Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>Hanwha Group Chairman Kim Seung-youn (born in 1952) made a major move to give 11.32% of his shares in Hanwha Corporation (000880 KS) to his three sons.</li>
<li>It is estimated that the three sons will need to pay nearly 222 billion won in inheritance taxes associated with receiving additional stakes in Hanwha Corp.</li>
<li>Because the three sons need to pay for the high amounts of inheritance taxes, Hanwha Corp is likely to raise the dividend payout in the next several years.</li>
</ul>


Hanwha Group Chairman Kim Seung-youn (born in 1952) made a major move to give 11.32% of his shares in Hanwha Corporation (000880 KS) to his three sons.
It is estimated that the three sons will need to pay nearly 222 billion won in inheritance taxes associated with receiving additional stakes in Hanwha Corp.
Because the three sons need to pay for the high amounts of inheritance taxes, Hanwha Corp is likely to raise the dividend payout in the next several years.


Fat Inheritance Taxes for Hanwha Group Chairman Kim's Three Sons Post Receiving Hanwha Corp Shares

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>The chances of a Hanwha Corp-Hanwha Energy merger just dropped significantly. With the brothers now owning 43%, the merger's effectively off.</li>
<li>The three brothers face a KRW 200B gift tax bill and need liquidity. They’ll raise cash via Hanwha Energy’s IPO, with the youngest brother set to sell a 10% stake.</li>
<li>Hanwha Corp will likely fund its Hanwha Aerospace rights issue through a rights offering, using KRW 1.3 trillion from Hanwha Energy, after shutting down merger rumors.</li>
</ul>


The chances of a Hanwha Corp-Hanwha Energy merger just dropped significantly. With the brothers now owning 43%, the merger's effectively off.
The three brothers face a KRW 200B gift tax bill and need liquidity. They’ll raise cash via Hanwha Energy’s IPO, with the youngest brother set to sell a 10% stake.
Hanwha Corp will likely fund its Hanwha Aerospace rights issue through a rights offering, using KRW 1.3 trillion from Hanwha Energy, after shutting down merger rumors.


Hanwha's Surprise Gift Disclosure: Three Major Takeaways

Equity Capital Markets

Hanwha Corporation / Equity Capital Markets

<ul>
<li>Hanwha Corp’s chances of raising 1T KRW without a capital call are slim, likely channeling Hanwha Energy’s 1.3T KRW into Hanwha Corp intead of Hanwha Aero.</li>
<li>A shareholder-allotted rights issue from Hanwha Corp looks likely, and with short-selling resumption, it sets up a clean arbitrage play with low risk before the official announcement.</li>
<li>Timing is key—Hanwha’s using debt for now, but likely won’t delay long. Expect Hanwha Corp’s rights issue to follow Hanwha Aero’s, probably between June and July.</li>
</ul>


Hanwha Corp’s chances of raising 1T KRW without a capital call are slim, likely channeling Hanwha Energy’s 1.3T KRW into Hanwha Corp intead of Hanwha Aero.
A shareholder-allotted rights issue from Hanwha Corp looks likely, and with short-selling resumption, it sets up a clean arbitrage play with low risk before the official announcement.
Timing is key—Hanwha’s using debt for now, but likely won’t delay long. Expect Hanwha Corp’s rights issue to follow Hanwha Aero’s, probably between June and July.


The Hidden Play in Hanwha’s Noisy Stake Reshuffling: Hanwha Corp’s Rights Issue

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, 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.

<ul>
<li>Korea Development Bank (KDB) plans to raise around US$740m via selling around 5%+ stake in <a href="https://www.smartkarma.com/entities/hanwha-ocean-co-ltd" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Hanwha Ocean (042660 KS)</a>.</li>
<li>HO’s shares have nearly tripled since the start of the year, and the company reported its results today.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>


Korea Development Bank (KDB) plans to raise around US$740m via selling around 5%+ stake in Hanwha Ocean (042660 KS).
HO’s shares have nearly tripled since the start of the year, and the company reported its results today.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


Hanwha Ocean Placement - Recent Run-Up, Results Make It Tricky

<ul>
<li>During the public hearing, Lee Jae-myung asked Simpac's CFO about their 0.3x PBR, then remarked, "That’s prime territory for a hostile M&amp;A."</li>
<li>With PBRs under 0.3x, these companies may roll out shareholder returns to manage political pressure—definitely worth tracking from a value-up trading perspective.</li>
<li>Hanwha is interesting due to its room for shareholder returns and potential merger with Hanwha Energy. With the new Commercial Act, a public tender offer is likely. Worth watching closely.</li>
</ul>


During the public hearing, Lee Jae-myung asked Simpac's CFO about their 0.3x PBR, then remarked, "That’s prime territory for a hostile M&amp;A."
With PBRs under 0.3x, these companies may roll out shareholder returns to manage political pressure—definitely worth tracking from a value-up trading perspective.
Hanwha is interesting due to its room for shareholder returns and potential merger with Hanwha Energy. With the new Commercial Act, a public tender offer is likely. Worth watching closely.


Korea’s Dem Leader: PBR Under 0.3x Should Be Hostile M&A Targets – Names That Could Feel the Heat

South Korea

Hanwha Corporation imports and exports petrochemicals, machinery, automotives, electronics, and steel.  The Company also produces explosives for the defense and construction industries.  In addition, Hanwha manufactures automotive airbag inflators and telecommunication equipment, such as wireless phones and provides financial services through its subsidiaries.

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Hanwha Corporation (000880 KS)

Fat Inheritance Taxes for Hanwha Group Chairman Kim's Three Sons Post Receiving Hanwha Corp Shares

Hanwha Group Chairman Kim Seung-youn will give 11.32% of his shares in Hanwha Corporation to his three sons. This is likely to lead to Hanwha Corp...

Douglas Kim

Hanwha's Surprise Gift Disclosure: Three Major Takeaways

This post covers 3 major takeaways from Hanwha’s surprise gift disclosure, breaking down the key implications for the company, the family’s stake...

Sanghyun Park

The Hidden Play in Hanwha’s Noisy Stake Reshuffling: Hanwha Corp’s Rights Issue

Hanwha’s shake-up—starting with Ocean’s stake shuffle and Aerospace’s rights issue—was always about locking in family control. That got sealed...

Sanghyun Park

Hanwha Ocean Placement - Recent Run-Up, Results Make It Tricky

Korea Development Bank (KDB) plans to raise around US$740m via selling around 5%+ stake in Hanwha Ocean (042660 KS). In this note, we talk about...

Sumeet Singh

Korea’s Dem Leader: PBR Under 0.3x Should Be Hostile M&A Targets – Names That Could Feel the Heat

The Democratic Party leader’s bold move: “A PBR under 0.3x is prime for a hostile M&A target.” Here are the stocks that could feel the heat.

Sanghyun Park

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