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

<p>Doosan Heavy Industries is up 15% today on the news that Korea and the US signed the business collaboration agreement for the SMR (Small Modular Reactor) cooperation. Doosan Heavy has been looking to export its SMRs to the US for a while.</p><p>Doosan Heavy's price surge leads to an extreme diversion in the price ratio vs. Doosan Corp. It is currently 2.43% off the 180-day mean: Doosan Corp in the numerator and Doosan Heavy in the denominator. The pair is 31.51% below the 180-day high.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Doosan Corp"}' data-sheets-formula="=R[-110]C[-6]">Doosan Corp vs. Doosan Heavy Industries</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current price ratio"}'>Current price ratio</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3.902869757174393}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula='=indirect("$E"&amp;R159C[0])'>3.90287</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"%Δ to 180-day mean"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]'><strong>%Δ to 180-day mean</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.024321120573437455}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula='=indirect("$B"&amp;R159C[0])'><strong>-2.43%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"%Δ to 180-day high"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]'><strong>%Δ to 180-day high</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.31509527938165255}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula='=indirect("$C"&amp;R159C[0])'><strong>-31.51%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"%Δ to 180-day low"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]'>%Δ to 180-day low</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.32239356345043796}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula='=indirect("$D"&amp;R159C[0])'>32.24%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><section class="figure"><p>The current sigma on a 20-day moving average is -2.59, putting the duo back to where there were a month ago. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/210/698/original/Doosan+Corp+vs.+Doosan+Heavy+Industries+Constrctn+Co+Ltd.png?1622610836" class="editor-image img-responsive" data-smartkarma-image-id="210698"></figure></section><p>Doosan Corp is basically a single-subsidiary holding company with a substantial presence of its own operating operation. But Doosan Heavy alone accounts for nearly 70% of the GAV, making them a suitable pair for a stub trade.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Assets"}'>Assets</td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":2,"2":"% of NAV"}'>% of NAV</td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":2,"2":"% of GAV"}'>% of GAV</td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Doosan Heavy Industries Constrctn Co Ltd"}' data-sheets-formula="=NAV!R[11]C[0]"><strong>Doosan Heavy Industries Constrctn Co Ltd</strong></td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":0.9151962366131203}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[2]/R28C[0]"><strong>91.52%</strong></td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":3,"3":0.6808923434006716}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[1]/R23C[-1]"><strong>68.09%</strong></td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Oricom Inc"}' data-sheets-formula="=NAV!R[11]C[0]">Oricom Inc</td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":0.011680247052466503}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[2]/R28C[0]">1.17%</td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":3,"3":0.00868992951335164}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[1]/R23C[-1]">0.87%</td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Infinitt Healthcare Co Ltd"}' data-sheets-formula="=NAV!R[11]C[0]">Infinitt Healthcare Co Ltd</td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":0.000027824626946200257}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[2]/R28C[0]">0.00%</td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":3,"3":0.00002070110724641955}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[1]/R23C[-1]">0.00%</td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Solus Advanced Materials 1P"}' data-sheets-formula="=NAV!R[11]C[0]">Solus Advanced Materials 1P</td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":0.029027529178169444}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[2]/R28C[0]">2.90%</td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":3,"3":0.02159604855719073}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[1]/R23C[-1]">2.16%</td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Other - unlisted"}' data-sheets-formula="=NAV!R[11]C[0]">Other - unlisted</td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":0.13198779914059305}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[2]/R28C[0]">13.20%</td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":3,"3":0.09819695302694514}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[11]C[1]/R23C[-1]">9.82%</td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Operation"}' data-sheets-formula="=NAV!R[25]C[0]"><strong>Operation</strong></td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":0.25619334319140497}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[25]C[2]/R28C[0]"><strong>25.62%</strong></td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":3,"3":0.19060402439459445}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[25]C[1]/R23C[-1]"><strong>19.06%</strong></td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Holdco net cash/debt (de-consolidated)"}' data-sheets-formula="=NAV!R[25]C[0]">Holdco net cash/debt (de-consolidated)</td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":-0.2705439344996471}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[25]C[2]/R28C[0]">-27.05%</td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='[null,3,"0.00%",1]'>-</td>
