26/21
1,955.0
7.58%
7.82%
3.26
1.86
0.00%
96.88%
3.13%


Seah Besteel Corporation
0.97
3/23/21
615.0
1.48%
3.26%
0.26
2.56
-18.18%
54.55%
27.27%


Lotte Chilsung Beverage Co Ltd
0.97
2/9/21
1,148.8
4.07%
4.03%
1.41
1.54
0.00%
80.00%
20.00%


Kangwon Land, Inc.
0.97
3/18/21
5,658.7
0.57%
1.53%
0.24
1.49
-12.50%
87.50%
0.00%


Shinsegae International Inc
0.96
4/28/20
1,513.7
1.44%
2.90%
0.41
1.58
-16.67%
83.33%
0.00%


Dongkuk Steel Mill Co., Ltd
0.96
3/23/21
1,078.4
2.26%
5.02%
0.30
3.29
-27.27%
63.64%
9.09%


Hotel Shilla Co Ltd
0.96
1/18/21
3,430.3
1.39%
2.21%
0.40
1.33
-10.53%
78.95%
10.53%


MERITZ SECURITIES CO LTD
0.96
3/23/21
2,947.2
0.00%
2.30%
0.49
1.78
-5.00%
20.00%
75.00%


BNK Financial Group Inc
0.96
3/19/21
2,180.5
2.14%
3.37%
0.33
1.66
-9.09%
72.73%
18.18%


Hana Financial Group Inc
0.96
3/19/21
12,294.9
0.00%
3.35%
0.56
1.95
-25.93%
44.44%
29.63%


Hansol Chemical Co Ltd
0.95
2/22/21
2,754.5
8.00%
10.00%
1.01
3.38
-11.11%
80.00%
8.89%


Doosan Infracore Co Ltd
0.95
9/28/20
2,176.5
5.24%
5.20%
2.96
3.50
-10.00%
86.00%
4.00%

Source: KRX



Hanwha S, DL, KCC, & Hansol C Are KOSPI 200 Movers Today: What Happens?

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<p>Daelim Industrial's BOD and shareholders agreed to spin-off the company into <a href="https://www.smartkarma.com/entities/dl-e-c-co-ltd" target="_blank" data-smartkarma-citation="entities:31375:1" rel="noopener">DL E&amp;C Co Ltd (375500 KS)</a> and <a href="https://www.smartkarma.com/entities/daelim-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:18095:1" rel="noopener">DL Co Ltd (000210 KS)</a> in December 2020. DL E&amp;C and DL Corp shares started trading again on 25 January 2021. DL E&amp;C and DL Corp's market caps are 2.45 trillion won and 1.08 trillion won, respectively as of 26 January 2021. The combined market caps of the two companies are 3.53 trillion won, up more than 20% from the pre-spin off levels. DL E&amp;C makes some of the best apartments in Korea and this is their bread and butter business. </p><div>Hyundai E&amp;C, GS E&amp;C, HDC Hyundai Development, and Daewoo E&amp;C are the most appropriate comps to DL E&amp;C. These four comps are currently trading at P/E (2021E) ratios 11.8x, 6.1x, 5.6x, and 6.9x, respectively, using the consensus earnings estimates. The average P/E ratio of these four companies is 7.6x. If we apply 7.6x P/E on the estimated net profit of 660 billion won, this would suggest an implied market cap of 5.0 trillion won, which would be nearly 100% upside from the current market cap of 2.4 trillion won. If we use the lowest P/E multiple of the comps (5.6x) and apply to the estimated net profit of 660 billion won, this would suggest a market cap of 3.7 trillion won, which would be 51% higher than its current market cap. </div>

