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 Capital Markets

Hanwha Systems Co Ltd / Equity Capital Markets

<p>Hanwha Systems announced a ₩1.2T rights offer at a 71.39% capital increase rate.</p><p>Per-share allocation for stockholders is 0.58124 as 20% goes to the ESOP.</p><p>The pricing discount is 15%, a little more aggressive than the usual 20%.</p><p>The ex-rights fall on April 21, with the preliminary pricing on April 19. The final pricing will be out on May 31. You can trade subscription rights between May 13~20.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Overview"}'>Overview</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Issuer"}'>Issuer</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Hanwha Systems Co Ltd"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Hanwha Systems 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":"272210"}' data-sheets-formula='="272210"'>272210</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target"}'>Target</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A public offering of forfeited shares after offering to stockholders"}'>A public offering of forfeited shares after offering to stockholders</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Transferability"}'>Transferability</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Renounceable"}'>Renounceable</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Volume"}'>Volume</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":78689000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>78,689,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bonus issue volume"}'>Bonus issue volume</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary price"}'>Preliminary price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15250}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩15,250</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary value"}'>Preliminary value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1200007250000}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-3]C[0]*R[-1]C[0]">₩1,200,007,250,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Oversubscription privilege"}'>Oversubscription privilege</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Banker"}'>Banker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Daishin &amp; KIS"}'>Daishin &amp; KIS</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Underwriting type"}'>- Underwriting type</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Standby"}'>Standby</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="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Allocation"}'>Allocation</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Common"}'>Common</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":110230389}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='=googlefinance(R[-13]C[0], "shares")'>110,230,389</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Pref (incl. RCPS &amp; CPS)"}'>Pref (incl. RCPS &amp; CPS)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares"}'>Total shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":110230389}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-2]C[0]+R[-1]C[0]">110,230,389</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1926128}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,926,128</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares ex treasury shares"}'>Total shares ex treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":108304261}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]">108,304,261</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offer volume"}'><strong>Offer volume</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":78689000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]"><strong>78,689,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Common"}'><strong>- Common</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":78689000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-16]C[0]"><strong>78,689,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Pref"}'><strong>- Pref</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>0</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Per-share allocation"}'><strong>Per-share allocation</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.58124398263518}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula="=R[15]C[0]/R[-4]C[0]"><strong>0.5812440</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase"}'>Capital increase</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7138594058667433}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-4]C[0]/R[-7]C[0]">71.39%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.41652156730191414}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-5]C[0]/(R[-8]C[0]+R[-5]C[0])">41.65%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares after rights offer"}'>Total shares after rights offer</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":188919389}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]">188,919,389</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Common"}'>- Common</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":188919389}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-12]C[0]+R[-7]C[0]">188,919,389</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Pref"}'>- Pref</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-12]C[0]">0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bonus issue"}'>Bonus issue</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]">0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Common"}'>- Common</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Pref"}'>- Pref</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Per-share allocation"}'>Per-share allocation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula="=R[-3]C[0]/(R[-6]C[0]-R[-14]C[0])">0.0000000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares after bonus issue"}'>Total shares after bonus