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

<h2><strong>Eight new names, SoftBank remains for the 3rd quarter running</strong></h2>
<ul>
<li>
<strong>Our</strong><strong>Q2-2021 All Cap High-Risk screen of stocks produced a market cap-weighted average price decline of 2%</strong>. In comparison, the MSCI Asia Pacific Index posted a decline of 1.7% over the same period. The stock quality of our Q2 2021 decreased 2.4 points or 3.8% over the period. Within the mix of 34 stocks in our Q2 2021 (May) list 19 posted negative performance, with an average decline of 14.1%.</li>
<li>
<strong>At a static number of 34</strong><strong> stocks our Q3 2021 screen, delivers an interesting composition this quarter, </strong>with eight (8) new names and strong representation from Hong Kong in terms of geography and Industrials and Basic Materials from a sector perspective. This suggests that the “reopening of the economy” trade may have run its course for now.</li>
<li><strong>Our Q3 2021 screen shows a further reduction in average stock rank (a reading on relative quality amongst the broad market peers with 100 being the highest) to 61 from 65.18 in Q2 2021.</strong></li>
<li>
<strong>Stock specific focus:</strong> We discuss why SoftBank stands out as a stock that presents with additional risk. We also discuss the fact that whilst there is a high representation of Industrials in the list, within this list, there are several names that may warrant not being too bearish towards.</li>
</ul>

Eight new names, SoftBank remains for the 3rd quarter running


OurQ2-2021 All Cap High-Risk screen of stocks produced a market cap-weighted average price decline of 2%. In comparison, the MSCI Asia Pacific Index posted a decline of 1.7% over the same period. The stock quality of our Q2 2021 decreased 2.4 points or 3.8% over the period. Within the mix of 34 stocks in our Q2 2021 (May) list 19 posted negative performance, with an average decline of 14.1%.

At a static number of 34 stocks our Q3 2021 screen, delivers an interesting composition this quarter, with eight (8) new names and strong representation from Hong Kong in terms of geography and Industrials and Basic Materials from a sector perspective. This suggests that the “reopening of the economy” trade may have run its course for now.
Our Q3 2021 screen shows a further reduction in average stock rank (a reading on relative quality amongst the broad market peers with 100 being the highest) to 61 from 65.18 in Q2 2021.

Stock specific focus: We discuss why SoftBank stands out as a stock that presents with additional risk. We also discuss the fact that whilst there is a high representation of Industrials in the list, within this list, there are several names that may warrant not being too bearish towards.


Screening the Silk Road: Q3 2021 High-Risk Names to Avoid

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<p>In this insight, we provide visual set-ups of the Korean stubs related pair-trades. We have included 40 pair trade set-ups of all the major Korean stubs related pairs (including regular and quasi holdcos and their respective opcos). We have provided YTD price chart comparisons of all the 40 pair trade set-ups below. </p><p>The <strong>top six best performing holdcos</strong> (among the companies listed below) YTD are as follows:</p><ul>
<li>
<a href="https://www.smartkarma.com/entities/doosan-co-ltd" target="_blank" data-smartkarma-citation="entities:7423:1" rel="noopener">Doosan Corp (000150 KS)</a> - up 86% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/hyosung-corporation" target="_blank" data-smartkarma-citation="entities:20712:1" rel="noopener">Hyosung Corporation (004800 KS)</a> - Up 62.5% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/poongsan-corp" target="_blank" data-smartkarma-citation="entities:16504:1" rel="noopener">Poongsan Corp (103140 KS)</a> - Up 50.3% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/samyang-holdings-corp" target="_blank" data-smartkarma-citation="entities:13761:1" rel="noopener">Samyang Holdings (000070 KS)</a> - Up 47.7% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/ecopro-co-ltd" target="_blank" data-smartkarma-citation="entities:19029:1" rel="noopener">Ecopro Co Ltd (086520 KS)</a> - Up 34.8% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/orion-corp" target="_blank" data-smartkarma-citation="entities:7615:1" rel="noopener">Orion Holdings (001800 KS)</a> - Up 30.2% YTD</li>
</ul><p>The <strong>top six best performing opcos</strong> (among the companies listed below) YTD are as follows:</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 73.8% YTD</li>
<li>
<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> - Up 56.5% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/ecopro-bm-co-ltd" target="_blank" data-smartkarma-citation="entities:27873:1" rel="noopener">Ecopro BM Co Ltd (247540 KS)</a> - 54.7% YTD</li>
<li>Aekyung Petrochem - Up 47.2% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/pan-ocean-co-ltd" target="_blank" data-smartkarma-citation="entities:5279:1" rel="noopener">Pan Ocean (028670 KS)</a> - Up 40.6% YTD</li>
<li>
<a href="https://www.smartkarma.com/entities/poongsan-corp" target="_blank" data-smartkarma-citation="entities:16504:1" rel="noopener">Poongsan Corp (103140 KS)</a> - Up 36.7% YTD</li>
</ul>

