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>Hyundai Mobis said it was considering a split but had not yet made a decision. This kind of response is generally seen as an ACKNOWLEDGMENT.</li>
<li>The eventual goal should be to liquidate the Chung family's Mobis stake via spin-off/merger and swap it with Kia Motors' Mobis stake. It implies that this will be a spin-off.</li>
<li>This aspect serves as an opportunity to use today's Mobis price drop as a swing trading entry point. I would consider building a Long/Short setup with HMC at this point.</li>
</ul>


Hyundai Mobis said it was considering a split but had not yet made a decision. This kind of response is generally seen as an ACKNOWLEDGMENT.
The eventual goal should be to liquidate the Chung family's Mobis stake via spin-off/merger and swap it with Kia Motors' Mobis stake. It implies that this will be a spin-off.
This aspect serves as an opportunity to use today's Mobis price drop as a swing trading entry point. I would consider building a Long/Short setup with HMC at this point.


Looking at Hyundai Mobis Spin-Off from a Swing Trading Perspective

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>On 12 August, it was reported in numerous local media that Hyundai Mobis (012330 KS) plans to spin off its auto parts and module business units into two separate entities. </li>
<li>Hyundai Mobis has not formally announced these spin offs although local media mentioned that these spin off plans have recently been finalized. </li>
<li>These spin-offs by Hyundai Mobis also are likely to be preludes to the Hyundai Mobis/Hyundai Motor Group reorganization. We remain positive on Hyundai Mobis. </li>
</ul>


On 12 August, it was reported in numerous local media that Hyundai Mobis (012330 KS) plans to spin off its auto parts and module business units into two separate entities. 
Hyundai Mobis has not formally announced these spin offs although local media mentioned that these spin off plans have recently been finalized. 
These spin-offs by Hyundai Mobis also are likely to be preludes to the Hyundai Mobis/Hyundai Motor Group reorganization. We remain positive on Hyundai Mobis. 


Hyundai Mobis: Plans to Spin Off Parts & Module Units

Cross Asset Strategy

<ul>
<li>We believe that there is a relatively high probability that the Korean government will lower the highest corporate tax rate bracket from 25% to 22% starting next year.</li>
<li>A 3% change in corporate tax rate should result in about 4% higher net profit for Korean companies.</li>
<li>Among the top 30 companies in Korea, we believe the companies with the biggest impact on lowering their tax rates include LG Electronics, Naver, Kakao Corp, SK Innovation, and KT&amp;G. </li>
</ul>


We believe that there is a relatively high probability that the Korean government will lower the highest corporate tax rate bracket from 25% to 22% starting next year.
A 3% change in corporate tax rate should result in about 4% higher net profit for Korean companies.
Among the top 30 companies in Korea, we believe the companies with the biggest impact on lowering their tax rates include LG Electronics, Naver, Kakao Corp, SK Innovation, and KT&amp;G. 


Lower Corporate Tax Rate in Korea Could Be an Extra Alpha Kicker

<ul>
<li>A trading dynamic that is drawing attention is the possibility of Chung Eui-sun's purchase of a stake in Mobis, triggering to boost Mobis' relative share price to Hyundai Motor.</li>
<li>Chung may push ahead with the Glovis → Mobis swap using the substantially increased value of Glovis' stake. Carlyle, who serves as Chung's ally, may additionally park Chung's Glovis stake</li>
<li>Chung uses the proceeds to purchase a stake in Mobis. Unlike in 2020, likely, he will only purchase Mobis shares this time.</li>
</ul>


A trading dynamic that is drawing attention is the possibility of Chung Eui-sun's purchase of a stake in Mobis, triggering to boost Mobis' relative share price to Hyundai Motor.
Chung may push ahead with the Glovis → Mobis swap using the substantially increased value of Glovis' stake. Carlyle, who serves as Chung's ally, may additionally park Chung's Glovis stake
Chung uses the proceeds to purchase a stake in Mobis. Unlike in 2020, likely, he will only purchase Mobis shares this time.


