Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>We provide an updated NAV analysis of Hanwha Corporation which is a holding company of the Hanwha Group. We argue that Hanwha Corp's shares are trading excessively below its NAV. </li>
<li>Hanwha Corp is down 10.5% YTD, underperforming Hanwha Aerospace (up 54.2% YTD). Hanwha Corp's stake in Hanwha Aerospace is worth 1.9 trillion won (14% higher than Hanwha Corp's market cap). </li>
<li>Our NAV analysis of Hanwha Corporation (000880 KS) suggests NAV of 2.3 trillion won or NAV per share of 30,203 won which is 33% higher than current price.</li>
</ul>


We provide an updated NAV analysis of Hanwha Corporation which is a holding company of the Hanwha Group. We argue that Hanwha Corp's shares are trading excessively below its NAV. 
Hanwha Corp is down 10.5% YTD, underperforming Hanwha Aerospace (up 54.2% YTD). Hanwha Corp's stake in Hanwha Aerospace is worth 1.9 trillion won (14% higher than Hanwha Corp's market cap). 
Our NAV analysis of Hanwha Corporation (000880 KS) suggests NAV of 2.3 trillion won or NAV per share of 30,203 won which is 33% higher than current price.


Hanwha Corp: Updated NAV Analysis - Defense Assets Undervalued

Event-Driven

<ul>
<li>On 30 October, Kum Yang announced that it has submitted an agenda to expand the issuance limit of CB and BW to 10 trillion won.</li>
<li>This increase in the limit of CB and BW issuance to 10 trillion won would mean potential capital raise through these methods that are nearly 2x its entire market cap.</li>
<li>
<strong>Kum Yang may be trying to raise large amount of capital (several trillion won) which could result in significant dilution risk for the existing shareholders.</strong> </li>
</ul>


On 30 October, Kum Yang announced that it has submitted an agenda to expand the issuance limit of CB and BW to 10 trillion won.
This increase in the limit of CB and BW issuance to 10 trillion won would mean potential capital raise through these methods that are nearly 2x its entire market cap.

Kum Yang may be trying to raise large amount of capital (several trillion won) which could result in significant dilution risk for the existing shareholders. 


Kum Yang - Submits An Agenda to Expand Issuance Limit of CB and BW to 10 Trillion Won

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

EcoPro Materials / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ecopro-materials" target="_blank" data-smartkarma-citation="entities:36806:1" rel="noopener">EcoPro Materials (ECO123 KS)</a> is looking to raise up to US$500m in its Korean IPO. </li>
<li>Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries. </li>
<li>Ecopro Materials’ revenue has grown by more than three times over the track record period.  However, its parent company Ecopro and sister company Ecopro BM have been mired in controversy.</li>
</ul>



EcoPro Materials (ECO123 KS) is looking to raise up to US$500m in its Korean IPO. 
Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries. 
Ecopro Materials’ revenue has grown by more than three times over the track record period.  However, its parent company Ecopro and sister company Ecopro BM have been mired in controversy.


Ecopro Materials IPO - Pushing Ahead with Listing Despite the Controversies

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.

<ul>
<li>First, we can take on some risk and build up a short position using SSFs from now, aiming for an aggressively low price (likely Day 1) during the rights trading. </li>
<li>If this approach seems somewhat risky, the second is to wait until the rights trading and, although accepting some sacrifice in the spread, build positions relatively risk-free. </li>
<li>We can also actively build up a long position in the significantly backwardated SSFs from now and, instead, set up an aggressive short on the underlying shares.</li>
</ul>


First, we can take on some risk and build up a short position using SSFs from now, aiming for an aggressively low price (likely Day 1) during the rights trading. 
If this approach seems somewhat risky, the second is to wait until the rights trading and, although accepting some sacrifice in the spread, build positions relatively risk-free. 
We can also actively build up a long position in the significantly backwardated SSFs from now and, instead, set up an aggressive short on the underlying shares.


Trading Angles Using Severely Backwardated Hanwha Ocean's SSFs Ahead of the Rights Trading

<ul>
<li>In the past several days, there have been numerous local news about a substantial defense cooperation between Saudi Arabia and South Korea. </li>
<li>This could result in billions of dollars in new military/defense related systems new orders for numerous companies in Korea in the coming decade. </li>
<li>If there are major long-term arms deal between Saudi Arabia and South Korea, it could benefit the top defense companies in Korea including Hanwha Aerospace and Korea Aerospace Industries. </li>
</ul>


In the past several days, there have been numerous local news about a substantial defense cooperation between Saudi Arabia and South Korea. 
This could result in billions of dollars in new military/defense related systems new orders for numerous companies in Korea in the coming decade. 
If there are major long-term arms deal between Saudi Arabia and South Korea, it could benefit the top defense companies in Korea including Hanwha Aerospace and Korea Aerospace Industries. 


A Major Defense Cooperation Between Saudi Arabia and South Korea Likely

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 Corp: Updated NAV Analysis - Defense Assets Undervalued

We provide an updated NAV analysis of Hanwha Corporation which is a holding company of the Hanwha Group. We argue that Hanwha Corp's shares are...

Douglas Kim

Kum Yang - Submits An Agenda to Expand Issuance Limit of CB and BW to 10 Trillion Won

Kum Yang may be trying to raise large amount of capital which could result in significant dilution risk for the existing shareholders.

Douglas Kim

Ecopro Materials IPO - Pushing Ahead with Listing Despite the Controversies

Ecopro Materials opened its books today (30th Oct 23). The bookbuilding timing remains unchanged at October 30 to November 3 with pricing slated...

Ethan Aw

Trading Angles Using Severely Backwardated Hanwha Ocean's SSFs Ahead of the Rights Trading

Considering the significantly high spread based on the 2nd-round pricing while the trading deadline for Hanwha Ocean subscription rights is just a...

Sanghyun Park

A Major Defense Cooperation Between Saudi Arabia and South Korea Likely

There is likely to be a major arms deal between Saudi Arabia and South Korea, which could benefit the top defense companies in Korea including...

Douglas Kim

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