</tr>
<tr>
<td style="width: 229.091px;" data-sheets-value='{"1":2,"2":"Value of pref shares"}' data-sheets-formula="=NAV!R[-14]C[0]">Value of pref shares</td>
<td style="text-align: right; width: 225.455px;" data-sheets-value='{"1":3,"3":-0.07356904530305353}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=-R[-14]C[0]/R28C[0]">-7.36%</td>
<td style="text-align: right; width: 227.273px;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='[null,3,"0.00%",1]'>-</td>
</tr>
<tr><td colspan="3" style="width: 723.636px;">Source: DART &amp; KRX</td></tr>
</tbody>
</table><p>Doosan Corp controls 41.95% of Doosan Heavy Industries, translating into a ₩3.85T market value.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 242.727px;" data-sheets-value='{"1":2,"2":"Holdings"}'>Holdings</td>
<td style="text-align: right; width: 148.182px;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right; width: 122.727px;" data-sheets-value='{"1":2,"2":"Stake"}'>Stake</td>
<td style="text-align: right; width: 147.273px;" data-sheets-value='{"1":2,"2":"Value"}'>Value</td>
</tr>
<tr>
<td style="width: 242.727px;" data-sheets-value='{"1":2,"2":"Doosan Heavy Industries Constrctn Co Ltd"}' data-sheets-formula="=NAV!R[10]C[0]"><strong>Doosan Heavy Industries Constrctn Co Ltd</strong></td>
<td style="text-align: right; width: 148.182px;" data-sheets-value='{"1":2,"2":"034020"}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=NAV!R[10]C[0]"><strong>034020</strong></td>
<td style="text-align: right; width: 122.727px;" data-sheets-value='{"1":3,"3":0.41950000000000004}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=NAV!R[10]C[0]"><strong>41.95%</strong></td>
<td style="text-align: right; width: 147.273px;" data-sheets-value='{"1":3,"3":3854.7747096210005}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=NAV!R[10]C[0]"><strong>₩3,854.8B</strong></td>
</tr>
<tr>
<td style="width: 242.727px;" data-sheets-value='{"1":2,"2":"Oricom Inc"}' data-sheets-formula="=NAV!R[10]C[0]">Oricom Inc</td>
<td style="text-align: right; width: 148.182px;" data-sheets-value='{"1":2,"2":"010470"}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=NAV!R[10]C[0]">010470</td>
<td style="text-align: right; width: 122.727px;" data-sheets-value='{"1":3,"3":0.6154999999999999}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=NAV!R[10]C[0]">61.55%</td>
<td style="text-align: right; width: 147.273px;" data-sheets-value='{"1":3,"3":49.50336598724999}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=NAV!R[10]C[0]">₩49.5B</td>
</tr>
<tr>
<td style="width: 242.727px;" data-sheets-value='{"1":2,"2":"Infinitt Healthcare Co Ltd"}' data-sheets-formula="=NAV!R[10]C[0]">Infinitt Healthcare Co Ltd</td>
<td style="text-align: right; width: 148.182px;" data-sheets-value='{"1":2,"2":"071200"}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=NAV!R[10]C[0]">071200</td>
<td style="text-align: right; width: 122.727px;" data-sheets-value='{"1":3,"3":0.0006}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=NAV!R[10]C[0]">0.06%</td>
<td style="text-align: right; width: 147.273px;" data-sheets-value='{"1":3,"3":0.11827402838399999}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=NAV!R[10]C[0]">₩0.1B</td>
</tr>
<tr>
<td style="width: 242.727px;" data-sheets-value='{"1":2,"2":"Solus Advanced Materials 1P"}' data-sheets-formula="=NAV!R[10]C[0]">Solus Advanced Materials 1P</td>
<td style="text-align: right; width: 148.182px;" data-sheets-value='{"1":2,"2":"33637K"}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=NAV!R[10]C[0]">33637K</td>
<td style="text-align: right; width: 122.727px;" data-sheets-value='{"1":3,"3":0.028399999999999998}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=NAV!R[10]C[0]">2.84%</td>
<td style="text-align: right; width: 147.273px;" data-sheets-value='{"1":3,"3":123.01888}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=NAV!R[10]C[0]">₩123.0B</td>
</tr>
<tr>
<td style="width: 242.727px;" data-sheets-value='{"1":2,"2":"Other - unlisted"}' data-sheets-formula="=NAV!R[13]C[0]">Other - unlisted</td>
<td style="text-align: right; width: 148.182px;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='[null,2,"#,##0",1]'>-</td>
<td style="text-align: right; width: 122.727px;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=NAV!R[13]C[0]">-</td>
<td style="text-align: right; width: 147.273px;" data-sheets-value='{"1":3,"3":561.04}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=NAV!R[13]C[0]">₩561.0B</td>
</tr>
<tr><td colspan="4" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: KRX &amp; DART"}'>Source: KRX &amp; DART</td></tr>
</tbody>
</table>

