Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Doosan Fuel Cell   / Equity Capital Markets

<p>It was announced after the market close today that <a href="https://www.smartkarma.com/entities/doosan-fuel-cell-co-ltd" target="_blank" data-smartkarma-citation="entities:29252:1" rel="noopener">Doosan Fuel Cell Co Ltd (336260 KS)</a> will conduct a big block deal of 10.927 million shares. Doosan Fuel Cell currently has 55.493 million shares so the block deal would represent <a href="https://finance.naver.com/news/news_read.nhn?article_id=0004426670&amp;office_id=015&amp;mode=LSS2D&amp;type=0&amp;section_id=101&amp;section_id2=258&amp;section_id3=&amp;date=20201005&amp;page=1" target="_blank" rel="noopener">19.7%</a> of total shares outstanding. About 10 major shareholders (including Doosan Corp, Doosan Group Chairman Park Jung-Won, and Doosan Heavy Industries Chairman Park Ji-Won) are selling part of their shares in this block deal. </p><div class="content-highlight">
<p><strong>We would take this block deal due to the following three main reasons:</strong></p>
<p><strong>1) Big discount</strong><strong>&amp; reduced valuations</strong></p>
<p><strong>2) A leading, profitable player in the fuel cell industry in Korea</strong></p>
<p><strong>3) Inclusion in BBIG and Korean New Deal Funds</strong></p>
</div>

It was announced after the market close today that Doosan Fuel Cell Co Ltd (336260 KS) will conduct a big block deal of 10.927 million shares. Doosan Fuel Cell currently has 55.493 million shares so the block deal would represent 19.7% of total shares outstanding. About 10 major shareholders (including Doosan Corp, Doosan Group Chairman Park Jung-Won, and Doosan Heavy Industries Chairman Park Ji-Won) are selling part of their shares in this block deal. 
We would take this block deal due to the following three main reasons:
1) Big discount&amp; reduced valuations
2) A leading, profitable player in the fuel cell industry in Korea
3) Inclusion in BBIG and Korean New Deal Funds


Doosan Fuel Cell Big Block Deal Placement

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Event-Driven

<p>KOSPI 200 biannual rebalancing is coming. This year, it will be December 11, 2020.</p><p>It will be the first time that the KRX does a KOSPI 200 rebalancing biannually in December.</p><p>Due to the current market condition (high fluctuations), we will likely see a higher number of changes than usual.</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":"Status"}'>Status</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Index"}'>Index</td>
<td style="text-align: right;" data-sheets-formula='=googlefinance(R[1]C[0], "name")' data-sheets-numberformat='{"1":5,"2":"mmmm d, yyyy","3":1}' data-sheets-value='{"1":2,"2":"KOSPI 200 Index"}'>KOSPI 200 Index</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-formula='="KRX:KOSPI200"' data-sheets-numberformat='{"1":5,"2":"mmmm d, yyyy","3":1}' data-sheets-value='{"1":2,"2":"KRX:KOSPI200"}'>KOSPI200</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Date"}'>Date</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":5,"2":"mmmm d, yyyy","3":1}' data-sheets-value='{"1":3,"3":44099}'>September 25, 2020</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Rebalancing"}'>Rebalancing</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-value='{"1":2,"2":"Biannually"}'>Biannually</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Effective date"}'>- Effective date</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-value='{"1":2,"2":"Next trading day of 2nd Thursday of June &amp; December"}'>Next trading day of 2nd Thursday of June &amp; December</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - June"}'>- June</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":5,"2":"mmmm d, yyyy","3":1}' data-sheets-value='{"1":3,"3":43994}'>June 12, 2020</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - December"}'>- December</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":5,"2":"mmmm d, yyyy","3":1}' data-sheets-value='{"1":3,"3":44176}'>December 11, 2020</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Number of constituents"}'>Number of constituents</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-value='{"1":3,"3":200}'>200</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Est. total mirroring funds"}'>Est. total mirroring funds</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-value='{"1":3,"3":60000}'>60,000.0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total float MC"}'>Total float MC</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-value='{"1":3,"3":884235.718}'>884,235.7</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Average"}'>- Average</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-value='{"1":3,"3":4421.179}'>4,421.2</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Highest"}'>- Highest</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-value='{"1":3,"3":273063.808}'>273,063.8</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Lowest"}'>- Lowest</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-value='{"1":3,"3":62.926}'>62.9</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Median"}'>- Median</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-value='{"1":3,"3":1023.081}'>1,023.1</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Top 10 largest"}'>- Top 10 largest</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-value='{"1":3,"3":0.5753}'>57.53%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current"}'>Current</td>
<td style="text-align: right;" data-sheets-formula='=googlefinance(R[-14]C[0], "price")' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-value='{"1":3,"3":303.57}'>303.57</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"52W high (September 15, 2020)"}'>52W high (September 15, 2020)</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-value='{"1":3,"3":323.36}'>323.36</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"52W low (March 19, 2020)"}'>52W low (March 19, 2020)</td>
<td style="text-align: right;" data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-value='{"1":3,"3":199.28}'>199.28</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX"}'><em>Source: KRX</em></td></tr>
</tbody>
</table>

