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

<p>In a regulatory filing, HMM said it had decided to repay 600 billion won worth of permanent CB (#191 owned by KOBC: Korea Ocean Business Corporation) in advance. That is, HMM will exercise its right to claim for early redemption. If the CB holder (KOBC) agrees, HMM will make the CB repayment on December 9.</p><p><a href="https://engkind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptNo=20211026000136&amp;docno=&amp;formProcsCd=070&amp;language=english" target="_blank" rel="noopener">The link to the English regulatory filing is here.</a></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/523/original/1.png?1635227576" class="editor-image img-responsive" data-smartkarma-image-id="237523"></figure></section><div class="content-caption">(Source: KRX KIND)</div><p>The #191 perpetual convertible bonds were exclusively issued to KOBC in March 2017. The conversion price is ₩7,173, and if KOBC converts all of them, it will obtain 83,647,009 ordinary shares, causing a share dilution of 16.4%.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/524/original/image?1635227656" class="editor-image img-responsive" data-smartkarma-image-id="237524"></figure><div class="content-caption">(Source: DART)</div><div class="content-highlight"><p><strong>However, there is a catch here. Suppose the KOBC exercises the right to claim conversion before the scheduled repayment date. In that case, the CB will be converted to HMM's new stock, regardless of HMM's decision to exercise its right to claim for early redemption.</strong></p></div><p>Yes, the KOBC reserves the right to convert this CB into HMM stocks at ₩7,173 per share at any time. It is still a quarter of HMM's current share price. The market profit obtained by converting CB into stock alone amounts to about 1.86 trillion won.</p>

In a regulatory filing, HMM said it had decided to repay 600 billion won worth of permanent CB (#191 owned by KOBC: Korea Ocean Business Corporation) in advance. That is, HMM will exercise its right to claim for early redemption. If the CB holder (KOBC) agrees, HMM will make the CB repayment on December 9.The link to the English regulatory filing is here.(Source: KRX KIND)The #191 perpetual convertible bonds were exclusively issued to KOBC in March 2017. The conversion price is ₩7,173, and if KOBC converts all of them, it will obtain 83,647,009 ordinary shares, causing a share dilution of 16.4%.(Source: DART)However, there is a catch here. Suppose the KOBC exercises the right to claim conversion before the scheduled repayment date. In that case, the CB will be converted to HMM's new stock, regardless of HMM's decision to exercise its right to claim for early redemption.Yes, the KOBC reserves the right to convert this CB into HMM stocks at ₩7,173 per share at any time. It is still a quarter of HMM's current share price. The market profit obtained by converting CB into stock alone amounts to about 1.86 trillion won.

HMM Perpetual Bond Conversion Situation Update for Short Position

<p>Today (October 13), HMM posted a "CEO Letter to Shareholders" on its website.</p><div class="content-highlight"><p><a href="http://www.hmm21.com/cms/company/irk/disclosure/dart/1209953_12686.jsp" target="_blank" rel="noopener">Here is the link to the HMM CEO Letter to Shareholders.</a></p></div><p>As shareholders' dissatisfaction grew over <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a> 's recent sharp decline in share price, the company's CEO Bae Jae-hoon took out a shareholder-friendly policy card including dividends to appease shareholders.</p><p>The first sentence of this letter is straightforward and clear: <strong>"We are reviewing shareholder-friendly policies due to shareholders' concerns about the share price decline."</strong> In fact, HMM shares have been corrected more than 40% since peaking at the end of May.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/908/original/6.png?1634131311" class="editor-image img-responsive" data-smartkarma-image-id="234908"></figure><hr>
<p><strong>So let's take a look at what this CEO letter contains. There are some pretty significant parts.</strong></p></section><h2>1. Dividend</h2><section class="figure"><p>The first is a dividend. HMM has explicitly stated that it is considering a dividend payment.</p>
<p>However, the company said that at this time, there is no available profit that can pay dividends under the local commercial law. It is because HMM still has a massive accumulated deficit, which stood at ₩4.44T as of the end of 2020. According to local commercial law, dividends are not allowed when there is a deficit. <strong>But the company said that the deficit situation is getting better, so it will actively consider paying dividends when dividend-payable profits are generated. FYI, it will only know the status of this year's deficit size at the end of this year.</strong></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/909/original/1.png?1634131586" class="editor-image img-responsive" data-smartkarma-image-id="234909"></figure></section><h2>2. Massive CB Conversion (Share Dilution) Risk</h2><p>The second is the massive CB conversion risk. That is, this letter tried to address the concern about the possible conversion of the ₩600B perpetual convertible bonds held by KOBC into stocks: the '#191 CB' issued in March 2017. The conversion price is ₩7,173, and if KOBC converts all of them, it will obtain 83,647,009 ordinary shares, causing a share dilution of 16.4%.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/923/original/3.png?1634134729" class="editor-image img-responsive" data-smartkarma-image-id="234923"></figure><p>Now, HMM stressed in this letter that it might opt for early full repayment of these CBs as the company is in good cash condition due to the recent brisk business. <strong>But there is a catch here. It also clarified that even if it wanted early full repayment, it wouldn't be able to refuse CB conversion into stocks if the bondholder (KOBC: Korea Ocean Business Corporation) made a request.</strong></p></section><div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/910/original/2.png?1634132720" class="editor-image img-responsive" data-smartkarma-image-id="234910"></figure><h2>3. Illegal shorting activities</h2>
<section class="figure"><p>This part is also fun. First, HMM said that it had not found any illegal short-selling activities so far.</p>
<p>However, <strong>local retail investors are arguing that KDB (Korea Development Bank) and KOBC are artificially lowering the stock price to facilitate the sale of their controlling stake. In response, HMM adamantly denied the allegation.</strong> HMM also revealed that KDB and KOBC are not lending their HMM shares to short-sellers.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/920/original/4.png?1634133557" class="editor-image img-responsive" data-smartkarma-image-id="234920"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/921/original/5.png?1634133615" class="editor-image img-responsive" data-smartkarma-image-id="234921"></figure></section>
</div>

