Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

Hyundai Engineering & Construction / Equity Bottom-Up

<ul>
<li>Mohammed bin Salman (MBS), the Crown Prince of Saudi Arabia, is expected to visit South Korea in late October/early November 2022.</li>
<li>In this insight, we discuss the top 14 stocks in Korea that could benefit from his visit of South Korea in a couple of months.</li>
<li>We think that many local investors have been buying some of the 14 stocks mentioned in this insight with the expectation of further positive news from MBS visiting South Korea.</li>
</ul>


Mohammed bin Salman (MBS), the Crown Prince of Saudi Arabia, is expected to visit South Korea in late October/early November 2022.
In this insight, we discuss the top 14 stocks in Korea that could benefit from his visit of South Korea in a couple of months.
We think that many local investors have been buying some of the 14 stocks mentioned in this insight with the expectation of further positive news from MBS visiting South Korea.


Top 14 Korean Stocks to Benefit from Mohammed Bin Salman's Visit to South Korea in October/November

<ul>
<li>We highlight the top five catalysts of why we believe Hyundai E&amp;C is likely to outperform the market in the next 6-12 months. </li>
<li>Higher housing supply, surge in new orders, expansion in nuclear projects/inclusion in nuclear ETFs, Neom mega project, and shift to value stocks are likely to drive Hyundai E&amp;C's outperformance.</li>
<li>Housing/Architecture accounted for 57.1% and 59.7% of total sales in 2021 and 1Q 2022, respectively. Plants/power plants accounted for 25.7% of total sales in 2021.</li>
</ul>


We highlight the top five catalysts of why we believe Hyundai E&amp;C is likely to outperform the market in the next 6-12 months. 
Higher housing supply, surge in new orders, expansion in nuclear projects/inclusion in nuclear ETFs, Neom mega project, and shift to value stocks are likely to drive Hyundai E&amp;C's outperformance.
Housing/Architecture accounted for 57.1% and 59.7% of total sales in 2021 and 1Q 2022, respectively. Plants/power plants accounted for 25.7% of total sales in 2021.


Hyundai Engineering & Construction: Top Five Catalysts

Event-Driven

<ul>
<li>Korea Investment Management will be launching a new nuclear power related ETF called Kindex Nuclear Theme Deep Search ETF on 28 June. </li>
<li>NH-Amundi Asset Management will also be launching Hanaro Nuclear iSelect ETF on 28 June. Both ETFs are the first ones to focus on the nuclear power related stocks in Korea.</li>
<li>The launch of these ETFs should have a positive impact on the major nuclear power related stocks including Doosan Enerbility (034020 KS) and Kepco Plant Service &amp; Engineering (051600 KS).</li>
</ul>


Korea Investment Management will be launching a new nuclear power related ETF called Kindex Nuclear Theme Deep Search ETF on 28 June. 
NH-Amundi Asset Management will also be launching Hanaro Nuclear iSelect ETF on 28 June. Both ETFs are the first ones to focus on the nuclear power related stocks in Korea.
The launch of these ETFs should have a positive impact on the major nuclear power related stocks including Doosan Enerbility (034020 KS) and Kepco Plant Service &amp; Engineering (051600 KS).


Launch of Kindex Nuclear Theme Deep Search ETF & Hanaro Nuclear ISelect ETF in Korea

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.

Kepco Engineering & Construction / Event-Driven

<ul>
<li>Since KEPCO announced the sale of its stake in KEPCO E&amp;C, this will happen. But the question is when, and the market was betting that it would not happen immediately.</li>
<li>But these bets collapsed yesterday. It is because Choo Kyung-ho, Deputy Prime Minister of Economy, publicly made remarks yesterday that seemed to pressure KEPCO to make additional self-rescue efforts.</li>
<li>KEPCO may aim at the level of ₩60,000 by applying a 5-7% discount rate from the mid-₩60,000 price. With this price in mind, we need to time this block deal.</li>
</ul>


Since KEPCO announced the sale of its stake in KEPCO E&amp;C, this will happen. But the question is when, and the market was betting that it would not happen immediately.
But these bets collapsed yesterday. It is because Choo Kyung-ho, Deputy Prime Minister of Economy, publicly made remarks yesterday that seemed to pressure KEPCO to make additional self-rescue efforts.
KEPCO may aim at the level of ₩60,000 by applying a 5-7% discount rate from the mid-₩60,000 price. With this price in mind, we need to time this block deal.


Discussing How We Should Time the KEPCO E&C Block Deal

<ul>
<li>There are three major reasons we like a pair trade between Doosan Corp (go long) and Doosan Enerbility (go short). </li>
<li>First, share prices of two companies have diverged too much this year. Second, Doosan Corp is currently trading at a 76% discount to its NAV, which is excessive. </li>
<li>Third, as investors have poured capital into nuclear power themed Doosan Enerbility, they have neglected its parent Doosan Corp. </li>
</ul>


There are three major reasons we like a pair trade between Doosan Corp (go long) and Doosan Enerbility (go short). 
First, share prices of two companies have diverged too much this year. Second, Doosan Corp is currently trading at a 76% discount to its NAV, which is excessive. 
Third, as investors have poured capital into nuclear power themed Doosan Enerbility, they have neglected its parent Doosan Corp. 


A Pair Trade Between Doosan Corp & Doosan Enerbility

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)

Top 14 Korean Stocks to Benefit from Mohammed Bin Salman's Visit to South Korea in October/November

In this insight, we discuss the top 14 stocks in Korea that could benefit from Saudi Arabia's Mohammed bin Salman's visit of South Korea in a...

Douglas Kim

Hyundai Engineering & Construction: Top Five Catalysts

Higher housing supply, surge in new orders, expansion in nuclear projects/inclusion in nuclear ETFs, Neom mega project, and shift to value stocks...

Douglas Kim

Launch of Kindex Nuclear Theme Deep Search ETF & Hanaro Nuclear ISelect ETF in Korea

The launch of the new nuclear power related ETFs should have a positive impact on the major nuclear power related stocks including Doosan...

Douglas Kim

Discussing How We Should Time the KEPCO E&C Block Deal

This post gives the background story surrounding the KEPCO E&C block deal and discusses how we should time this stake sale event.

Sanghyun Park

A Pair Trade Between Doosan Corp & Doosan Enerbility

There are three major reasons we like a pair trade between Doosan Corp (go long) and Doosan Enerbility (go short). Doosan Corp is currently trading...

Douglas Kim

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