In this insight, we provide visual set-ups of the Korean stubs related pair-trades. We have included 40 pair trade set-ups of all the major Korean stubs related pairs (including regular and quasi holdcos and their respective opcos). We have provided YTD price chart comparisons of all the 40 pair trade set-ups below. The top six best performing holdcos (among the companies listed below) YTD are as follows:

Doosan Corp (000150 KS) - up 86% YTD

Hyosung Corporation (004800 KS) - Up 62.5% YTD

Poongsan Corp (103140 KS) - Up 50.3% YTD

Samyang Holdings (000070 KS) - Up 47.7% YTD

Ecopro Co Ltd (086520 KS) - Up 34.8% YTD

Orion Holdings (001800 KS) - Up 30.2% YTD
The top six best performing opcos (among the companies listed below) YTD are as follows:

Hanwha Aerospace (012450 KS) - Up 73.8% YTD

Doosan Heavy Industries &amp; Construction (034020 KS) - Up 56.5% YTD

Ecopro BM Co Ltd (247540 KS) - 54.7% YTD
Aekyung Petrochem - Up 47.2% YTD

Pan Ocean (028670 KS) - Up 40.6% YTD

Poongsan Corp (103140 KS) - Up 36.7% YTD


Pair Trade Setups of Korean Holdcos & Opcos

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

<h2>Subscription</h2><p>Hanwha Systems will issue a total of 78,689,000 shares in this capital increase. It got a total of 73,626,614 subscriptions with an oversubscription of 10,950,101, making the final subscription rate 107.48% with no forfeited share for a public subscription.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Subscription"}'>Subscription</td></tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Offering"}'>Offering</td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":78689000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>78,689,000 shares</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Main subscription"}'>Subscription</td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":73626614}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=11736139+61890475">73,626,614 shares</td>
</tr>
<tr>
<td style="width: 352.5px;"> - ESOP</td>
<td style="text-align: right; width: 352.514px;">11,736,139 shares</td>
</tr>
<tr>
<td style="width: 352.5px;"> - Stockholders</td>
<td style="text-align: right; width: 352.514px;">61,890,475 shares</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Over-subscription"}'>Over-subscription</td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":10950101}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>10,950,101 shares</td>
</tr>
<tr>
<td style="width: 352.5px;"><strong>- Allocation per over-subscription</strong></td>
<td style="text-align: right; width: 352.514px;"><strong>0.4623140918 share</strong></td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"- Final subscription rate"}'><strong>Final subscription rate</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":1.0748225927385022}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[-3]C[0]+R[-2]C[0])/R[-4]C[0]"><strong>107.48%</strong></td>
</tr>
<tr><td colspan="2" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Shares outstanding</h2><p>This is a massive offering at a capital increase rate of 71.39%. Accordingly, the total number of shares increased from 110,230,389 to 188,919,389. The stock dilution ratio for existing shareholders is 41.65%.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'>Offering</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[-9]C[0]">78,689,000 shares</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase"}'><strong>Capital increase</strong></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[-1]C[0]/R[2]C[0]"><strong>71.39%</strong></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[-2]C[0]/(R[-2]C[0]+R[1]C[0])">41.65%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding before the offering"}'>Shares outstanding before the offering</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":110230389}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>110,230,389 shares</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding after the offering"}'><strong>Shares outstanding after the offering</strong></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[-4]C[0]+R[-1]C[0]"><strong>188,919,389 shares</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Float adjustment</h2><p>The major shareholders, Hanwha Aerospace and H Solution, announced their participation in this capital increase through <a href="http://dart.fss.or.kr/dsaf001/main.do?rcpNo=20210607000001" target="_blank" rel="noopener">a regulatory filing</a>. Their majority shareholding has declined slightly. But the free-float rate has also dropped slightly due to an increase in the shares owned by the ESOP.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"Float adjustment"}'>Float adjustment</td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":2,"2":"Before the offering"}'>Before the offering</td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":2,"2":"%"}'>%</td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":2,"2":"After the offering"}'>After the offering</td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":2,"2":"%"}'>%</td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"Hanwha Aerospace"}'><strong>Hanwha Aerospace</strong></td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":54000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>54,000,000</strong></td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.48988305756591316}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2"><strong>48.99%</strong></td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":88289321}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[0]C[-2]+34289321"><strong>88,289,321</strong></td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.4673385906409003}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2"><strong>46.73%</strong></td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"H Solution"}'><strong>H Solution</strong></td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":14785550}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>14,785,550</strong></td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.13413315632951273}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2"><strong>13.41%</strong></td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":24174187}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[0]C[-2]+9388637"><strong>24,174,187</strong></td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.1279603280952809}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2"><strong>12.80%</strong></td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"Special affiliated persons"}'>Special affiliated persons</td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":37617}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=15601+10708+11308">37,617</td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.00034125798104549915}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2">0.03%</td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":59482}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=24669+17881+16932">59,482</td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.00031485386605818424}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2">0.03%</td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"Executives"}'>Executives</td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":36514}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>36,514</td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.0003312516659992917}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2">0.03%</td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":36514}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[0]C[-2]">36,514</td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.00019327820290589655}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2">0.02%</td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"ESOP"}'>ESOP</td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":2916933}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>2,916,933</td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.026462149199165032}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2">2.65%</td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":14653072}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[0]C[-2]+11736139">14,653,072</td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.07756256294053544}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2">7.76%</td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":1926128}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>1,926,128</td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.017473656924135505}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2">1.75%</td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":1926128}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[0]C[-2]">1,926,128</td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.01019550195559864}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2">1.02%</td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"- Non-float"}'><strong>- Non-float</strong></td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":73702742}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=sum(R[-6]C[0]:R[-1]C[0])"><strong>73,702,742</strong></td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.6686245296657712}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2"><strong>66.86%</strong></td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":129138704}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=sum(R[-6]C[0]:R[-1]C[0])"><strong>129,138,704</strong></td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.6835651157012793}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2"><strong>68.36%</strong></td>
</tr>
<tr>
<td style="width: 217.273px;" data-sheets-value='{"1":2,"2":"Free-float"}'><strong>Free-float</strong></td>
<td style="text-align: right; width: 143.878px;" data-sheets-value='{"1":3,"3":36527647}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-12]C[0]-R[-1]C[0]"><strong>36,527,647</strong></td>
<td style="text-align: right; width: 88.5795px;" data-sheets-value='{"1":3,"3":0.3313754703342288}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R15C2"><strong>33.14%</strong></td>
<td style="text-align: right; width: 103.665px;" data-sheets-value='{"1":3,"3":59780685}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-11]C[-2]-R[-1]C[0]"><strong>59,780,685</strong></td>
<td style="text-align: right; width: 88.6364px;" data-sheets-value='{"1":3,"3":0.31643488429872063}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R16C2"><strong>31.64%</strong></td>
</tr>
<tr><td colspan="5" rowspan="1" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Remaining schedule</h2><p>The public subscription scheduled for June 4 is canceled. The payment date is June 9, and the first trading day is June 21. In other words, you can sell new shares from June 21, two trading days ahead of the listing day. Lastly, the listing date is June 23.</p><div><div><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Timetable"}'>Remaining schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Public subscription"}'>Public subscription</td>
<td data-sheets-value='{"1":3,"3":44351}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>June 8 (Canceled)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td data-sheets-value='{"1":3,"3":44356}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>June 11</td>
</tr>
<tr>
<td><strong>First trading day</strong></td>
<td><strong>June 21</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'><strong>Listing</strong></td>
<td data-sheets-value='{"1":3,"3":44369}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>June 23</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div></div>