issue</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":188919389}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[0]+R[2]C[0]">188,919,389</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Common"}'>- Common</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":188919389}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-7]C[0]+R[-4]C[0]">188,919,389</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Pref"}'>- Pref</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-7]C[0]+R[-4]C[0]">0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP allocation"}'>ESOP allocation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15737800}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-16]C[0]*R[1]C[0]">15,737,800</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - %"}'>- %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stockholder allocation"}'>Stockholder allocation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":62951200}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-18]C[0]-R[-2]C[0]">62,951,200</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - %"}'>- %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-19]C[0]">80.00%</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="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Timetable"}'>Timetable</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"BOD meeting"}'>BOD meeting</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44284}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 3. 29</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary pricing"}'>Preliminary pricing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44305}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 4. 19</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights date"}'>Ex-rights date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44307}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 4. 21</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Record date"}'>Record date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44308}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 4. 22</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade beginning"}'>Subscription rights trade beginning</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44329}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 5. 13</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade ending"}'>Subscription rights trade ending</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44329}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 5. 20</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Final pricing"}'>Final pricing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44347}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 5. 31</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stockholder subscription"}'>Stockholder subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44350}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 6. 3</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Public subscription"}'>Public subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44355}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 6. 8</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44358}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 6. 11</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44370}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 6. 23</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="350">
<col width="350">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1st round"}'>1st round</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"RP × (1 - 15%) / [1 + (71.39% × 15%)]"}' data-sheets-formula='="RP × (1 - "&amp;(R[11]C[0]*100&amp;"%")&amp;") / [1 + ("&amp;(R[12]C[0]*100&amp;"%"&amp;" × "&amp;(R[11]C[0]*100&amp;"%"&amp;")]"))'>RP × (1 - 15%) / [1 + (71.39% × 15%)]</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'>- Reference price (RP)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]"}'>Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44305}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}' data-sheets-formula="=Terms!R[41]C[0]">2021. 4. 19</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights base price"}'>Ex-rights base price</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"[RP + (1st × 71.39%)] / (1 + 71.39%)"}' data-sheets-formula='="[RP + (1st × "&amp;R[9]C[0]*100&amp;"%"&amp;")] / (1 + "&amp;R[9]C[0]*100&amp;"%"&amp;")"'>[RP + (1st × 71.39%)] / (1 + 71.39%)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'>- Reference price (RP)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Previous close"}'>Previous close</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44307}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}' data-sheets-formula="=Terms!R[39]C[0]">2021. 4. 21</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"2nd round"}'>2nd round</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"RP × (1 - 15%)"}' data-sheets-formula='="RP × (1 - "&amp;(R[5]C[0]*100&amp;"%")&amp;")"'>RP × (1 - 15%)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference price (RP)"}'>- Reference price (RP)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Min [Close, Avg (Close, 1W VWAP)]"}'>Min [Close, Avg (Close, 1W VWAP)]</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44347}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}' data-sheets-formula="=Terms!R[40]C[0]">2021. 5. 31</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Final"}'>Final</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Max [Min (1st, 2nd), 3D VWAP × 60%]"}'>Max [Min (1st, 2nd), 3D VWAP × 60%]</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Reference date"}'>- Reference date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44347}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}' data-sheets-formula="=Terms!R[38]C[0]">2021. 5. 31</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Discount rate"}'>Discount rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.15}' data-sheets-numberformat='[null,3,"0.00%",1]'>15.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'>Capital increase rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7139}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=LEFT(Terms!R[11]C[0],6)*100/100">71.39%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

