Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A double dose of StubWorld this week as <a href="https://www.smartkarma.com/entities/hanwha-corporation" target="_blank" data-smartkarma-citation="entities:10619:1" rel="noopener">Hanwha Corporation (000880 KS)</a> comes up "cheap" on my monitor.</li>
<li>Preceding my comments on Hanwha are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


A double dose of StubWorld this week as Hanwha Corporation (000880 KS) comes up "cheap" on my monitor.
Preceding my comments on Hanwha are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


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

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>Korea has a total of 68 holding companies listed on KOSPI and KOSDAQ. We then have 14 holdcos with a high level of price cointegration with their respective listed subsidiaries.</li>
<li>Three holding companies have sigma below zero on a 20D MA. Hanwha Corp is considered stub tradable as its share price relative to its subsidiaries was relatively flat.</li>
<li>Four holdcos, including SK Square are over 70% NAV discount. Among them, SK Square is of the most interest as the price correlation with SK Hynix has been improving lately.</li>
</ul>


Korea has a total of 68 holding companies listed on KOSPI and KOSDAQ. We then have 14 holdcos with a high level of price cointegration with their respective listed subsidiaries.
Three holding companies have sigma below zero on a 20D MA. Hanwha Corp is considered stub tradable as its share price relative to its subsidiaries was relatively flat.
Four holdcos, including SK Square are over 70% NAV discount. Among them, SK Square is of the most interest as the price correlation with SK Hynix has been improving lately.


Korea Holding Companies: Stub Tradable Names

<ul>
<li>Korea's majority party plans to amend the Capital Markets Act to base listed companies' merger ratios on intrinsic rather than market value, dubbed the "Doosan Bobcat Prevention Law."</li>
<li>Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.</li>
<li>We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment's enforcement.</li>
</ul>


Korea's majority party plans to amend the Capital Markets Act to base listed companies' merger ratios on intrinsic rather than market value, dubbed the "Doosan Bobcat Prevention Law."
Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment's enforcement.


Trading Opportunities Arising from the Enactment of The "Doosan Bobcat Prevention Law"

<ul>
<li>The Toyota Group cross-holding ecosystem is in flux. They started with a small announcement by <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> but moves have come fast and furious.</li>
<li>Apparently minorities are grumbling to the SFC about the low-balled Offer for <a href="https://www.smartkarma.com/entities/asia-cement-china-holdings" target="_blank" data-smartkarma-citation="entities:3374:1" rel="noopener">Asia Cement China (743 HK)</a>. And for good reason. The best course of action? Vote against the Scheme.</li>
<li>
<a href="https://www.smartkarma.com/entities/hanwha-corporation" target="_blank" data-smartkarma-citation="entities:10619:1" rel="noopener">Hanwha Corporation (000880 KS)</a> is trading at a steep NAV discount. And the controlling family is making  a partial Offer to gain majority control. </li>
</ul>


The Toyota Group cross-holding ecosystem is in flux. They started with a small announcement by Aisin (7259 JP) but moves have come fast and furious.
Apparently minorities are grumbling to the SFC about the low-balled Offer for Asia Cement China (743 HK). And for good reason. The best course of action? Vote against the Scheme.

Hanwha Corporation (000880 KS) is trading at a steep NAV discount. And the controlling family is making  a partial Offer to gain majority control. 


Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric

South Korea

Kolon Corp. is an investment holding company. The company, through its subsidiaries, manufactures a variety of chemical fibers, textiles, films, and engineering plastic products.

Hansol Chemical Co., Ltd. manufactures chemical products such as hydrogen peroxide, benzol peroxide, urea resin, polyacrylamide, trimethylolpropane, and latex.  The Company supplies its products to the paper, textile, and food industries.

Dongjin Semichem Co., Ltd. produces fine chemicals for semiconductor and liquid crystal display (LCD) manufacturing.  The Company's products include photoresist materials and epoxy molding compounds.  In addition, Dongjin Semichem also produces chemical foaming agents for plastic and rubber applications.

OCI Holdings Company Ltd. operates chemical business. The Company manufactures inorganic chemicals, petroleum and coal chemicals, fine chemicals, renewable energy and insulation materials. OCI Holdings markets its products primarily throughout Korea with limited overseas.

Poongsan Corporation manufactures non-ferrous metal and defense-related products.  The Company also makes coin blanks, cans, stainless steel strips, lead frame alloys, tin plated strips, bars, and rods & wires.  It also produces precision products such as lead frames for semiconductors, machinery, and dies & gauges.

Hyosung Advanced Materials Corporation operates as an advanced materials production company. The Company manufactures and sells high-strength industrial yarns, fabric, steel wire materials, and other products. Hyosung Advanced Materials markets its products worldwide.

LOTTE Fine Chemical Co., Ltd. produces general and fine chemicals. The Company produces ammonia, epichlorohydrin, caustic soda, and dimethylformamide. LOTTE Fine Chemical also manufactures chemicals used in pharmaceutical and paint manufacturing areas.

Capro Corporation manufactures and exports caprolactam, a key raw material for nylon.  The Company's customers include nylon manufacturers such as Hyosung Corporation, Kolon Industries, and  Taekwang Industrial.  In addition, Capro also produces ammonia sulfate fertilizer for industrial and agricultural uses.

VT GMP Co.,Ltd. manufactures and markets laminating machines. The Company produces and sells pouch laminators, roll laminators, and other products. VT GMP also produces and sells laminating films.

Lion Chemtech Co., Ltd. manufactures plastics and paint additives for industrial applications.  The Company also produces synthetic and natural waxes with wide variety of grades. Lion Chemtech offers its products to the industrial industry in the United States, Europe and China.

Youngy Co.,Ltd. manufactures lithium battery equipments, and it is also involved in the mining of lithium ore.

Hunan Corun New Energy Co., Ltd. develops, manufactures, and retails continuous nickel foam.

Yunding Technology Co.,Ltd. engages in ore mining business. The Company provides ore mining, processing, and sales services. Yunding Technology also offers mining management consulting services.

Aliaxis SA manufactures plastic plumbing products for the construction, industrial, and public utilities sectors.

Wuhan Xianglong Power Industry Co., Ltd. produces and markets chemical products including PVC (polyvinyl chloride).  The Company also generates and distributes electricity and heat to customers in Wuhan area.

Tien Phong Plastic JSC manufactures a wide range of plastic products for the construction industry. The Company's products include plastic pipes, tubes, and fittings.

Binh Minh Plastics JSC manufactures plastic pipe.

Angang Steel Company Limited produces steel products which include cold rolled sheets, steel rail, pipe billets, wire rods, thick plates, and other steel products.

Fufeng Group Limited manufactures corn-based bio-chemical products utilizing fermentation technology. The Company's products include glutamic acid and xanthan gum.

Lee & Man Paper Manufacturing Limited, through its subsidiaries, produces linerboard and corrugating medium.  The Company's linerboard and corrugating medium are divided into a range of grades with different specifications customized for different industrial and consumer packaging purposes.

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)

StubWorld: Hanwha Corp Is "Cheap"

I'd be inclined to set up the stub here; however Korea's short selling ban makes its difficult for long/short trades. Alternatively, I would...

David Blennerhassett

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

Korea Holding Companies: Stub Tradable Names

Korea has a total of 68 holding companies listed on KOSPI and KOSDAQ. Then, there are 14 stub tradable names as they have a high level of price...

Sanghyun Park

Trading Opportunities Arising from the Enactment of The "Doosan Bobcat Prevention Law"

This post explores trading opportunities expected from the upcoming "Doosan Bobcat Prevention Law," as labeled by the local market.

Sanghyun Park

Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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