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>Another thing to consider in strategic trades aimed at the buying trend for yearend dividend hunting is the ₩1B majority shareholder transfer tax-triggered selling trend.</li>
<li>But the degree of direct conflict between the buying force targeting dividends and this factor at the point close to the ex-dividend date should not be as large as expected.</li>
<li>Considering a gradual preemptive sale of yearend tax evasion until the ex-dividend, we should consider shortening the trading time frame of the yearend dividend play close to the ex-dividend.</li>
</ul>


Another thing to consider in strategic trades aimed at the buying trend for yearend dividend hunting is the ₩1B majority shareholder transfer tax-triggered selling trend.
But the degree of direct conflict between the buying force targeting dividends and this factor at the point close to the ex-dividend date should not be as large as expected.
Considering a gradual preemptive sale of yearend tax evasion until the ex-dividend, we should consider shortening the trading time frame of the yearend dividend play close to the ex-dividend.


Yearend Dividend-Hunt Buying Vs. Majority Shareholder Transfer Tax-Triggered Selling

<ul>
<li>In Korea's local stock market, intense short-covering at the yearend dividend season has been consistently observed since mid-November. So, this post screens potential short-covering stocks.</li>
<li>KOSPI stocks meeting these screening factors include Kumho Petro Chemical, SK Inc, Lotte Shopping, Mirae Asset Securities, CJ Corp, and HiteJinro.</li>
<li>In the KOSDAQ, we can obtain the following results if the same screening factors are applied: LX Semicon, BH Co Ltd, and Seegene.</li>
</ul>


In Korea's local stock market, intense short-covering at the yearend dividend season has been consistently observed since mid-November. So, this post screens potential short-covering stocks.
KOSPI stocks meeting these screening factors include Kumho Petro Chemical, SK Inc, Lotte Shopping, Mirae Asset Securities, CJ Corp, and HiteJinro.
In the KOSDAQ, we can obtain the following results if the same screening factors are applied: LX Semicon, BH Co Ltd, and Seegene.


Potential Yearend Short-Covering Stocks in Korea

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

<ul>
<li>
Our Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%.</li>
<li>
Out of the 34 stocks that appeared in our Q3-2021 screen, 15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.</li>
<li>Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, </li>
<li>
As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.</li>
</ul>



Our Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%.

Out of the 34 stocks that appeared in our Q3-2021 screen, 15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.
Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, 

As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.


Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

<h2>Eight new names, SoftBank remains for the 3rd quarter running</h2>
<ul>
<li>
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%.</li>
<li>
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.</li>
<li>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.</li>
<li>
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.</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

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

BeerCo consists of <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a>'s beer business and operations except for the sale of Thai beer products outside Thailand. ThaiBev aims to conduct a public offering of up to 20% of the total number of issued ordinary shares of BeerCo through an SGX IPO. The IPO could raise as much as $2 billion, according to press reports. In <a href="https://www.smartkarma.com/insights/thaibev-s-beerco-ipo-first-look" target="_blank" data-smartkarma-citation="insights:47885" rel="noopener">ThaiBev’s BeerCo IPO: First Look</a>, we noted that BeerCo has attractive fundamentals as it will return to growth driven by the recovery in on-premise consumption as the effect of the COVID-19 pandemic wanes. In <a href="https://www.smartkarma.com/insights/thaibev-s-beerco-ipo-valuation-first-look" target="_blank" data-smartkarma-citation="insights:47927" rel="noopener">ThaiBev’s BeerCo IPO: Valuation First Look</a>, we opined that BeerCo's rumoured valuation of $10 billion can be justified. <div class="content-highlight">In this note, we take a close look at the BeerCo's 1QFY2021 results released alongside ThaiBev's 1QFY2021 results. BeerCo’s 1QFY2021 results are mixed as the top-line decline driven by largely one-off factors was accompanied by ongoing margin progression and cash generation. We continue to believe that BeerCo is well-placed to return to growth as the year unfolds due to a gradual recovery in on-premise consumption and undemanding comparable periods. </div>

BeerCo consists of Thai Beverage (THBEV SP)'s beer business and operations except for the sale of Thai beer products outside Thailand. ThaiBev aims to conduct a public offering of up to 20% of the total number of issued ordinary shares of BeerCo through an SGX IPO. The IPO could raise as much as $2 billion, according to press reports. In ThaiBev’s BeerCo IPO: First Look, we noted that BeerCo has attractive fundamentals as it will return to growth driven by the recovery in on-premise consumption as the effect of the COVID-19 pandemic wanes. In ThaiBev’s BeerCo IPO: Valuation First Look, we opined that BeerCo's rumoured valuation of $10 billion can be justified. In this note, we take a close look at the BeerCo's 1QFY2021 results released alongside ThaiBev's 1QFY2021 results. BeerCo’s 1QFY2021 results are mixed as the top-line decline driven by largely one-off factors was accompanied by ongoing margin progression and cash generation. We continue to believe that BeerCo is well-placed to return to growth as the year unfolds due to a gradual recovery in on-premise consumption and undemanding comparable periods. 

ThaiBev’s BeerCo Limited IPO: 1Q Results

South Korea

Hite Jinro Co., Ltd. specializes in manufacturing Soju, vodka-like distilled Korean liquor. The Company also produces and sells other alcoholic beverages, such as wine, whiskey, and ginseng liquors as well as non-alcoholic beverages including mineral water and soft drinks. In addition, Jinro also provides information processing and financial services as well as construction services.

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Hite Jinro (000080 KS)

Yearend Dividend-Hunt Buying Vs. Majority Shareholder Transfer Tax-Triggered Selling

This post looks at the yearend dividend-hunt buying versus the ₩1B majority shareholder transfer tax-triggered selling trend.

Sanghyun Park

Potential Yearend Short-Covering Stocks in Korea

In Korea's local stock market, intense short-covering at the yearend dividend season has been consistently observed since mid-November. So, this...

Sanghyun Park

Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

As we move through into Q1 2022, we expect to see volatility around highly priced & leveraged names. This screen is a key starting point towards...

David Lepper

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

Screening the Silk Road Q3 2021: Asia Pac High-risk names to avoid screening is out now. Eight new names, despite being down 23%, SoftBank remains...

David Lepper

ThaiBev’s BeerCo Limited IPO: 1Q Results

BeerCo's 1QFY2021 results suggest that it is well-placed to return to growth as the year unfolds due to a gradual recovery in on-premise...

Arun George

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