SubscriptionHanwha Systems will issue a total of 78,689,000 shares in this capital increase. It got a total of 73,626,614 subscriptions with an oversubscription of 10,950,101, making the final subscription rate 107.48% with no forfeited share for a public subscription.





Subscription

Offering
78,689,000 shares


Subscription
73,626,614 shares


 - ESOP
11,736,139 shares


 - Stockholders
61,890,475 shares


Over-subscription
10,950,101 shares


- Allocation per over-subscription
0.4623140918 share


Final subscription rate
107.48%

Source: DART

Shares outstandingThis is a massive offering at a capital increase rate of 71.39%. Accordingly, the total number of shares increased from 110,230,389 to 188,919,389. The stock dilution ratio for existing shareholders is 41.65%.





Shares outstanding

Offering
78,689,000 shares


Capital increase
71.39%


Dilution
41.65%


Shares outstanding before the offering
110,230,389 shares


Shares outstanding after the offering
188,919,389 shares

Source: DART

Float adjustmentThe major shareholders, Hanwha Aerospace and H Solution, announced their participation in this capital increase through a regulatory filing. Their majority shareholding has declined slightly. But the free-float rate has also dropped slightly due to an increase in the shares owned by the ESOP.









Float adjustment
Before the offering
%
After the offering
%


Hanwha Aerospace
54,000,000
48.99%
88,289,321
46.73%


H Solution
14,785,550
13.41%
24,174,187
12.80%


Special affiliated persons
37,617
0.03%
59,482
0.03%


Executives
36,514
0.03%
36,514
0.02%


ESOP
2,916,933
2.65%
14,653,072
7.76%


Treasury shares
1,926,128
1.75%
1,926,128
1.02%


- Non-float
73,702,742
66.86%
129,138,704
68.36%


Free-float
36,527,647
33.14%
59,780,685
31.64%

Source: DART

Remaining scheduleThe public subscription scheduled for June 4 is canceled. The payment date is June 9, and the first trading day is June 21. In other words, you can sell new shares from June 21, two trading days ahead of the listing day. Lastly, the listing date is June 23.