Hanwha Systems announced a ₩1.2T rights offer at a 71.39% capital increase rate.Per-share allocation for stockholders is 0.58124 as 20% goes to the ESOP.The pricing discount is 15%, a little more aggressive than the usual 20%.The ex-rights fall on April 21, with the preliminary pricing on April 19. The final pricing will be out on May 31. You can trade subscription rights between May 13~20.





Overview

Issuer
Hanwha Systems Co Ltd


Ticker
272210


Target
A public offering of forfeited shares after offering to stockholders


Transferability
Renounceable


Volume
78,689,000


Bonus issue volume
0


Preliminary price
₩15,250


Preliminary value
₩1,200,007,250,000


Oversubscription privilege
20.00%


Banker
Daishin &amp; KIS


- Underwriting type
Standby

Source: DART







Allocation

Common
110,230,389


Pref (incl. RCPS &amp; CPS)
0


Total shares
110,230,389


Treasury shares
1,926,128


Total shares ex treasury shares
108,304,261


Offer volume
78,689,000


- Common
78,689,000


- Pref
0


Per-share allocation
0.5812440


Capital increase
71.39%


Dilution
41.65%


Total shares after rights offer
188,919,389


- Common
188,919,389


- Pref
0


Bonus issue
0


- Common
0


- Pref
0


Per-share allocation
0.0000000


Total shares after bonus issue
188,919,389


- Common
188,919,389


- Pref
0


ESOP allocation
15,737,800


- %
20.00%


Stockholder allocation
62,951,200


- %
80.00%

Source: DART







Timetable

BOD meeting
2021. 3. 29


Preliminary pricing
2021. 4. 19


Ex-rights date
2021. 4. 21


Record date
2021. 4. 22


Subscription rights trade beginning
2021. 5. 13


Subscription rights trade ending
2021. 5. 20


Final pricing
2021. 5. 31


Stockholder subscription
2021. 6. 3


Public subscription
2021. 6. 8


Payment
2021. 6. 11


Listing
2021. 6. 23

Source: DART







Pricing

1st round
RP × (1 - 15%) / [1 + (71.39% × 15%)]


- Reference price (RP)
Min [Close, Avg (Close, 1W VWAP, 1M VWAP)]


- Reference date
2021. 4. 19


Ex-rights base price
[RP + (1st × 71.39%)] / (1 + 71.39%)


- Reference price (RP)
Previous close


- Reference date
2021. 4. 21


2nd round
RP × (1 - 15%)


- Reference price (RP)
Min [Close, Avg (Close, 1W VWAP)]


- Reference date
2021. 5. 31


Final
Max [Min (1st, 2nd), 3D VWAP × 60%]


- Reference date
2021. 5. 31


Discount rate
15.00%


Capital increase rate
71.39%

Source: DART



Hanwha Systems ₩1.2T Rights Offer Summary & Dynamics

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

<p style="text-align: start;"><strong>Time to remove the upper market cap limit as risk increases.</strong></p><ul>
<li>
<strong>Our screen from this quarter onwards is for all stocks</strong><a href="applewebdata://17FB2464-550F-48C5-BBBA-E248B1412D29#_ftn1" target="_blank" rel="noopener"><strong>[1]</strong></a><strong> above a market capitalisation of US$500m </strong>as we now encounter possibly one of the riskier periods in our market history. With this in mind, we have removed our Small-Mid Cap focus (US$500m-US$10bn market capitalisation) from our screens. </li>
<li>
<strong>21</strong><strong> stocks appear in our Q3 2020 screen</strong>. The average stock rank in our list has maintained a ranking of 63.5 points compared to 68 in Q2 2020 placing the stocks lower in the second quartile of the market, suggesting deteriorating fundamentals and a strong possibility of lagging performance.</li>
<li>
<strong>As we highlighted in Q1, watch for the risk of deteriorating credit metrics over 2020: </strong>In Q3, the Altman Z score is at a market-cap-weighted 1.44 times, versus 1.31 in Q2. Whilst marginally improved, since earnings continue to be adjusted by analysts and there is limited visibility of their bottoming, the potential for a lower Z score in Q4 2020 and H1 2021is increased.</li>
</ul>

Time to remove the upper market cap limit as risk increases.

Our screen from this quarter onwards is for all stocks[1] above a market capitalisation of US$500m as we now encounter possibly one of the riskier periods in our market history. With this in mind, we have removed our Small-Mid Cap focus (US$500m-US$10bn market capitalisation) from our screens. 

21 stocks appear in our Q3 2020 screen. The average stock rank in our list has maintained a ranking of 63.5 points compared to 68 in Q2 2020 placing the stocks lower in the second quartile of the market, suggesting deteriorating fundamentals and a strong possibility of lagging performance.

As we highlighted in Q1, watch for the risk of deteriorating credit metrics over 2020: In Q3, the Altman Z score is at a market-cap-weighted 1.44 times, versus 1.31 in Q2. Whilst marginally improved, since earnings continue to be adjusted by analysts and there is limited visibility of their bottoming, the potential for a lower Z score in Q4 2020 and H1 2021is increased.


