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>Nine constituents will likely face an increase in the float rate: five stocks for the sale of the majority shareholder's shares and four names for the IPO lockup release.</li>
<li>Kakao Bank (6.35x), LG Corp (003550 KS) (2.62x), Krafton (2.09x), and Woori Financial Group (316140 KS) (1.74x) are expected to have the most significant impact.</li>
<li>In general, float rate changes show price movement by passive flow similar to new changes (adds/deletes). So, we need to consider gradually building up positions two months before the rebalancing.</li>
</ul>


Nine constituents will likely face an increase in the float rate: five stocks for the sale of the majority shareholder's shares and four names for the IPO lockup release.
Kakao Bank (6.35x), LG Corp (003550 KS) (2.62x), Krafton (2.09x), and Woori Financial Group (316140 KS) (1.74x) are expected to have the most significant impact.
In general, float rate changes show price movement by passive flow similar to new changes (adds/deletes). So, we need to consider gradually building up positions two months before the rebalancing.


KOSPI 200 Index Rebalancing: Constituents Subject to Float Rate Increase

<ul>
<li>I sorted out those on KOSPI 200 with a weekly short-selling volume exceeding 10% of last week's total trade volume and a 30-day ADTV of +₩5B.</li>
<li>I further screened those having an increase in the weekly loan balance. As a result, I filtered 23 KOSPI 200 constituents meeting these conditions.</li>
<li>Among the filtered ones, those whose stock price did not drop last week are screened, meaning that the market's expectations for further share price declines are high for these names.</li>
</ul>


I sorted out those on KOSPI 200 with a weekly short-selling volume exceeding 10% of last week's total trade volume and a 30-day ADTV of +₩5B.
I further screened those having an increase in the weekly loan balance. As a result, I filtered 23 KOSPI 200 constituents meeting these conditions.
Among the filtered ones, those whose stock price did not drop last week are screened, meaning that the market's expectations for further share price declines are high for these names.


Short Interest Flow Checkup on KOSPI 200 Constituents

<ul>
<li>We can consider three types of dividend stocks, targeting the March 31 dividend base date: 1. 1Q fiscal year-ending dividends, 2. Interim (quarterly) dividends, 3. REITs regular dividends</li>
<li>The ex-dividend price corrections of fiscal year-ending dividend stocks have been pretty tight recently. In addition, the futures basis has not reached a desirable level either.</li>
<li>So, either outright dividend trading or dividend arb play does not have much trade opening. So, I'd consider setting up a long/short basket trading, by focusing on high DTV ones.</li>
</ul>


We can consider three types of dividend stocks, targeting the March 31 dividend base date: 1. 1Q fiscal year-ending dividends, 2. Interim (quarterly) dividends, 3. REITs regular dividends
The ex-dividend price corrections of fiscal year-ending dividend stocks have been pretty tight recently. In addition, the futures basis has not reached a desirable level either.
So, either outright dividend trading or dividend arb play does not have much trade opening. So, I'd consider setting up a long/short basket trading, by focusing on high DTV ones.


KOSPI/KOSDAQ End-March Dividends: 1Q Fiscal Year-Ending, Interim(Quarterly), & REITs

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Quantitative Analysis

<ul>
<li>In this insight, we provide the data analysis regarding most shorted stocks and short selling ratios for stocks in KOSPI. </li>
<li>Among these 20 most shorted stocks in KOSPI, the % changes in the short amount on a one week and one month basis were -0.2% and 6.4%, respectively.</li>
<li>Among these 20 most shorted stocks in KOSPI, three stocks with the biggest decline in shorts on a one month basis included Krafton, Kumho Petro Chemical, and Samsung Heavy Industries. </li>
</ul>


In this insight, we provide the data analysis regarding most shorted stocks and short selling ratios for stocks in KOSPI. 
Among these 20 most shorted stocks in KOSPI, the % changes in the short amount on a one week and one month basis were -0.2% and 6.4%, respectively.
Among these 20 most shorted stocks in KOSPI, three stocks with the biggest decline in shorts on a one month basis included Krafton, Kumho Petro Chemical, and Samsung Heavy Industries. 


Korea Short Selling Data Analysis: Celltrion, Amorepacific, Hotel Shilla, & Hanssem

<ul>
<li>Hanssem announced a new shareholder return policy: 1. raised the minimum dividend payout ratio to 50%, 2. quarterly dividend starting next year, and 3. ₩60B worth of share buyback 
</li>
<li>
IMM PE needed a way to raise the share price for the acquisition financing. For this, it introduced a remarkably improved shareholder return policy, which is virtually the only card.</li>
<li>If the stock price does not rise as expected, the uncertainty issue of financing the acquisition may rise again above the water. It may then open up a shorting opportunity.
</li>
</ul>


Hanssem announced a new shareholder return policy: 1. raised the minimum dividend payout ratio to 50%, 2. quarterly dividend starting next year, and 3. ₩60B worth of share buyback 


IMM PE needed a way to raise the share price for the acquisition financing. For this, it introduced a remarkably improved shareholder return policy, which is virtually the only card.
If the stock price does not rise as expected, the uncertainty issue of financing the acquisition may rise again above the water. It may then open up a shorting opportunity.