KOSPI 200 biannual rebalancing is coming. This year, it will be December 11, 2020.It will be the first time that the KRX does a KOSPI 200 rebalancing biannually in December.Due to the current market condition (high fluctuations), we will likely see a higher number of changes than usual.





Status

Index
KOSPI 200 Index


Ticker
KOSPI200


Date
September 25, 2020


Rebalancing
Biannually


- Effective date
Next trading day of 2nd Thursday of June &amp; December


- June
June 12, 2020


- December
December 11, 2020


Number of constituents
200


Est. total mirroring funds
60,000.0


Total float MC
884,235.7


- Average
4,421.2


- Highest
273,063.8


- Lowest
62.9


- Median
1,023.1


- Top 10 largest
57.53%


Current
303.57


52W high (September 15, 2020)
323.36


52W low (March 19, 2020)
199.28

Source: KRX



KOSPI 200 Rebalancing Projection: Safe Bets & Those in Grey Area

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

<p>The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective.  China (<strong>CSI 300, MSCI China</strong>) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (<strong>TAIEX</strong>) continues to be worthy of an overweight within the EM universe, while South Korea (<strong>KOSPI</strong>) and India (<strong>SENSEX</strong>) display improving price and RS trends -- add exposure.</p>

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective.  China (CSI 300, MSCI China) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while South Korea (KOSPI) and India (SENSEX) display improving price and RS trends -- add exposure.

Cross Asset Strategy

<div class="content-highlight"><p><strong>It has been reported in the past few days that <a href="http://www.koreaninvestors.com/?p=12175" target="_blank" rel="noopener">NPS</a> is likely to put a greater emphasis on ESG (environmental, social, &amp; governance) based investing for Korean stocks and bonds starting 2021. </strong>NPS has currently given a mandate to a company to help NPS to apply ESG based investment system. The ESG evaluations are expected to aid NPS to actively exercise shareholder rights and also to carry out negative screening of stocks.</p></div><h3>Implications of NPS Incorporating More ESG Criteria on Domestic Investments (Bonds &amp; Stocks)</h3><ul>
<li>Negative Impact on VICE industries </li>
<li>Positive Impact on Renewable Energy Industries</li>
<li>Negative Impact on Coal &amp; Oil Industries</li>
<li>Greater Representation of Women in Senior Management Team/BOD</li>
</ul>

It has been reported in the past few days that NPS is likely to put a greater emphasis on ESG (environmental, social, &amp; governance) based investing for Korean stocks and bonds starting 2021. NPS has currently given a mandate to a company to help NPS to apply ESG based investment system. The ESG evaluations are expected to aid NPS to actively exercise shareholder rights and also to carry out negative screening of stocks.Implications of NPS Incorporating More ESG Criteria on Domestic Investments (Bonds &amp; Stocks)
Negative Impact on VICE industries 
Positive Impact on Renewable Energy Industries
Negative Impact on Coal &amp; Oil Industries
Greater Representation of Women in Senior Management Team/BOD


