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

<ul>
<li>Hanwha Energy, wholly owned by the Hanwha Group's owning family, announced a tender offer for an 8% stake in Hanwha Corp at ₩30,000. The tender period is until July 24.</li>
<li>Hanwha Energy will buy all shares if tendered less than planned, otherwise pro-rata. Payment in cash eliminates cancellation risk but poses allocation risk.</li>
<li>Approximately 10-15% of shares are likely to be the potential ceiling for tendering, minimizing allocation risk for the 8% target. A widening spread of 2-3% could offer arbitrage opportunities.</li>
</ul>


Hanwha Energy, wholly owned by the Hanwha Group's owning family, announced a tender offer for an 8% stake in Hanwha Corp at ₩30,000. The tender period is until July 24.
Hanwha Energy will buy all shares if tendered less than planned, otherwise pro-rata. Payment in cash eliminates cancellation risk but poses allocation risk.
Approximately 10-15% of shares are likely to be the potential ceiling for tendering, minimizing allocation risk for the 8% target. A widening spread of 2-3% could offer arbitrage opportunities.


Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>We believe the new restructuring plan of the Hanwha Group is likely to have a positive impact on Hanwha Corp but could negatively impact Hanwha Ocean. </li>
<li>Our NAV analysis of Hanwha Corp suggests NAV of 3.2 trillion won or NAV per share of 43,168 won, which is 50% higher than current share price. </li>
<li>The biggest component of the valuation is Hanwha Corp's 34% stake in Hanwha Aerospace which is worth 4.1 trillion won. (187% of Hanwha Corp's market cap). </li>
</ul>


We believe the new restructuring plan of the Hanwha Group is likely to have a positive impact on Hanwha Corp but could negatively impact Hanwha Ocean. 
Our NAV analysis of Hanwha Corp suggests NAV of 3.2 trillion won or NAV per share of 43,168 won, which is 50% higher than current share price. 
The biggest component of the valuation is Hanwha Corp's 34% stake in Hanwha Aerospace which is worth 4.1 trillion won. (187% of Hanwha Corp's market cap). 


Hanwha Group's Restructuring to Positively Benefit Hanwha Corp but Negatively Impact Hanwha Ocean

<ul>
<li>On 21 February, NPS announced that it will select three domestic asset management companies to manage funds that will be allocated to the "corporate value up" program. </li>
<li>NPS plans to accept proposals from the local asset management and investment advisory companies from 21 to 29 February. NPS is likely to finalize the selected candidates sometime in March. </li>
<li>We provide a list of 34 companies where the NPS has at least 5% ownership stake, with PBR of 0.5x or less, and included in KOSPI 200.</li>
</ul>


On 21 February, NPS announced that it will select three domestic asset management companies to manage funds that will be allocated to the "corporate value up" program. 
NPS plans to accept proposals from the local asset management and investment advisory companies from 21 to 29 February. NPS is likely to finalize the selected candidates sometime in March. 
We provide a list of 34 companies where the NPS has at least 5% ownership stake, with PBR of 0.5x or less, and included in KOSPI 200.


NPS Plans to Select Three Asset Management Companies For "Corporate Value Up" Program

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>A double dose of StubWorld this week as <strong><a href="https://www.smartkarma.com/entities/hanwha-corporation" target="_blank" data-smartkarma-citation="entities:10619:1" rel="noopener">Hanwha Corporation (000880 KS)</a></strong> 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%.


<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

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)

Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment

This post covers the morning's tender offer announcement to Hanwha Corp shareholders and evaluates arbitrage trading opportunities.

Sanghyun Park

Hanwha Group's Restructuring to Positively Benefit Hanwha Corp but Negatively Impact Hanwha Ocean

We believe the new restructuring plan of the Hanwha Group is likely to have a positive impact on Hanwha Corp but could negatively impact Hanwha Ocean.

Douglas Kim

NPS Plans to Select Three Asset Management Companies For "Corporate Value Up" Program

On 21 February, NPS announced that it will select three domestic asset management companies to manage funds that will be allocated to the...

Douglas Kim

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

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

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