Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

Hyundai Engineering & Construction / Equity Bottom-Up

<ul>
<li>Mohammed bin Salman (MBS), the Crown Prince of Saudi Arabia, is expected to visit South Korea in late October/early November 2022.</li>
<li>In this insight, we discuss the top 14 stocks in Korea that could benefit from his visit of South Korea in a couple of months.</li>
<li>We think that many local investors have been buying some of the 14 stocks mentioned in this insight with the expectation of further positive news from MBS visiting South Korea.</li>
</ul>


Mohammed bin Salman (MBS), the Crown Prince of Saudi Arabia, is expected to visit South Korea in late October/early November 2022.
In this insight, we discuss the top 14 stocks in Korea that could benefit from his visit of South Korea in a couple of months.
We think that many local investors have been buying some of the 14 stocks mentioned in this insight with the expectation of further positive news from MBS visiting South Korea.


Top 14 Korean Stocks to Benefit from Mohammed Bin Salman's Visit to South Korea in October/November

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>The market seems to be focusing more on the cost risk increase than on Hyundai E&amp;C's sales growth following the top-line expansion of the urban renewal market.</li>
<li>Instead, the market is looking forward to the possibility that Hyundai E&amp;C's leap forward as a nuclear power solution provider will lead to a growth premium for the share price. </li>
<li>The trading point should be to target this risk when the price is peaking out from the nuclear power theme. Specifically, we need to consider a sector pair long/short setup.</li>
</ul>


The market seems to be focusing more on the cost risk increase than on Hyundai E&amp;C's sales growth following the top-line expansion of the urban renewal market.
Instead, the market is looking forward to the possibility that Hyundai E&amp;C's leap forward as a nuclear power solution provider will lead to a growth premium for the share price. 
The trading point should be to target this risk when the price is peaking out from the nuclear power theme. Specifically, we need to consider a sector pair long/short setup.


Hyundai Engineering & Construction (000720 KS): Trading Points

<ul>
<li>We highlight the top five catalysts of why we believe Hyundai E&amp;C is likely to outperform the market in the next 6-12 months. </li>
<li>Higher housing supply, surge in new orders, expansion in nuclear projects/inclusion in nuclear ETFs, Neom mega project, and shift to value stocks are likely to drive Hyundai E&amp;C's outperformance.</li>
<li>Housing/Architecture accounted for 57.1% and 59.7% of total sales in 2021 and 1Q 2022, respectively. Plants/power plants accounted for 25.7% of total sales in 2021.</li>
</ul>


We highlight the top five catalysts of why we believe Hyundai E&amp;C is likely to outperform the market in the next 6-12 months. 
Higher housing supply, surge in new orders, expansion in nuclear projects/inclusion in nuclear ETFs, Neom mega project, and shift to value stocks are likely to drive Hyundai E&amp;C's outperformance.
Housing/Architecture accounted for 57.1% and 59.7% of total sales in 2021 and 1Q 2022, respectively. Plants/power plants accounted for 25.7% of total sales in 2021.


Hyundai Engineering & Construction: Top Five Catalysts

Event-Driven

<ul>
<li>Korea Investment Management will be launching a new nuclear power related ETF called Kindex Nuclear Theme Deep Search ETF on 28 June. </li>
<li>NH-Amundi Asset Management will also be launching Hanaro Nuclear iSelect ETF on 28 June. Both ETFs are the first ones to focus on the nuclear power related stocks in Korea.</li>
<li>The launch of these ETFs should have a positive impact on the major nuclear power related stocks including Doosan Enerbility (034020 KS) and Kepco Plant Service &amp; Engineering (051600 KS).</li>
</ul>


Korea Investment Management will be launching a new nuclear power related ETF called Kindex Nuclear Theme Deep Search ETF on 28 June. 
NH-Amundi Asset Management will also be launching Hanaro Nuclear iSelect ETF on 28 June. Both ETFs are the first ones to focus on the nuclear power related stocks in Korea.
The launch of these ETFs should have a positive impact on the major nuclear power related stocks including Doosan Enerbility (034020 KS) and Kepco Plant Service &amp; Engineering (051600 KS).


Launch of Kindex Nuclear Theme Deep Search ETF & Hanaro Nuclear ISelect ETF in Korea

<ul>
<li>Neom is the largest construction project in the world with total project size of nearly $500 billion. </li>
<li>Neom has started to provide construction project awards for key projects in 1H 2022. Hyundai E&amp;C and Samsung C&amp;T consortium recently won a project estimated at $1 billion for Neom. </li>
<li>Samsung C&amp;T and Hyundai E&amp;C are two key companies in Korea that will be long-term beneficiaries of the Neom futuristic city construction in Saudi Arabia. </li>
</ul>


Neom is the largest construction project in the world with total project size of nearly $500 billion. 
Neom has started to provide construction project awards for key projects in 1H 2022. Hyundai E&amp;C and Samsung C&amp;T consortium recently won a project estimated at $1 billion for Neom. 
Samsung C&amp;T and Hyundai E&amp;C are two key companies in Korea that will be long-term beneficiaries of the Neom futuristic city construction in Saudi Arabia. 


Samsung C&T and Hyundai E&C: Two Main Beneficiaries of Neom (World's Biggest Construction Project)

South Korea

Hyundai Engineering & Construction Co., Ltd., a general construction company, provides civil engineering, architectural, industrial, and electrical engineering services.  The Company constructs roadways, dams, bridges, ports, industrial plants, apartment complexes, and cultural facilities.

Hyundai Engineering & Construction (000720 KS)

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Hyundai Engineering & Construction (000720 KS)

Top 14 Korean Stocks to Benefit from Mohammed Bin Salman's Visit to South Korea in October/November

In this insight, we discuss the top 14 stocks in Korea that could benefit from Saudi Arabia's Mohammed bin Salman's visit of South Korea in a...

Douglas Kim