Today (October 13), HMM posted a "CEO Letter to Shareholders" on its website.Here is the link to the HMM CEO Letter to Shareholders.As shareholders' dissatisfaction grew over HMM Co., Ltd. (011200 KS) 's recent sharp decline in share price, the company's CEO Bae Jae-hoon took out a shareholder-friendly policy card including dividends to appease shareholders.The first sentence of this letter is straightforward and clear: "We are reviewing shareholder-friendly policies due to shareholders' concerns about the share price decline." In fact, HMM shares have been corrected more than 40% since peaking at the end of May.
So let's take a look at what this CEO letter contains. There are some pretty significant parts.1. DividendThe first is a dividend. HMM has explicitly stated that it is considering a dividend payment.
However, the company said that at this time, there is no available profit that can pay dividends under the local commercial law. It is because HMM still has a massive accumulated deficit, which stood at ₩4.44T as of the end of 2020. According to local commercial law, dividends are not allowed when there is a deficit. But the company said that the deficit situation is getting better, so it will actively consider paying dividends when dividend-payable profits are generated. FYI, it will only know the status of this year's deficit size at the end of this year.
2. Massive CB Conversion (Share Dilution) RiskThe second is the massive CB conversion risk. That is, this letter tried to address the concern about the possible conversion of the ₩600B perpetual convertible bonds held by KOBC into stocks: the '#191 CB' issued in March 2017. The conversion price is ₩7,173, and if KOBC converts all of them, it will obtain 83,647,009 ordinary shares, causing a share dilution of 16.4%.Now, HMM stressed in this letter that it might opt for early full repayment of these CBs as the company is in good cash condition due to the recent brisk business. But there is a catch here. It also clarified that even if it wanted early full repayment, it wouldn't be able to refuse CB conversion into stocks if the bondholder (KOBC: Korea Ocean Business Corporation) made a request.
3. Illegal shorting activities
This part is also fun. First, HMM said that it had not found any illegal short-selling activities so far.
However, local retail investors are arguing that KDB (Korea Development Bank) and KOBC are artificially lowering the stock price to facilitate the sale of their controlling stake. In response, HMM adamantly denied the allegation. HMM also revealed that KDB and KOBC are not lending their HMM shares to short-sellers.