Doosan Heavy Industries is up 15% today on the news that Korea and the US signed the business collaboration agreement for the SMR (Small Modular Reactor) cooperation. Doosan Heavy has been looking to export its SMRs to the US for a while.Doosan Heavy's price surge leads to an extreme diversion in the price ratio vs. Doosan Corp. It is currently 2.43% off the 180-day mean: Doosan Corp in the numerator and Doosan Heavy in the denominator. The pair is 31.51% below the 180-day high.





Doosan Corp vs. Doosan Heavy Industries

Current price ratio
3.90287


%Δ to 180-day mean
-2.43%


%Δ to 180-day high
-31.51%


%Δ to 180-day low
32.24%

Source: KRX

The current sigma on a 20-day moving average is -2.59, putting the duo back to where there were a month ago. 
Doosan Corp is basically a single-subsidiary holding company with a substantial presence of its own operating operation. But Doosan Heavy alone accounts for nearly 70% of the GAV, making them a suitable pair for a stub trade.







Assets
% of NAV
% of GAV


Doosan Heavy Industries Constrctn Co Ltd
91.52%
68.09%


Oricom Inc
1.17%
0.87%


Infinitt Healthcare Co Ltd
0.00%
0.00%


Solus Advanced Materials 1P
2.90%
2.16%


Other - unlisted
13.20%
9.82%


Operation
25.62%
19.06%


Holdco net cash/debt (de-consolidated)
-27.05%
-


Value of pref shares
-7.36%
-

Source: DART &amp; KRX

Doosan Corp controls 41.95% of Doosan Heavy Industries, translating into a ₩3.85T market value.








Holdings
Ticker
Stake
Value


Doosan Heavy Industries Constrctn Co Ltd
034020
41.95%
₩3,854.8B


Oricom Inc
010470
61.55%
₩49.5B


Infinitt Healthcare Co Ltd
071200
0.06%
₩0.1B


Solus Advanced Materials 1P
33637K
2.84%
₩123.0B


Other - unlisted
-
-
₩561.0B

Source: KRX &amp; DART



Doosan Stub: An Entry Point in This Extreme Diversion

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<div class="content-highlight">
<p>On 28 May, Korea's National Pension Fund (NPS) announced its new <a href="https://news.mt.co.kr/mtview.php?no=2021052820172973220" target="_blank" rel="noopener">5 year plan</a> to reduce the asset allocation of Korean equities to 14.5% of total assets at the end of 2026, down from the current target of 16.8% of total assets at the end of 2021. NPS now is targeting overseas equity asset allocation targets to increase from 25.1% at the end of 2021 to 35.5% at the end of 2026.</p>
<p>NPS is targeting equity, fixed income and alternative assets to account for 50%, 35%, and 15% of total assets by the end of 2026. NPS has set an annual expected return of 5.1% for its total invested assets from 2021 to 2026.</p>
</div>


On 28 May, Korea's National Pension Fund (NPS) announced its new 5 year plan to reduce the asset allocation of Korean equities to 14.5% of total assets at the end of 2026, down from the current target of 16.8% of total assets at the end of 2021. NPS now is targeting overseas equity asset allocation targets to increase from 25.1% at the end of 2021 to 35.5% at the end of 2026.
NPS is targeting equity, fixed income and alternative assets to account for 50%, 35%, and 15% of total assets by the end of 2026. NPS has set an annual expected return of 5.1% for its total invested assets from 2021 to 2026.