Daelim Industrial's BOD and shareholders agreed to spin-off the company into DL E&amp;C Co Ltd (375500 KS) and DL Co Ltd (000210 KS) in December 2020. DL E&amp;C and DL Corp shares started trading again on 25 January 2021. DL E&amp;C and DL Corp's market caps are 2.45 trillion won and 1.08 trillion won, respectively as of 26 January 2021. The combined market caps of the two companies are 3.53 trillion won, up more than 20% from the pre-spin off levels. DL E&amp;C makes some of the best apartments in Korea and this is their bread and butter business. Hyundai E&amp;C, GS E&amp;C, HDC Hyundai Development, and Daewoo E&amp;C are the most appropriate comps to DL E&amp;C. These four comps are currently trading at P/E (2021E) ratios 11.8x, 6.1x, 5.6x, and 6.9x, respectively, using the consensus earnings estimates. The average P/E ratio of these four companies is 7.6x. If we apply 7.6x P/E on the estimated net profit of 660 billion won, this would suggest an implied market cap of 5.0 trillion won, which would be nearly 100% upside from the current market cap of 2.4 trillion won. If we use the lowest P/E multiple of the comps (5.6x) and apply to the estimated net profit of 660 billion won, this would suggest a market cap of 3.7 trillion won, which would be 51% higher than its current market cap. 

Newly Spun-Off DL E&C and DL Corp Create Higher Value

<div><p>Daelim Industrial (000210) is about to complete the three-way demerger.</p></div><div>
<p>It is undergoing an equity spin-off at a split ratio of 0.44 to 0.56.</p>
<ol>
<li>DL Corp (holding company)</li>
<li>DL E&amp;C (operating company - construction)</li>
</ol>
</div><div><div><table class="table table-striped">
<colgroup>
<col width="300">
<col width="200">
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"Overview"}'>Overview</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Surviving"}'><strong>Surviving</strong></td>
<td colspan="3" data-sheets-value='{"1":2,"2":"DL Corp"}'><strong>DL Corp</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ticker"}'>- Ticker</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"000210"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-2]C[0]">000210</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Bourse"}'>- Bourse</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"KOSPI"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>KOSPI</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ratio"}'>- Ratio</td>
<td colspan="3" data-sheets-value='{"1":3,"3":0.4437144}' data-sheets-numberformat='{"1":3,"2":"0.00000%","3":1}'>44.37144%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Type"}'>- Type</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"Holding company"}'>Holding company</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Business"}'>- Business</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"Subsidiary management &amp; investment"}'>Subsidiary management &amp; investment</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"New 1"}'><strong>New</strong></td>
<td colspan="3" data-sheets-value='{"1":2,"2":"DL E&amp;C Corp"}'><strong>DL E&amp;C Corp</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Type"}'>- Type</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"Equity spin-off"}'>Equity spin-off</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ticker"}'>- Ticker</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"TBA"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>TBA</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Bourse"}'>- Bourse</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"KOSPI"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>KOSPI</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ratio"}'>- Ratio</td>
<td colspan="3" data-sheets-value='{"1":3,"3":0.5562856}' data-sheets-numberformat='{"1":3,"2":"0.00000%","3":1}'>55.62856%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Type"}'>- Type</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"Operating company"}'>Operating company</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Business"}'>- Business</td>
<td colspan="3" data-sheets-value='{"1":2,"2":"Construction"}'>Construction</td>
</tr>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"Source: DART"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>Source: DART</td></tr>
</tbody>
</table></div></div><div><p>The stock trading will get suspended from December 29 to January 22. The trading will resume on January 25.</p></div><div><div><table class="table table-striped">
<colgroup>
<col width="300">
<col width="200">
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="4" style="width: 723.727px;" data-sheets-note="Sang Hyun Park: We have to buy shares until BOD+1 and hold onto them until the day immediately before the ex-rights date to be eligible to receive stock purchase rights. We then have to notify our dissenting opinion until the end of dissenting opinion notice period." data-sheets-value='{"1":2,"2":"Timetable"}'>Timetable</td></tr>
<tr>
<td style="width: 278.542px;" data-sheets-value='{"1":2,"2":"Trade suspension begins"}'><strong>Trade suspension begins</strong></td>
<td colspan="3" style="width: 424.468px;" data-sheets-numberformat='{"1":5,"2":"[$-1009]mmmm\\ d\\,\\ yyyy","3":1}' data-sheets-value='{"1":3,"3":44194}'><strong>December 29, 2020</strong></td>
</tr>
<tr>
<td style="width: 278.542px;" data-sheets-value='{"1":2,"2":"Trade suspension ends"}'>Trade suspension ends</td>
<td colspan="3" style="width: 424.468px;" data-sheets-numberformat='{"1":5,"2":"[$-1009]mmmm\\ d\\,\\ yyyy","3":1}' data-sheets-value='{"1":3,"3":44218}'>January 22, 2021</td>
</tr>
<tr>
<td style="width: 278.542px;" data-sheets-value='{"1":2,"2":"Re-listing"}'><strong>Re-listing</strong></td>
<td colspan="3" style="width: 424.468px;" data-sheets-numberformat='{"1":5,"2":"[$-1009]mmmm\\ d\\,\\ yyyy","3":1}' data-sheets-value='{"1":3,"3":44221}'><strong>January 25, 2021</strong></td>
</tr>
<tr><td colspan="4" style="width: 723.727px;" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div></div><hr><p>Daelim Industrials is currently a proud member of KOSPI 200.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"KODEX 200 (₩B)"}'>Daelim Industrials in KOSPI 200 (₩B)</td></tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Weight"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>Weight</strong></td>
<td style="width: 350.909px;" data-sheets-value='{"1":3,"3":0.0021}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>0.21%</strong></td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Float MC"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Float MC</td>
<td style="width: 350.909px;" data-sheets-value='{"1":3,"3":2301.6}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>2,301.6</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"MC"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>MC</td>
<td style="width: 350.909px;" data-sheets-value='{"1":3,"3":3215.5}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>3,215.5</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"120DA MC"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>120DA MC</td>
<td style="width: 350.909px;" data-sheets-value='{"1":3,"3":2909.2}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>2,909.2</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Float"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>Float</td>
<td style="width: 350.909px;" data-sheets-value='{"1":3,"3":0.7158}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>71.58%</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Mirroring"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><strong>Estimated passive money</strong></td>
<td style="width: 350.909px;" data-sheets-value='{"1":3,"3":126}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><strong>126.0</strong></td>
</tr>
<tr><td colspan="2" style="width: 351.818px;">Source: KRX</td></tr>
</tbody>
</table><p><strong>The KRX made it official yesterday that both DL Corp (the surviving entity) and DL E&amp;C will stay in KOSPI 200 after re-listing on January 25.</strong></p><p>Besides,</p><p>DL E&amp;C will be added to the KOSPI 200, KOSPI 200 Constructions, KRX300 and KRX300 Industrials.</p><div class="content-highlight">
<p><strong>Below is the corporate action schedule for DL E&amp;C (courtesy KRX).</strong></p>
<ul>
<li>Corporate action of DL E&amp;C will be applied after the close of trading on the first day from suspension.</li>
<li>The index market cap (index share and price) on the last trading day before the suspension will be applied in index calculation from December 29 to January 25.</li>
<li>The actual price and actual market cap will be reflected in calculating the Index on January 26.</li>
</ul>
</div>