Screening the Silk Road: Q3 2020 High Risk Names to Avoid

<ul>
<li>
<strong>Deteriorating credit metrics</strong> continue to support our view that the level of risk is increasing within the small-mid cap universe. </li>
<li>
<strong>Our screen looks for high valuation multiples presented</strong> by candidates with significant earnings growth forecasts, as well as financial indicators that suggest balance sheet distress. Therefore, with the credit markets pointing towards high yield stress, this screen becomes highly relevant.</li>
<li>
<strong>15 stocks appear in our Q2 2020 screen</strong>. The average stock rank in our list has decreased to 67.5 from 72.1 points since early March 2019. The reduction reflects some of the continued bearish moves in recent weeks within the Asian Universe. We, therefore, feel, as highlighted in other recent commentary, that the market is currently undergoing a defined separation of Quality, Value and relative Momentum.</li>
</ul>



Deteriorating credit metrics continue to support our view that the level of risk is increasing within the small-mid cap universe. 

Our screen looks for high valuation multiples presented by candidates with significant earnings growth forecasts, as well as financial indicators that suggest balance sheet distress. Therefore, with the credit markets pointing towards high yield stress, this screen becomes highly relevant.

15 stocks appear in our Q2 2020 screen. The average stock rank in our list has decreased to 67.5 from 72.1 points since early March 2019. The reduction reflects some of the continued bearish moves in recent weeks within the Asian Universe. We, therefore, feel, as highlighted in other recent commentary, that the market is currently undergoing a defined separation of Quality, Value and relative Momentum.


Screening the Silk Road: Q2 2020 Small-Mid Cap High Risk Names to Avoid

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p><strong>There has been major <a href="https://www.bloomberg.com/news/articles/2020-04-21/kim-surgery-report-fuels-speculation-about-north-korean-leader" target="_blank" rel="noopener">news</a> that came out this morning regarding the fat North Korean dictator Kim Jong-Un who is in a critical condition after undergoing cardiovascular surgery last week. It is uncertain whether Kim Jong-Un is dead or alive. If he is alive, it is uncertain about his current brain conditions. </strong></p></div><p>Following this news, KOSPI is getting knocked down by 1.8%. The major Korean defense stocks are rising sharply today.</p><ul>
<li>
<a href="https://www.smartkarma.com/entities/hanwha-aerospace-co-ltd" target="_blank" data-smartkarma-citation="entities:504:1" rel="noopener">Hanwha Aerospace (012450 KS)</a> - Up 7.1%</li>
<li>
<a href="https://www.smartkarma.com/entities/korea-aerospace-industries" target="_blank" data-smartkarma-citation="entities:9033:1" rel="noopener">Korea Aerospace Industries (047810 KS)</a> - Up 8.5%</li>
<li>
<a href="https://www.smartkarma.com/entities/lig-nex1-co" target="_blank" data-smartkarma-citation="entities:23588:1" rel="noopener">LIG Nex1 Co (079550 KS)</a> - Up 4.1%</li>
<li>
<a href="https://www.smartkarma.com/entities/hanwha-systems-co-ltd" target="_blank" data-smartkarma-citation="entities:28308:1" rel="noopener">Hanwha Systems Co Ltd (272210 KS)</a> - Up 4.2%</li>
<li>
<a href="https://www.smartkarma.com/entities/victek-co-ltd" target="_blank" data-smartkarma-citation="entities:1641:1" rel="noopener">Victek Co Ltd (065450 KS)</a> - Up 26%</li>
</ul><p>Given that KJU is only 36 years old, there is probably no succession plan in place right now. In terms of the impact on the Korean stock market - this is an obvious NEGATIVE. So until he shows up again publicly, the market will continue to view this situation negatively. In the midst of the COVID-19 pandemic, this is another potential major risk factor in the Korean stock market for the time being. </p>

There has been major news that came out this morning regarding the fat North Korean dictator Kim Jong-Un who is in a critical condition after undergoing cardiovascular surgery last week. It is uncertain whether Kim Jong-Un is dead or alive. If he is alive, it is uncertain about his current brain conditions. Following this news, KOSPI is getting knocked down by 1.8%. The major Korean defense stocks are rising sharply today.

Hanwha Aerospace (012450 KS) - Up 7.1%

Korea Aerospace Industries (047810 KS) - Up 8.5%

LIG Nex1 Co (079550 KS) - Up 4.1%

Hanwha Systems Co Ltd (272210 KS) - Up 4.2%

Victek Co Ltd (065450 KS) - Up 26%
Given that KJU is only 36 years old, there is probably no succession plan in place right now. In terms of the impact on the Korean stock market - this is an obvious NEGATIVE. So until he shows up again publicly, the market will continue to view this situation negatively. In the midst of the COVID-19 pandemic, this is another potential major risk factor in the Korean stock market for the time being. 

