Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 30 March, it was announced that Hyun Jeong-Eun (Chairwoman of the Hyundai Group) lost a final lawsuit against the Schindler Group.</li>
<li>The Supreme Court upheld an appeal court ruling that Chairwoman Hyun needs to pay 170 billion won (US$131 million) and delayed interest payments to Hyundai Elevator. </li>
<li>Although this major lawsuit loss for Chairwoman Hyun is a tremendous catalyst, the downturn in the construction sector and uncertainty in the reduction in Chairwoman's stake remain key negatives. </li>
</ul>


On 30 March, it was announced that Hyun Jeong-Eun (Chairwoman of the Hyundai Group) lost a final lawsuit against the Schindler Group.
The Supreme Court upheld an appeal court ruling that Chairwoman Hyun needs to pay 170 billion won (US$131 million) and delayed interest payments to Hyundai Elevator. 
Although this major lawsuit loss for Chairwoman Hyun is a tremendous catalyst, the downturn in the construction sector and uncertainty in the reduction in Chairwoman's stake remain key negatives. 


Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<ul>
<li>After peaking in H122, container rates have tumbled back to pre-Covid levels in Q123</li>
<li>We believe core profitability has also declined to pre-Covid levels for some carriers</li>
<li>
<a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a> no longer looks expensive, trading at 70-75% of replacement  cost.</li>
</ul>


After peaking in H122, container rates have tumbled back to pre-Covid levels in Q123
We believe core profitability has also declined to pre-Covid levels for some carriers

Evergreen Marine Corp (2603 TT) no longer looks expensive, trading at 70-75% of replacement  cost.


TRACKING TRAFFIC / Container Shipping: End of the Rollercoaster Ride

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>KDB recently initiated the process of selecting an advisory firm to sell its stake in HMM, which will likely be the first to implement the mandatory offer rule.</li>
<li>Potential bidders include Hyundai Glovis, LX Holdings, and Samsung SDS. As for POSCO Holdings, it recently said that it is not considering acquiring HMM.</li>
<li>Given that HMM is the only national shipping company, there is a good chance that multiple bidders will appear, which will lead to a premium to the market price.</li>
</ul>


KDB recently initiated the process of selecting an advisory firm to sell its stake in HMM, which will likely be the first to implement the mandatory offer rule.
Potential bidders include Hyundai Glovis, LX Holdings, and Samsung SDS. As for POSCO Holdings, it recently said that it is not considering acquiring HMM.
Given that HMM is the only national shipping company, there is a good chance that multiple bidders will appear, which will lead to a premium to the market price.


HMM Is Likely the First to Be Subject to the Mandatory Offer that Comes into Force

<ul>
<li>Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200) </li>
<li>
Samsung Electronics (005930)' basis does not reflect special dividends, even though speculations have not disappeared entirely.</li>
<li>As the current basis hasn't widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.</li>
</ul>


Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200) 

Samsung Electronics (005930)' basis does not reflect special dividends, even though speculations have not disappeared entirely.
As the current basis hasn't widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.


Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

<ul>
<li>The additional Lotte Confectionery/Samyang Holdings flow will come from K200/KRX 300 Consumer Staples, K200 MidSmallCap, and K200 Ex-Top. However, the actual flow impact wouldn't be significant.</li>
<li>From a flow trading standpoint, the KOSPI 50's HMM/Hanon System probably deserves our attention because additional inflows come from the pensions that account for more than half of local PASSIVE.</li>
<li>Since their rebalancing trading tends to be somewhat dispersed, the return rate was the best when the position holding period was from T-3 to the effective date.</li>
</ul>


The additional Lotte Confectionery/Samyang Holdings flow will come from K200/KRX 300 Consumer Staples, K200 MidSmallCap, and K200 Ex-Top. However, the actual flow impact wouldn't be significant.
From a flow trading standpoint, the KOSPI 50's HMM/Hanon System probably deserves our attention because additional inflows come from the pensions that account for more than half of local PASSIVE.
Since their rebalancing trading tends to be somewhat dispersed, the return rate was the best when the position holding period was from T-3 to the effective date.


KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

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)

Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group

On 30 March, the Supreme Court upheld an appeal court ruling that Chairwoman Hyun needs to pay 170 billion won (US$131 million) and delayed...

Douglas Kim

TRACKING TRAFFIC / Container Shipping: End of the Rollercoaster Ride

For container rates and profitability, it's been a wild rollercoaster ride over the past three years. But now shares of pure play Evergreen Marine...

Tracking Traffic

HMM Is Likely the First to Be Subject to the Mandatory Offer that Comes into Force

This post investigates KDB's HMM stake sale reportedly initiated last week and discusses the possibility that this deal will be the first to be...

Sanghyun Park

Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

This post screens targetable names on KOSPI for dividend arbitrage based on relatively reliable DPS estimates and current basis widening.

Sanghyun Park

KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

This post details the constituent changes of the sector/size sub-indices of KOSPI 200 and KRX 300, announced by KRX last week and discusses trading...

Sanghyun Park

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