NPS - Greater Emphasis of ESG Based Investing for Korean Stocks & Bonds Starting 2021

<p>On Friday, September 4th, <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> announced a major rights offering worth 1.3 trillion won ($1.1 billion), representing 32% of its total market cap of 4.1 trillion won. The expected rights offering price of Doosan Heavy Industries is 10,700 won, which is <strong>34%</strong> lower than the current price of 16,100 won. The expected rights offering price of Doosan Fuel Cell is 34,200 won, which is <strong>42% lower</strong> than the current price of 59,300 won.</p>
<h3><strong>Korean New Deal Funds &amp; Big Market Discounts Drive Rights Offering </strong></h3>
<div class="content-highlight">
<p>The Korean New Deal Funds are likely to be one of the major drivers of both Doosan Heavy Industries and Doosan Fuel Cell. Although both companies are likely to be included in numerous New Deal Funds, Doosan Fuel Cell is viewed more as a pure-play. The market certainly seemed to favor Doosan Fuel Cell much better than Doosan Heavy Industries, reflecting the limit up position of the former stock.</p>
<p>Going forward, there are likely to be some interesting trading opportunities regarding the rights offerings of these two stocks, especially driven by the New Deal Funds and also due to the fact that the discounts on their expected rights offering prices and current prices are quite wide.</p>
</div>

On Friday, September 4th, Doosan Heavy Industries &amp; Construction (034020 KS) announced a major rights offering worth 1.3 trillion won ($1.1 billion), representing 32% of its total market cap of 4.1 trillion won. The expected rights offering price of Doosan Heavy Industries is 10,700 won, which is 34% lower than the current price of 16,100 won. The expected rights offering price of Doosan Fuel Cell is 34,200 won, which is 42% lower than the current price of 59,300 won.
Korean New Deal Funds &amp; Big Market Discounts Drive Rights Offering 

The Korean New Deal Funds are likely to be one of the major drivers of both Doosan Heavy Industries and Doosan Fuel Cell. Although both companies are likely to be included in numerous New Deal Funds, Doosan Fuel Cell is viewed more as a pure-play. The market certainly seemed to favor Doosan Fuel Cell much better than Doosan Heavy Industries, reflecting the limit up position of the former stock.
Going forward, there are likely to be some interesting trading opportunities regarding the rights offerings of these two stocks, especially driven by the New Deal Funds and also due to the fact that the discounts on their expected rights offering prices and current prices are quite wide.


Doosan Heavy Industries & Doosan Fuel Cell (Rights Offerings of $1.1 Billion & $0.3 Billion)

South Korea

Doosan Fuel Cell Co. Ltd. produces and sells cell products. The Company develops and sells residential used compact fuel cells and other products. Doosan Fuel Cell markets its products worldwide.

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Doosan Fuel Cell (336260 KS)

Doosan Fuel Cell Big Block Deal Placement

It was announced after the market close today that Doosan Fuel Cell Co Ltd (336260 KS) will conduct a big block deal of 10.927 million shares....

Douglas Kim

KOSPI 200 Rebalancing Projection: Safe Bets & Those in Grey Area

???

Sanghyun Park

Remain Overweight EM Relative To EAFE

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is...

Vermilion Research

NPS - Greater Emphasis of ESG Based Investing for Korean Stocks & Bonds Starting 2021

It has been reported in the past few days that NPS is likely to put a greater emphasis on ESG (environmental, social, & governance) based...

Douglas Kim

Doosan Heavy Industries & Doosan Fuel Cell (Rights Offerings of $1.1 Billion & $0.3 Billion)

The Korean New Deal Funds are likely to be one of the major drivers of both Doosan Heavy Industries and Doosan Fuel Cell. Although both companies...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)