HMM CEO Letter to Shareholders Concerning Share Price Decline

Equity Capital Markets

<h2>Offering terms</h2><p>One of Korea's major flag-carrying maritime transporter (only behind HMM in size), SM Line, put out the IPO prospectus. It will be listed on the KOSDAQ market around late November. The total offering is 34 million shares, representing 50% of the current number of shares outstanding. The institutional allotment is 68.5~75.0% of the offering.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"TBA"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[1]C[-2]">076710</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}'>Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSPI"}'>KOSPI</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Pre-IPO SO"}'>Pre-IPO SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":67688440}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[1]C[-2]">67,688,440</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'><strong>Offering</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33844220}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[3]C[-2]"><strong>33,844,220</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of SO"}'><strong>- % of SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[5]C[-2]"><strong>50.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- Institutional allotment"}'><strong>- Institutional allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"55.00~75.00%"}' data-sheets-formula="=Terms!R[5]C[-2]"><strong>68.50~75.00%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>This is a split offering at a 50:50 ratio. So the capital increase rate is 25%, with a share dilution at 20%.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Split"}'>Split</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Primary %"}'><strong>Primary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[3]C[-2]"><strong>50.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'><strong>Secondary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]"><strong>50.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Post-IPO shares outstanding"}'>Post-IPO shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":84610550}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-9]C[0]+Terms!R[2]C[-2]">84,610,550</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'>Capital increase rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">25.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'>Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Terms!R[4]C[-2]">20.00%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The book opens on November 1, and the allotment will be disclosed on November 3. The subscription follows on November 4, followed by the payment on November 9. The listing date will be announced later.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'><strong>Book open</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44501}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 01</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'><strong>Book close</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44502}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 02</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'>Allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44503}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 03</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'>Subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44446}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 04</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'><strong>Payment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44449}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'><strong>2021. 11. 09</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The share of the largest shareholder will be 60% after listing. The stake is locked for six months. And the amount of inflow through the public offering is 40% of the post-IPO total shares.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Shareholders"}'>Shareholders</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shares"}'>Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Post-IPO shareholding %"}'>Post-IPO shareholding %</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Lockup"}'>Lockup</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"TK Chemicals"}'>TK Chemicals</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18646232}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>18,646,232</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2204}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>22.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'>6 months</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samra Midas"}'>Samra Midas</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":17846733}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>17,846,733</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2109}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>21.09%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'>6 months</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samra Inc"}'>Samra Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":14273365}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>14,273,365</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1687}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>16.87%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'>6 months</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Major shareholder"}'><strong>- Major shareholder total</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":50766330}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=sum(R[-3]C[0]:R[-1]C[0])"><strong>50,766,330</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(R[-3]C[0]:R[-1]C[0])"><strong>60.00%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"6 months"}'><strong>6 months</strong></td>
</tr>
<tr><td colspan="4"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP (post-IPO)"}'>ESOP (post-IPO)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":507663}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>507,663</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.006}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>0.60%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"1 year"}'>1 year</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO"}'>IPO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33336557}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>33,336,557</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.394}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>39.40%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>-</td>
</tr>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

Offering termsOne of Korea's major flag-carrying maritime transporter (only behind HMM in size), SM Line, put out the IPO prospectus. It will be listed on the KOSDAQ market around late November. The total offering is 34 million shares, representing 50% of the current number of shares outstanding. The institutional allotment is 68.5~75.0% of the offering.





Offering size

Ticker
076710


Bourse
KOSPI


Pre-IPO SO
67,688,440


Offering
33,844,220


- % of SO
50.00%


- Institutional allotment
68.50~75.00%

Source: DART

This is a split offering at a 50:50 ratio. So the capital increase rate is 25%, with a share dilution at 20%.





Split

Primary %
50.00%


Secondary %
50.00%


Post-IPO shares outstanding
84,610,550


Capital increase rate
25.00%


Dilution
20.00%

Source: DART

The book opens on November 1, and the allotment will be disclosed on November 3. The subscription follows on November 4, followed by the payment on November 9. The listing date will be announced later.





Schedule

Book open
2021. 11. 01


Book close
2021. 11. 02


Allotment
2021. 11. 03


Subscription
2021. 11. 04


Payment
2021. 11. 09


Listing
-

Source: DART

The share of the largest shareholder will be 60% after listing. The stake is locked for six months. And the amount of inflow through the public offering is 40% of the post-IPO total shares.








Shareholders
Shares
Post-IPO shareholding %
Lockup


TK Chemicals
18,646,232
22.04%
6 months


Samra Midas
17,846,733
21.09%
6 months


Samra Inc
14,273,365
16.87%
6 months


- Major shareholder total
50,766,330
60.00%
6 months



ESOP (post-IPO)
507,663
0.60%
1 year


IPO
33,336,557
39.40%
-

Source: DART



SM Line IPO: Offering Terms, Valuation Details, & Risk Analysis

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">
<p>SM Line Corp is getting ready to complete its IPO in the KOSDAQ exchange in the next few weeks. This is the first shipping (marine transportation) company IPO in Korea in 14 years. SM Line Corp is trying to capitalize on the highly bullish environment for shipping companies globally.</p>
<p>The IPO price range is from 18,000 won to 25,000 won. At the high end of the IPO price range, the implied market cap of the company is 2.1 trillion won. The IPO offering amount range is from 609 billion won to 846 billion won. The book building for the institutional investors starts on 1 November. The lead underwrite of the IPO is NH Investment &amp; Securities. </p>
<p>The company plans to use the<a href="https://pulsenews.co.kr/view.php?year=2021&amp;no=826592" target="_blank" rel="noopener"> IPO proceeds</a> to purchase more eco-friendly, green vessels to better respond to stricter carbon emission rules to be applied from 2022. It is also considering on buying used vessels that can be used immediately to capitalize on the current global ship shortages. </p>
</div>


SM Line Corp is getting ready to complete its IPO in the KOSDAQ exchange in the next few weeks. This is the first shipping (marine transportation) company IPO in Korea in 14 years. SM Line Corp is trying to capitalize on the highly bullish environment for shipping companies globally.
The IPO price range is from 18,000 won to 25,000 won. At the high end of the IPO price range, the implied market cap of the company is 2.1 trillion won. The IPO offering amount range is from 609 billion won to 846 billion won. The book building for the institutional investors starts on 1 November. The lead underwrite of the IPO is NH Investment &amp; Securities. 
The company plans to use the IPO proceeds to purchase more eco-friendly, green vessels to better respond to stricter carbon emission rules to be applied from 2022. It is also considering on buying used vessels that can be used immediately to capitalize on the current global ship shortages. 