<ul>
<li>
<strong>Our</strong> <strong>Q4-2019 Small-Mid Cap High-Risk list of stocks produced an average price decline of 6.1% and on a market cap weighted basis a decline of 8.6%</strong>. In comparison, the MSCI Asia Pacific Index posted a decline of 4.1% over the same period. The stock rank quality of the Q4 2019 list increased mere1.5 points or 0.46% for the period. Refer: <a href="https://www.smartkarma.com/insights/screening-the-silk-road-small-mid-cap-high-risk-names-to-avoid-q4-2019" target="_blank" data-smartkarma-citation="insights:34640" rel="noopener">Screening the Silk Road: Small-Mid Cap High Risk Names to Avoid: Q4 2019</a> </li>
<li>
<strong>17 stocks appear in our Q1 2020 screen, compared to 16, 14, 19 and 26 in Q4, Q3, Q2 and Q1 2019 respectively</strong>. The average stock rank in our list has decreased 2.8 to 72.1 points since December 2019. The reduction reflects some of the decisive bearish moves in recent weeks within the Asian Universe. This has seen the market making a more defined separation of Quality, Value and relative Momentum, which we had felt was overdue in Q4 2019.</li>
<li>
<strong>Deteriorating credit metrics</strong> support our view that the level of risk appears is increasing within the small-mid cap universe. </li>
</ul>



Our Q4-2019 Small-Mid Cap High-Risk list of stocks produced an average price decline of 6.1% and on a market cap weighted basis a decline of 8.6%. In comparison, the MSCI Asia Pacific Index posted a decline of 4.1% over the same period. The stock rank quality of the Q4 2019 list increased mere1.5 points or 0.46% for the period. Refer: Screening the Silk Road: Small-Mid Cap High Risk Names to Avoid: Q4 2019 

17 stocks appear in our Q1 2020 screen, compared to 16, 14, 19 and 26 in Q4, Q3, Q2 and Q1 2019 respectively. The average stock rank in our list has decreased 2.8 to 72.1 points since December 2019. The reduction reflects some of the decisive bearish moves in recent weeks within the Asian Universe. This has seen the market making a more defined separation of Quality, Value and relative Momentum, which we had felt was overdue in Q4 2019.

Deteriorating credit metrics support our view that the level of risk appears is increasing within the small-mid cap universe. 


Screening the Silk Road: Q1 2020 Small-Mid Cap High Risk Names to Avoid

South Korea

Hanwha Aerospace Co., Ltd. operates as an aircraft parts manufacturing company. The Company produces and sells aircraft gas turbine engine products, aircraft compressors, low pressure turbines, and other products. Hanwha Aerospace markets its products worldwide.

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Hanwha Aerospace (012450 KS)

Hanwha Systems ₩1.2T Rights Offer Summary & Dynamics

This post summarizes Hanwha Systems' massive rights offer (₩1.2T) and examines the questionable aspects for trading approach.

Sanghyun Park

Screening the Silk Road: Q3 2020 High Risk Names to Avoid

Time to remove the upper market cap limit as risk increases. Our screen from this quarter onwards is for all stocks[1] above a market...

David Lepper

Screening the Silk Road: Q2 2020 Small-Mid Cap High Risk Names to Avoid

Deteriorating credit metrics continue to support our view that the level of risk is increasing within the small-mid cap universe. Our screen...

David Lepper

Kim Jong-Un: Dead or Alive?

There has been major news that came out this morning regarding the fat North Korean dictator Kim Jong-Un who is in a critical condition after...

Douglas Kim

Screening the Silk Road: Q1 2020 Small-Mid Cap High Risk Names to Avoid

Our Q4-2019 Small-Mid Cap High-Risk list of stocks produced an average price decline of 6.1% and on a market cap weighted basis a decline of...

David Lepper

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