Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<ul>
<li>In this insight, we present our first cut at the KOSPI 200 rebalance in March and June 2022. </li>
<li>The most likely new inclusion on the KOSPI 200 index in March could be LG Energy Solution, which is getting ready for an IPO in Korea in January 2022.</li>
<li>We also provide a list of 10 companies for exclusion and 4 companies for inclusion in the June 2022 KOSPI 200 rebalance. </li>
</ul>


In this insight, we present our first cut at the KOSPI 200 rebalance in March and June 2022. 
The most likely new inclusion on the KOSPI 200 index in March could be LG Energy Solution, which is getting ready for an IPO in Korea in January 2022.
We also provide a list of 10 companies for exclusion and 4 companies for inclusion in the June 2022 KOSPI 200 rebalance. 


KOSPI 200 Rebalance In March (LG Energy Solution) & June 2022

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><a href="https://www.smartkarma.com/entities/hyundai-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:33008:1" rel="noopener">Hyundai Engineering Co Ltd (HEC KS)</a> finally embarks on an IPO.</p><div class="content-highlight"><p><a href="https://biz.chosun.com/site/data/html_dir/2021/04/13/2021041302338.html#:~:text=%ED%98%84%EB%8C%80%EC%97%94%EC%A7%80%EB%8B%88%EC%96%B4%EB%A7%81%EC%9D%98%20%EC%B5%9C%EB%8C%80%20%EC%A3%BC%EC%A3%BC,%EB%B3%B4%EC%9C%A0%ED%95%9C%202%EB%8C%80%20%EC%A3%BC%EC%A3%BC%EB%8B%A4.&amp;text=%ED%98%84%EB%8C%80%EC%97%94%EC%A7%80%EB%8B%88%EC%96%B4%EB%A7%81%EC%9D%B4%20%EC%83%81%EC%9E%A5%ED%95%98%EB%A9%B4,%EC%9C%A0%EC%9A%A9%ED%95%98%EA%B2%8C%20%EC%93%B0%EC%9D%BC%20%EC%88%98%20%EC%9E%88%EB%8B%A4." target="_blank" rel="noopener">Here is the news link. (Source: Chosun Biz)</a></p></div><p>Chung Eui-sun owns an 11.72% stake, while Hyundai E&amp;C retains the major shareholding at 38.62%.</p><p>The current OTC MC sits at ₩8T, giving a 1.11x Sales and a 30.92x OP on FY2020. The CES stake is valued at a little less than ₩1T.</p><p>The target IPO date is before the end of this year.</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":"Hyundai Engineering shareholding"}'>Hyundai Engineering shareholding</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Engineering &amp; Construction Co."}' data-sheets-formula='=googlefinance(R[0]C[3], "name")'>Hyundai Engineering &amp; Construction Co.</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3862}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>38.62%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Chung Eui-sun"}'>Chung Eui-sun</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1172}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>11.72%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: Chosun Biz"}'>Source: Chosun Biz</td></tr>
</tbody>
</table><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":"Hyundai Engineering valuation (₩B)"}'>Hyundai Engineering valuation (₩B)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"OTC MC"}'>OTC MC</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8000}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>8,000.0</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"x Sales"}'>x Sales</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.112904123309777}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=R[-1]C[0]/R[-7]C[3]">1.11</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"x OP"}'>x OP</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":30.923850019327407}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=R[-2]C[0]/R[-7]C[3]">30.92</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Chung Eui-sun stake"}'>Chung Eui-sun stake (11.72%)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":937.6}' data-sheets-formula="=R[-3]C[0]*R[-22]C[0]">937.6</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: 38 Communication"}'>Source: 38 Communication</td></tr>
</tbody>
</table><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Engineering financials (₩B)"}'>Hyundai Engineering financials (₩B)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2017}'>2017</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2018}'>2018</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2019}'>2019</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2020}'>2020</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Sales"}'>Sales</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6268.2}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>6,268.2</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6286.2}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>6,286.2</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6801.1}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>6,801.1</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7188.4}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>7,188.4</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"OP"}'>OP</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":514.4}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>514.4</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":453.7}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>453.7</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":408.1}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>408.1</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":258.7}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>258.7</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - OPM"}'>- OPM</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.08206502664241729}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]">8.21%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.07217396837517101}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]">7.22%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.060004999191307286}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]">6.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.03598853708752991}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]">3.60%</td>
</tr>
<tr><td colspan="5" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

Hyundai Engineering Co Ltd (HEC KS) finally embarks on an IPO.Here is the news link. (Source: Chosun Biz)Chung Eui-sun owns an 11.72% stake, while Hyundai E&amp;C retains the major shareholding at 38.62%.The current OTC MC sits at ₩8T, giving a 1.11x Sales and a 30.92x OP on FY2020. The CES stake is valued at a little less than ₩1T.The target IPO date is before the end of this year.





