Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50 years.</li>
<li>The spin-off of the Hanwha Galleria is a good move. Clearly, having both the renewable energy and a luxury department store business under one roof does not make much sense.</li>
<li>We also like the company's move expand its U.S. solar module production capacity. The total amount of potential benefit could be nearly US$2 billion over the next decade. </li>
</ul>


On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50 years.
The spin-off of the Hanwha Galleria is a good move. Clearly, having both the renewable energy and a luxury department store business under one roof does not make much sense.
We also like the company's move expand its U.S. solar module production capacity. The total amount of potential benefit could be nearly US$2 billion over the next decade. 


Hanwha Solutions: Biggest Restructuring Measures in 50 Years

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>There is no unlocking of treasury shares, so a flow betting on dramatic value accretion will not occur. For tendering, the proration risk appears to be relatively high.</li>
<li>Passive trackers will sell at the close on February 24 and repurchase (likely only for Solutions) at the close on March 31. The flow size would be around 5.5x ADTV.</li>
<li>ECO risk wouldn't be a concern as the new rule will grant appraisal/preemptive rights to the existing shareholders. Also, Hanwha hinted at the possibility of choosing private placement over ECO.</li>
</ul>


There is no unlocking of treasury shares, so a flow betting on dramatic value accretion will not occur. For tendering, the proration risk appears to be relatively high.
Passive trackers will sell at the close on February 24 and repurchase (likely only for Solutions) at the close on March 31. The flow size would be around 5.5x ADTV.
ECO risk wouldn't be a concern as the new rule will grant appraisal/preemptive rights to the existing shareholders. Also, Hanwha hinted at the possibility of choosing private placement over ECO.


A Detailed Summary of Hanwha Solutions Demerger & Tender Offer

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We are seeing signs that suggest this pullback may have run its course, as several global market indexes and Sectors appear to be making a higher low near logical support.</li>
<li>This includes the S&amp;P 500, Russell 2000, MSCI ACWI (local currency), TOPIX/TOPIX Small/Nikkei 225, MSCI ACWI Technology (IXN-US), Consumer Discretionary (RXI-US), Financials (IXG-US), Industrials and (EXI-US) -- add exposure.</li>
<li>While our overall outlook remains neutral, we continue to see a plethora of attractive buying opportunities in the new leaders.</li>
</ul>


We are seeing signs that suggest this pullback may have run its course, as several global market indexes and Sectors appear to be making a higher low near logical support.
This includes the S&amp;P 500, Russell 2000, MSCI ACWI (local currency), TOPIX/TOPIX Small/Nikkei 225, MSCI ACWI Technology (IXN-US), Consumer Discretionary (RXI-US), Financials (IXG-US), Industrials and (EXI-US) -- add exposure.
While our overall outlook remains neutral, we continue to see a plethora of attractive buying opportunities in the new leaders.


Pullback Complete?; Commodities Heading Lower; Buying Growth/Cyclicals & A Few Utilities

<ul>
<li>We are starting to see early signs of a potential bottom on MSCI EM (EEM-US).</li>
<li>Specifically, the EEM-US has reversed topside its 6-month downtrend. If MSCI EM has indeed bottomed, we want to be buying the leaders; that is where this report comes in.</li>
<li>Specific themes include attractive opportunities in India and Thailand, and also many in Taiwan and South Korea. Attractive Sectors include Energy, Financials, Materials, and Industrials.</li>
</ul>


We are starting to see early signs of a potential bottom on MSCI EM (EEM-US).
Specifically, the EEM-US has reversed topside its 6-month downtrend. If MSCI EM has indeed bottomed, we want to be buying the leaders; that is where this report comes in.
Specific themes include attractive opportunities in India and Thailand, and also many in Taiwan and South Korea. Attractive Sectors include Energy, Financials, Materials, and Industrials.


Finding Leadership Within Emerging Markets

Equity Bottom-Up

<ul>
<li>The US Inflation Reduction Act (IRA) is likely to have a bifurcated impact on key Korean companies including Hanwha Solutions (009830 KS) and Hyundai Motor (005380 KS).</li>
<li>IRA is likely to have a positive impact on Hanwha Solutions, CS Wind, LG Energy Solution, and Samsung SDI and negative impact on Hyundai Motor Group.</li>
<li>The impact of the IRA could last for a few more trading days although it is difficult to tell exactly how long the bifurcated impact by the IRA will last.</li>
</ul>


The US Inflation Reduction Act (IRA) is likely to have a bifurcated impact on key Korean companies including Hanwha Solutions (009830 KS) and Hyundai Motor (005380 KS).
IRA is likely to have a positive impact on Hanwha Solutions, CS Wind, LG Energy Solution, and Samsung SDI and negative impact on Hyundai Motor Group.
The impact of the IRA could last for a few more trading days although it is difficult to tell exactly how long the bifurcated impact by the IRA will last.


US Inflation Reduction Act: Bifurcated Impact on Korean Chaebols (Hyundai, LG, Hanwha, SK & Samsung)

South Korea

Hanwha Solution Corporation is a chemical manufacturer.  The Company's products include a line of chlorine alkali chemicals, such as caustic soda, chlorine, and hydrochloric acid.  Hanwha also produces resins including low density polyethylene (LDPE) and polyvinyl chloride (PVC).

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Hanwha Solutions (009830 KS)

Hanwha Solutions: Biggest Restructuring Measures in 50 Years

On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50...

Douglas Kim

A Detailed Summary of Hanwha Solutions Demerger & Tender Offer

This post details the demerger and tender offer of Hanwha Solutions, filed last Friday. And it discusses trading angles resulting from this event.

Sanghyun Park

Pullback Complete?; Commodities Heading Lower; Buying Growth/Cyclicals & A Few Utilities

Signs suggest this pullback may have run its course, as several global market indexes & Sectors appear to be making a higher low near logical...

Vermilion Research

Finding Leadership Within Emerging Markets

We are starting to see early signs of a potential bottom on $EEM. Specifically, the EEM has reversed topside its 6-month downtrend. If EEM has...

Vermilion Research

US Inflation Reduction Act: Bifurcated Impact on Korean Chaebols (Hyundai, LG, Hanwha, SK & Samsung)

The US Inflation Reduction Act (IRA) is likely to have a bifurcated impact on key Korean companies including Hanwha Solutions (009830 KS) and...

Douglas Kim

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