Hanssem Situation Checkup Amid a New Shareholder Return Policy

South Korea

Cuckoo Holdings Co.,Ltd manufactures and distributes electric home appliances. The Company produces electronic pressure cookers, humidifiers, vacuum cleaners, and air purifiers. Cuckoo Holdings markets its products throughout South Korea.

Topfield Co., Ltd. manufactures digital set top boxes.  The Company's products include free to air receivers, personal video recorders, and common interface receivers.  Topfield provides its products mainly to overseas market.

Ace Bed Co., Ltd. manufactures and markets bed mattresses, bed frames, and other wooden furniture.  The Company exports some of its products to Indonesia and China.

Zinus Inc. wholesales and distributes household furniture. The Company wholesales and distributes bed frames, sofas, platform beds, mattresses, and other related products. Zinus markets its products worldwide.

Hyundai Livart Co Ltd designs and manufactures furniture.  The Company produces a variety of furniture, such as bed, chair, desk, and closet used in bedroom, living room, and office.

Iriver Ltd. develops, designs, manufactures, and markets audio equipment, such as MP3 players.  The Company's products include CD type, flash memory type, and hard disk type MP3 players.  In addition, Iriver produces and sells accessories for mobile communication devices.

Paseco Co., Ltd. manufactures and markets household appliances, such as oil stoves, electric heaters, dishwashers, dish dryers, and refrigerators.

Anam Electronics Co., Ltd. specializes in manufacturing audio and video products, such as wide screen televisions, video cassette recorders, and DVD players.  The Company also produces digital set-top boxes that receive satellite broadcasting programs.

Shinil Industrial Co., Ltd. manufactures electric fans, ovens, rice pots, small refrigerators, pagers, electric heaters, and other household appliances.

Thinkware Systems Corp. designs, manufactures, and markets navigational devices. The Company' products include portable navigation devices, hand-held navigation, and navigation software.  Thinkware Systems also provides location based services (LBS) through mobile networks which enables users to identify location of other users and obtain live traffic information, etc.

Q TECHNOLOGY (GROUP) Company Limited is a PRC-based camera module manufacturer focusing on mid-to-high end camera module market for Chinese branded smartphone, tablet and PC manufacturers.

Jiangsu Tongrun Equipment Technology Co., Ltd. manufactures tool cabinets, steel furniture, other sheet metal products and sheet metal machines.

Xilinmen Furniture Company Limited designs, develops, manufactures and sells mattresses, soft beds and other furniture products. The Company's main product is mattresses.

Miyakoshi Holdings, Inc. operates as a holding company. The company, through its subsidiaries, manufactures, markets, and sells audio & visual equipment. Its products include TVs, DVD players, and multimedia players. The Company is also engaged in the wholesale of pharmaceutical and medical equipment products.

Shenzhen New Nanshan Holding Group Co., Ltd manufactures and designs pre-fabricated houses, products include construction sites offices and houses, special houses for energy or mining projects, urban municipal settlement houses, houses for municipal, tourism, sports exhibition and large commercial activities, and houses for military uses.

Whirlpool China Co Ltd manufactures and markets washing machines and microwave ovens.

Tama Home Co Ltd operates in the home construction industry. The Company designs and constructs single-family homes, and offers real estate sales. Tama Home also operates in the insurance agency business.

Nagawa Co. Ltd. manufactures, sells, and rents prefabricated offices and stores. The Company builds prefabricated storage sheds. Nagawa also sells construction machinery and construction materials.

Vatti Corporation Ltd. manufactures and markets household appliances. The Company's products include gas stoves, kitchen ventilators and water heater.

ES-CON JAPAN Ltd. plans and organizes apartment construction works in Osaka and Kyoto area.  The Company also provides real estate consulting services for land owners and developers.

Hanssem Co., Ltd. manufactures kitchen furniture.  The Company's products include kitchen sinks, kitchen cabinets, dining tables and chairs, and kitchen accessories.  Hanssem also designs and manufactures interior products, such as sofas, bedsteads, closets, drawers, lamps, bathroom and office furniture.

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Hanssem Co Ltd (009240 KS)

KOSPI 200 Index Rebalancing: Constituents Subject to Float Rate Increase

This post investigates those among the KOSPI 200 constituents, which will face an increase in the float rate, thereby attracting a meaningful level...

Sanghyun Park

Short Interest Flow Checkup on KOSPI 200 Constituents

This post checks up the short interests of the KOSPI 200 constituents available for short selling and screens out those with a high potential for a...

Sanghyun Park

KOSPI/KOSDAQ End-March Dividends: 1Q Fiscal Year-Ending, Interim(Quarterly), & REITs

This post offers the latest update on the expected dividends and dividend yields of the three types of end-1Q dividend stocks.

Sanghyun Park

Korea Short Selling Data Analysis: Celltrion, Amorepacific, Hotel Shilla, & Hanssem

Among these 20 most shorted stocks in KOSPI, the % changes in the short amount on a one week and one month basis were -0.2% and 6.4%, respectively.

Douglas Kim

Hanssem Situation Checkup Amid a New Shareholder Return Policy

This post examines the trading dynamics of the Hanssem situation amid the announcement of a new shareholder return policy starting next year.

Sanghyun Park

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