Daelim Industrial (000210) is about to complete the three-way demerger.
It is undergoing an equity spin-off at a split ratio of 0.44 to 0.56.

DL Corp (holding company)
DL E&amp;C (operating company - construction)









Overview

Surviving
DL Corp


- Ticker
000210


- Bourse
KOSPI


- Ratio
44.37144%


- Type
Holding company


- Business
Subsidiary management &amp; investment


New
DL E&amp;C Corp


- Type
Equity spin-off


- Ticker
TBA


- Bourse
KOSPI


- Ratio
55.62856%


- Type
Operating company


- Business
Construction

Source: DART

The stock trading will get suspended from December 29 to January 22. The trading will resume on January 25.







Timetable

Trade suspension begins
December 29, 2020


Trade suspension ends
January 22, 2021


Re-listing
January 25, 2021

Source: DART

Daelim Industrials is currently a proud member of KOSPI 200.





Daelim Industrials in KOSPI 200 (₩B)

Weight
0.21%


Float MC
2,301.6


MC
3,215.5


120DA MC
2,909.2


Float
71.58%


Estimated passive money
126.0

Source: KRX

The KRX made it official yesterday that both DL Corp (the surviving entity) and DL E&amp;C will stay in KOSPI 200 after re-listing on January 25.Besides,DL E&amp;C will be added to the KOSPI 200, KOSPI 200 Constructions, KRX300 and KRX300 Industrials.
Below is the corporate action schedule for DL E&amp;C (courtesy KRX).