Equity Bottom-Up

<p>In this insight, we discuss the top 10 most heavily shorted stocks in KOSPI (amount shorted/market cap). There has been some sharp increase in the shorting levels of these stocks in Korea in recent weeks and these heavily shorted stocks have accelerated their underperformance relative to the KOSPI. Given the increased market volatility in the past three months, it makes sense to pay more attention to the heavily shorted stocks in Korea as more institutions (especially local ones) have been shorting these stocks. </p><p><strong>Local institutions driving higher shorts in KOSPI in September</strong> - It has been noted that the local institutions accounted for 34% of total shorts trading volumes in KOSPI (as of 30 September), which is up significantly from 16.6% on 30 August. The local institutions' shorting amount increased from 60 billion won at the end of August to 180 billion won on 30 September. </p><p>The top 10 most heavily shorted stocks in Korea are down on average 12.6% in the past three months, which is nearly double the underperformance of KOSPI which is down 6.9% in this period. Among these top 10 most shorted stocks, <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a>, <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, and <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> have been the worst performing stocks in this period.</p>

In this insight, we discuss the top 10 most heavily shorted stocks in KOSPI (amount shorted/market cap). There has been some sharp increase in the shorting levels of these stocks in Korea in recent weeks and these heavily shorted stocks have accelerated their underperformance relative to the KOSPI. Given the increased market volatility in the past three months, it makes sense to pay more attention to the heavily shorted stocks in Korea as more institutions (especially local ones) have been shorting these stocks. Local institutions driving higher shorts in KOSPI in September - It has been noted that the local institutions accounted for 34% of total shorts trading volumes in KOSPI (as of 30 September), which is up significantly from 16.6% on 30 August. The local institutions' shorting amount increased from 60 billion won at the end of August to 180 billion won on 30 September. The top 10 most heavily shorted stocks in Korea are down on average 12.6% in the past three months, which is nearly double the underperformance of KOSPI which is down 6.9% in this period. Among these top 10 most shorted stocks, Shinpoong Pharmaceutical (019170 KS), HMM Co., Ltd. (011200 KS), and LG Display (034220 KS) have been the worst performing stocks in this period.

Local Institutions Drive Higher Shorts in KOSPI

South Korea

HMM Co., Ltd. provides marine transportation services.  The Company commands different types of vessels including full container vessels, oil tankers, car carriers, LNG carriers, bulk carriers, and tramps.

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HMM Co., Ltd. (011200 KS)

HMM Perpetual Bond Conversion Situation Update for Short Position

This post examines and discusses the latest development in HMM's perpetual bond (exclusively owned by KOBC) conversion situation.

Sanghyun Park

SM Line IPO: Offering Terms, Valuation Details, & Risk Analysis

SM Line, one of Korea's two flag-carrying maritime transporters, plans to go public. This post details the offering terms and discusses the...

Sanghyun Park

SM Line Corp IPO Preview

SM Line Corp is getting ready to complete its IPO in the KOSDAQ exchange in the next few weeks. At the high end of the IPO price range, the implied...

Douglas Kim

Local Institutions Drive Higher Shorts in KOSPI

In this insight, we discuss the top 10 most heavily shorted stocks in KOSPI (amount shorted/market cap).These heavily shorted stocks have...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HMM Perpetual Bond Conversion Situation Update for Short Position

This post examines and discusses the latest development in HMM's perpetual bond (exclusively owned by KOBC) conversion situation.

Sanghyun Park

HMM CEO Letter to Shareholders Concerning Share Price Decline

HMM CEO posted a letter to shareholders on the corporate website today concerning the recent share price decline. This letter contains some...

Sanghyun Park

SM Line IPO: Offering Terms, Valuation Details, & Risk Analysis

SM Line, one of Korea's two flag-carrying maritime transporters, plans to go public. This post details the offering terms and discusses the...

Sanghyun Park

SM Line Corp IPO Preview

SM Line Corp is getting ready to complete its IPO in the KOSDAQ exchange in the next few weeks. At the high end of the IPO price range, the implied...

Douglas Kim

Local Institutions Drive Higher Shorts in KOSPI

In this insight, we discuss the top 10 most heavily shorted stocks in KOSPI (amount shorted/market cap).These heavily shorted stocks have...

Douglas Kim