NPS Announces A Reduction in Asset Allocation in Korean Equities to 14.5% of Assets by 2026

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>This week in StubWorld ...</p>
</div>
<div>
<div>
<div class="content-highlight">
<p>With the short-selling ban in Korea lifted this past Monday, this insight takes a cursory look at those Holdcos moving, and some that may yet have more to move. </p>
</div>
</div>
</div>
<div>
<p>Preceding my comments on Korean stubs are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div><hr></div>
<div>
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>


This week in StubWorld ...




With the short-selling ban in Korea lifted this past Monday, this insight takes a cursory look at those Holdcos moving, and some that may yet have more to move. 




Preceding my comments on Korean stubs are the weekly setup/unwind tables for Asia-Pacific Holdcos.



These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


<p>The split ratio (Infracore) is 0.6895026. The one to merge with Heavy takes 0.6895026.</p><p>Then, the merger ratio is 0.6866211, making the swap ratio 0.4734270.</p><p>The remaining 0.3104974 of Infracore will remain on KOSPI with the ticker 042670.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Swap ratio"}'>Swap ratio</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Doosan Infracore split ratio"}'>Doosan Infracore split ratio</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6895026}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}'>0.6895026</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Merger ratio with Doosan Heavy"}'>Merger ratio with Doosan Heavy</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6866211}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}'>0.6866211</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap ratio with Doosan Heavy"}'>Swap ratio with Doosan Heavy</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.47342703366485994}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula="=R[-2]C[0]*R[-1]C[0]">0.4734270</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Swap ratio based on the merger price"}'>Swap ratio based on the merger price</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Doosan Infracore Co Ltd"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Doosan Infracore Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"042670"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='="042670"'>042670</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Merger price"}'>Merger price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7827}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>₩7,827</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Merger price after split"}'>Post-split merger price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5396.7368502}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[-1]C[0]*R[-9]C[0]">₩5,397</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Doosan Heavy Industries Constrctn Co Ltd"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Doosan Heavy Industries Constrctn Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"034020"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='="034020"'>034020</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Merger price"}'>Merger price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11400}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>₩11,400</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap ratio"}'>Merger price-based swap ratio</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.47342703366485994}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula="=R[-11]C[0]">0.4734270</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>Infracore soared 21.82% yesterday. Heavy? It had a 2.59% gain.</p><p>As a result, assuming the market value of Infracore's other 0.3104974 remains unchanged, the current market price-based swap ratio is at a +20.9% disparity.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Swap ratio based on the market price"}'>Swap ratio based on the market price</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Doosan Infracore Co Ltd"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Doosan Infracore Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"042670"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='="042670"'>042670</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market price"}'>Market price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":9880}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R[-1]C[0], "price")'>₩9,880</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market price after split"}'>Post-split market price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6812.285688}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[-1]C[0]*R[-20]C[0]">₩6,812</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Doosan Heavy Industries Constrctn Co Ltd"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Doosan Heavy Industries Constrctn Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"034020"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='="034020"'>034020</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market price"}'>Market price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11900}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula='=googlefinance(R[-1]C[0], "price")'>₩11,900</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap ratio"}'><strong>Market price-based swap ratio</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.572460982184874}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula="=R[-4]C[0]/R[-1]C[0]"><strong>0.5724610</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Disparity"}'><strong>- Disparity</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.20918524181726464}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[-1]C[0]-R[-12]C[0])/R[-12]C[0]"><strong>+20.92%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>Infracore is now 16.8% above the appraisal rights exercise price. Heavy is +3.8%.</p><p>The ceiling for potential cancellation is ₩300B for Infracore and ₩200B for Heavy.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Entity"}'>Entity</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Purchase rights price"}'>Purchase rights price</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"% to the current price"}'>% to the current price</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Infracore"}'>Infracore</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8224}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>₩8,224</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.16761133603238867}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C[-1]-R[-10]C[-1])/R[-10]C[-1]">16.76%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Heavy"}'>Heavy</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11447}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>₩11,447</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.038067226890756305}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[0]C[-1]-R[-7]C[-1])/R[-7]C[-1]">3.81%</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

The split ratio (Infracore) is 0.6895026. The one to merge with Heavy takes 0.6895026.Then, the merger ratio is 0.6866211, making the swap ratio 0.4734270.The remaining 0.3104974 of Infracore will remain on KOSPI with the ticker 042670.