Hyundai Engineering shareholding

Hyundai Engineering &amp; Construction Co.
38.62%


Chung Eui-sun
11.72%

Source: Chosun Biz







Hyundai Engineering valuation (₩B)

OTC MC
8,000.0


x Sales
1.11


x OP
30.92


Chung Eui-sun stake (11.72%)
937.6

Source: 38 Communication











Hyundai Engineering financials (₩B)
2017
2018
2019
2020


Sales
6,268.2
6,286.2
6,801.1
7,188.4


OP
514.4
453.7
408.1
258.7


- OPM
8.21%
7.22%
6.00%
3.60%

Source: DART



Potential Trades on HMG Stocks Amid Hyundai Eng IPO: Loan/Short Int Flow & 20D MA σ

Equity Capital Markets

Hyundai Engineering   / Equity Capital Markets

<div class="content-highlight">
<p><strong><a href="https://m.stock.naver.com/index.html#/news/ranknews/view/011/0003896445" target="_blank" rel="noopener">Hyundai Engineering Co</a> is starting its IPO process, which was noted by several local Korean media accounts today. The local media also has mentioned that the value of Hyundai Engineering Co (HEC) could be about 10 trillion won ($8.9 billion).</strong></p>
<p><a href="https://www.smartkarma.com/entities/hyundai-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:33008:1" rel="noopener">Hyundai Engineering Co Ltd (HEC KS)</a> is expected to complete its IPO by the end of 2021. It was reported on 13 April by the local media that Hyundai Engineering Co sent request for proposals (RFP) for IPO to the major domestic investment banks (including Mirae Asset Securities, Korea Investment &amp; Securities, NH Investment &amp; Securities, and other foreign banks) on 9 April. </p>
<p>A successful IPO of Hyundai Engineering Co could accelerate the restructuring of the entire Hyundai Motor Group. For example, given that the Hyundai Motor Group Chairman Chung Eui-Sun is the second largest shareholder of Hyundai Engineering Co, the IPO proceeds from this company could be used to further increase the ownership of <a href="https://www.smartkarma.com/entities/hyundai-mobis-co-ltd" target="_blank" data-smartkarma-citation="entities:6089:1" rel="noopener">Hyundai Mobis (012330 KS)</a> in the future.</p>
<p><em>Note: Hyundai Engineering Co (HEC) is a different company than <a href="https://www.smartkarma.com/entities/hyundai-engineering-const" target="_blank" data-smartkarma-citation="entities:4292:1" rel="noopener">Hyundai Engineering &amp; Const (000720 KS) (Hyundai E&amp;C)</a>. In this insight, the former company is mentioned as either HEC or Hyundai Engineering Co.</em> </p>
</div>


Hyundai Engineering Co is starting its IPO process, which was noted by several local Korean media accounts today. The local media also has mentioned that the value of Hyundai Engineering Co (HEC) could be about 10 trillion won ($8.9 billion).
Hyundai Engineering Co Ltd (HEC KS) is expected to complete its IPO by the end of 2021. It was reported on 13 April by the local media that Hyundai Engineering Co sent request for proposals (RFP) for IPO to the major domestic investment banks (including Mirae Asset Securities, Korea Investment &amp; Securities, NH Investment &amp; Securities, and other foreign banks) on 9 April. 
A successful IPO of Hyundai Engineering Co could accelerate the restructuring of the entire Hyundai Motor Group. For example, given that the Hyundai Motor Group Chairman Chung Eui-Sun is the second largest shareholder of Hyundai Engineering Co, the IPO proceeds from this company could be used to further increase the ownership of Hyundai Mobis (012330 KS) in the future.
Note: Hyundai Engineering Co (HEC) is a different company than Hyundai Engineering &amp; Const (000720 KS) (Hyundai E&amp;C). In this insight, the former company is mentioned as either HEC or Hyundai Engineering Co. 


Hyundai Engineering IPO Process Begins - A Key Catalyst for the Hyundai Motor Group Restructuring?

South Korea

Hyundai Engineering Co., Ltd provides engineering services. The Company specializes in oil and gas projects including oil and gas processing plants, LNG facilities, oil refineries, and offshore facilities.Hyundai Engineering markets its services internationally.

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Hyundai Engineering (064540 KS)

KOSPI 200 Rebalance In March (LG Energy Solution) & June 2022

We present our first cut at the KOSPI 200 rebalance in March and June 2022. We also provide a list of 10 companies for exclusion and 4 companies...

Douglas Kim

Potential Trades on HMG Stocks Amid Hyundai Eng IPO: Loan/Short Int Flow & 20D MA σ

Hyundai Eng begins an IPO process, which should be a group-wide restructuring triggering momentum. This post looks into potential trades on the...

Sanghyun Park

Hyundai Engineering IPO Process Begins - A Key Catalyst for the Hyundai Motor Group Restructuring?

Hyundai Engineering Co (HEC) has started its IPO process and the IPO is expected to be completed by end of this year. The IPO of HEC could...

Douglas Kim

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