Remaining schedule

Public subscription
June 8 (Canceled)


Payment
June 11


First trading day
June 21


Listing
June 23

Source: DART



Hanwha Systems Offering: SO/Float Changes & Index Treatment

<p><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> announced on June 7th that it successfully completed its rights offering worth 1.2 trillion won. The company will use the proceeds to expand its aerospace investments. The expected uses of the funds from the rights offering are as follows: (M&amp;A/investments of other companies - 700 billion won; working capital - 390 billion won; and facility investments - 110 billion won).</p><p>The current share price of Hanwha Systems is 17,550 won, which is 18.9% higher than the rights offering price of 14,750 won. The shareholders that participated in the rights offering could gain some profits if the price does not drop much prior to the new shares listing date (June 23rd). </p><p>In recent years, Hanwha Aerospace has been investing in high quality overseas companies with technological expertise in the aerospace industry. In particular, the company has been showing a lot of interest in the urban air mobility (UAM) such as flying cars. The company plans to develop an air taxi aircraft by 2024 and start air taxi pilot operations from 2025. In addition to UAM, the company also plans to aggressively invest in satellite communications and digital platforms. </p><p>According to the company, it received 7.4% higher purchase orders for the rights offering than the amount raised in the subscription for the company's shareholders and ESOP on June 3rd and 4th. Although the demand from the ESOP fell a bit short of allotted amount, the overall rights offering was successful, driven by <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> (largest shareholder with a 48.99% stake) and H Solution (2nd largest shareholder with a 13.4% stake) that subscribed 120% of their allocated amount. </p>

Hanwha Systems Co Ltd (272210 KS) announced on June 7th that it successfully completed its rights offering worth 1.2 trillion won. The company will use the proceeds to expand its aerospace investments. The expected uses of the funds from the rights offering are as follows: (M&amp;A/investments of other companies - 700 billion won; working capital - 390 billion won; and facility investments - 110 billion won).The current share price of Hanwha Systems is 17,550 won, which is 18.9% higher than the rights offering price of 14,750 won. The shareholders that participated in the rights offering could gain some profits if the price does not drop much prior to the new shares listing date (June 23rd). In recent years, Hanwha Aerospace has been investing in high quality overseas companies with technological expertise in the aerospace industry. In particular, the company has been showing a lot of interest in the urban air mobility (UAM) such as flying cars. The company plans to develop an air taxi aircraft by 2024 and start air taxi pilot operations from 2025. In addition to UAM, the company also plans to aggressively invest in satellite communications and digital platforms. According to the company, it received 7.4% higher purchase orders for the rights offering than the amount raised in the subscription for the company's shareholders and ESOP on June 3rd and 4th. Although the demand from the ESOP fell a bit short of allotted amount, the overall rights offering was successful, driven by Hanwha Aerospace (012450 KS) (largest shareholder with a 48.99% stake) and H Solution (2nd largest shareholder with a 13.4% stake) that subscribed 120% of their allocated amount. 

Hanwha Systems: Rights Offering Results (Higher Short Term Volatility but Bullish Longer Term)

<p>Our screen looks for high valuation multiples presented by companies with significant earnings growth forecasts, as well as financial indicators that suggest balance sheet stress. 34 stocks appear in our Q2 2021 screen, versus 25 in Q1 2021 and 15 in Q4 2020. Our Q2 2021 screen shows a reduction in average stock rank to 65.18 from 70.8 points compared to the Q1 2020 screen, placing the stocks lower into the second quartile of the market and showing a deterioration in fundamental and technical aspects. Whilst this is a 7.6% decline, we see this data as tainted by trailing fundamentals. As we highlighted in previous commentaries, we expect the market to see a defined separation of Quality, Value and Relative Momentum over the next few quarters. The erosion is not unexpected as we see a wave of updated forecasts.</p>

Our screen looks for high valuation multiples presented by companies with significant earnings growth forecasts, as well as financial indicators that suggest balance sheet stress. 34 stocks appear in our Q2 2021 screen, versus 25 in Q1 2021 and 15 in Q4 2020. Our Q2 2021 screen shows a reduction in average stock rank to 65.18 from 70.8 points compared to the Q1 2020 screen, placing the stocks lower into the second quartile of the market and showing a deterioration in fundamental and technical aspects. Whilst this is a 7.6% decline, we see this data as tainted by trailing fundamentals. As we highlighted in previous commentaries, we expect the market to see a defined separation of Quality, Value and Relative Momentum over the next few quarters. The erosion is not unexpected as we see a wave of updated forecasts.

Screening the Silk Road: Q2 2021 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)

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