Swap ratio

Doosan Infracore split ratio
0.6895026


Merger ratio with Doosan Heavy
0.6866211


Swap ratio with Doosan Heavy
0.4734270

Source: DART







Swap ratio based on the merger price

Name
Doosan Infracore Co Ltd


Ticker
042670


Merger price
₩7,827


Post-split merger price
₩5,397


Name
Doosan Heavy Industries Constrctn Co Ltd


Ticker
034020


Merger price
₩11,400


Merger price-based swap ratio
0.4734270

Source: DART

Infracore soared 21.82% yesterday. Heavy? It had a 2.59% gain.As a result, assuming the market value of Infracore's other 0.3104974 remains unchanged, the current market price-based swap ratio is at a +20.9% disparity.





Swap ratio based on the market price

Name
Doosan Infracore Co Ltd


Ticker
042670


Market price
₩9,880


Post-split market price
₩6,812


Name
Doosan Heavy Industries Constrctn Co Ltd


Ticker
034020


Market price
₩11,900


Market price-based swap ratio
0.5724610


- Disparity
+20.92%

Source: DART

Infracore is now 16.8% above the appraisal rights exercise price. Heavy is +3.8%.The ceiling for potential cancellation is ₩300B for Infracore and ₩200B for Heavy.







Entity
Purchase rights price
% to the current price


Infracore
₩8,224
16.76%


Heavy
₩11,447
3.81%

Source: DART



Doosan Split/Merger: Infracore in Overshooting

<p>On 19 March, <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a> announced that it will split the operating division (surviving company) and the investment division (Newco company that is being split off). The split off Newco will then be merged with <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>. </p><p><strong>Need to Repay Doosan Infracore Shorts - </strong>As of 18 March, there were 12.56 million shares shorts outstanding for Doosan Infracore, representing 3.4% of total outstanding shares. At the current price of 9,880 won, this represents 124 billion won. There were 61 million shares of Doosan Infracore that were traded on Monday, 21 March and probably a good chunk of these shorted shares were covered. According to Korean regulations, prior to the Newco being formed, the investors that were shorted on the company need to repay them and this was one of the main reasons why Doosan Infracore's shares jumped 21% on Monday. </p><div class="content-highlight"><p><em>The Insight has been marked Bullish since we expect the split off and merger of Doosan Infracore's investment assets to DHIC is likely to result in a higher re-rating of the company's core operating business (construction equipment). There are also signs that the overseas construction business is rebounding in China, which should have a positive impact on Doosan Infracore. In addition, the creation of the Newco (and the getting rid of the previous company's shareholders' list) results in the need for the Doosan Infracore's shorts to cover. </em></p></div>

On 19 March, Doosan Infracore (042670 KS) announced that it will split the operating division (surviving company) and the investment division (Newco company that is being split off). The split off Newco will then be merged with Doosan Heavy Industries &amp; Construction (034020 KS). Need to Repay Doosan Infracore Shorts - As of 18 March, there were 12.56 million shares shorts outstanding for Doosan Infracore, representing 3.4% of total outstanding shares. At the current price of 9,880 won, this represents 124 billion won. There were 61 million shares of Doosan Infracore that were traded on Monday, 21 March and probably a good chunk of these shorted shares were covered. According to Korean regulations, prior to the Newco being formed, the investors that were shorted on the company need to repay them and this was one of the main reasons why Doosan Infracore's shares jumped 21% on Monday. The Insight has been marked Bullish since we expect the split off and merger of Doosan Infracore's investment assets to DHIC is likely to result in a higher re-rating of the company's core operating business (construction equipment). There are also signs that the overseas construction business is rebounding in China, which should have a positive impact on Doosan Infracore. In addition, the creation of the Newco (and the getting rid of the previous company's shareholders' list) results in the need for the Doosan Infracore's shorts to cover. 

Doosan Infracore: Investco Split Off & Merger Ratio Announced

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)

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