Corporate action of DL E&amp;C will be applied after the close of trading on the first day from suspension.
The index market cap (index share and price) on the last trading day before the suspension will be applied in index calculation from December 29 to January 25.
The actual price and actual market cap will be reflected in calculating the Index on January 26.



DL Corp Stays & DL E&C Newly Joins KOSPI 200: Trade DL E&C on Inclusion

<p><a href="https://www.smartkarma.com/entities/daelim-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:18095:1" rel="noopener">Daelim Industrial (000210 KS)</a> first announced its decision to form a holding company structure on 10 September 2020. Since then, Daelim Industrial's share price is down 9.2% in this period, underperforming KOSPI which is up 9.2% in the same period. On 4 December, Daelim Industrial's shareholders vote on this deal. We think the shareholders will confirm this formation of Holdco/spin-off. Over the years of following the Korean stock market, we have found that the shareholders sometimes do not like the initial spin-off story which knocks the price downwards but later on the share price makes a positive turnaround. In our view, Daelim Industrial could be one of these spin-off related turnaround plays that could outperform the market over the next 6 to 12 months.  </p><p>Daelim Industrial is one of the largest construction companies in Korea. It makes some of the finest apartments in Korea. The housing business (mostly apartments construction) accounted for 54% of total sales and 78% of the total operating profit of the company in 1Q-3Q 2020. The company has one of the most profitable and best E&amp;C business (especially housing/apartments construction) in Korea.</p><p><strong>What are the appropriate comps for DL E&amp;C? </strong>Hyundai E&amp;C, GS E&amp;C, and Daewoo E&amp;C are the most appropriate comps to DL E&amp;C. These three comps are currently trading at P/E ratios of 11.5x, 6.7x, and 7.6x, respectively. The average of these three multiples would be 8.6x. If we take a more conservative view and take just the lowest P/E of the comps (6.7x) and use this multiple to apply to the estimated annual net profit of 660 billion for the E&amp;C business, it would result in an implied market cap of 4.4 trillion won, which would exceed Daelim Industrial's current market cap of 2.9 trillion won. So essentially, you would be getting the other businesses for free.</p>

Daelim Industrial (000210 KS) first announced its decision to form a holding company structure on 10 September 2020. Since then, Daelim Industrial's share price is down 9.2% in this period, underperforming KOSPI which is up 9.2% in the same period. On 4 December, Daelim Industrial's shareholders vote on this deal. We think the shareholders will confirm this formation of Holdco/spin-off. Over the years of following the Korean stock market, we have found that the shareholders sometimes do not like the initial spin-off story which knocks the price downwards but later on the share price makes a positive turnaround. In our view, Daelim Industrial could be one of these spin-off related turnaround plays that could outperform the market over the next 6 to 12 months.  Daelim Industrial is one of the largest construction companies in Korea. It makes some of the finest apartments in Korea. The housing business (mostly apartments construction) accounted for 54% of total sales and 78% of the total operating profit of the company in 1Q-3Q 2020. The company has one of the most profitable and best E&amp;C business (especially housing/apartments construction) in Korea.What are the appropriate comps for DL E&amp;C? Hyundai E&amp;C, GS E&amp;C, and Daewoo E&amp;C are the most appropriate comps to DL E&amp;C. These three comps are currently trading at P/E ratios of 11.5x, 6.7x, and 7.6x, respectively. The average of these three multiples would be 8.6x. If we take a more conservative view and take just the lowest P/E of the comps (6.7x) and use this multiple to apply to the estimated annual net profit of 660 billion for the E&amp;C business, it would result in an implied market cap of 4.4 trillion won, which would exceed Daelim Industrial's current market cap of 2.9 trillion won. So essentially, you would be getting the other businesses for free.

Daelim Industrial: Unlocking Higher Value Through A Holdco & Spin-Off (Voting on 4 December)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

South Korea

DL Holdings Co., Ltd. provides civil engineering, architectural, and plant construction services. The Company constructs bridges, highways, tunnels, harbors, and governmental buildings. DL also manufactures petrochemical products , including polyester, benzene, butane, and methyl tertiary butyl ether (MTBE).

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DL Holdings Co (000210 KS)

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Douglas Kim

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David Blennerhassett

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