A Substantial Trade Seems Lurking on Hyundai Mobis with Chung's Possible Stake Purchase

Equity Bottom-Up

<ul>
<li>The US President Joe Biden is planning to visit South Korea on 20 to 22 May to meet the new South Korean President Yoon Suk-Yeol.</li>
<li>Hyundai Motor is likely to announce investments of nearly $7 billion for building a mega EV facility in Georgia which was leaked in the media in the last few days.</li>
<li>Hyundai Motor is aggressively penetrating the global EV markets and it is becoming an increasing threat against Tesla. Hyundai Motor has outperformed Tesla in the past 6 months.</li>
</ul>


The US President Joe Biden is planning to visit South Korea on 20 to 22 May to meet the new South Korean President Yoon Suk-Yeol.
Hyundai Motor is likely to announce investments of nearly $7 billion for building a mega EV facility in Georgia which was leaked in the media in the last few days.
Hyundai Motor is aggressively penetrating the global EV markets and it is becoming an increasing threat against Tesla. Hyundai Motor has outperformed Tesla in the past 6 months.


Joe Biden's Visit to South Korea: Hyundai Motor Ready to Announce $7 Billion Investment in EVs in US

South Korea

Hankook Tire & Technology Co. Ltd. develops and manufactures radial tires for passenger cars, light trucks, trucks, and buses.  The Company also produces batteries and aluminum alloy wheels and operates real estate business.

HL Mando Corp manufactures and markets automotive parts and equipments.  The Company's product line includes brake systems, suspension systems, and steering systems.

Kumho Tire Co., Inc. designs and produces tires.  The Company's main products include various automobile tires and tubes used in sedan, SUV, RV, truck, and bus.  Kumho Tire also provides racing tires.

Hanon Systems manufactures a variety of automotive air control equipment.  The Company's products include air conditioners, heaters, cooling modules, compressors, radiators, fans, evaporators, and condensers. Hanon Systems distributes its products on an original equipment manufacturing (OEM) basis.

SL Corp. designs and manufactures head lamps, chassis, and power trains for autos and motorcycles.  The Company exports its products to overseas market such as North America and Australia.

Sebang Global Battery Co., Ltd. specializes in manufacturing storage batteries used in automobiles, motorcycles, electric vehicles, and industrial machinery such as excavators and bulldozers.  The Company provides its products to domestic and overseas markets.

Hyundai Wia Corp. manufactures automobile parts. The Company also produces machine tools, robots, presses, industrial machinery, and aircraft parts.

Hankook & Company Co., Ltd. operates as a holding company. The Company operates batteries manufacturing, leasing, management consulting, tires production, and other businesses. Hankook provides services worldwide.

Nexen Tire Corporation manufactures, markets, and exports tires and inner tubes for automobiles, industrial and agricultural machinery, and construction equipment.

Sungwoo Hitech Co., Ltd. manufactures automotive parts, such as bumper rails, side members, and dash panels.  The Company supplies its products to Hyundai Motors.

Fuyao Glass Industry Group Co Ltd, through its subsidiaries, manufactures and distributes automobile glass, decorated glassware, and other industrial glassware. The Company also provides glass installation service. Fuyao Glass Industry Group markets its products internationally.

MRF Limited manufactures and distributes tyres and tubes for automobiles, aircrafts, motorcycles and cycles. The Company also manufactures conveyor belts, paint and coats, and hoses. Every MRF tyre designed is the result of a special acid test on the race and rally tracks.

Bosch Limited manufactures a wide range of automotive parts. The Company'products includes fuel injection pumps, spark plugs, including nozzles and nozzle holders, elements, delivery valves, filters and filter inserts, glow plugs, starter motors, alternators and wipers. Bosch also manufactures hydraulics and pneumatic equipment and electric power tools and fixtures.

China Shipbuilding Industry Group Power Co., Ltd. designs, produces, and markets power systems including electricity, gas, steam, chemical, diesel, civil-nuclear, and stirling engines.

China Shipbuilding Industry Group Power (600482 CH)

Huayu Automotive Systems Company Limited manufactures and sells auto parts. The Company's main products include interior and exterior auto parts, functional assembly autoparts and thermo processed auto parts etc.

Gentex Corporation designs, manufactures, and markets products that use electro-optic technology.  The Company's product lines include automatic-dimming rearview mirrors and fire protection products.  Gentex's Night Vision Safety Mirror automatically darkens to the degree required to eliminate rearview headlight glare.  The Company sells its products around the world.

Bharat Forge Limited manufactures steel forgings and machined components for the automotive, diesel engine, railway, earthmoving, cement, sugar, steel, coal, ship building and oilfield industries. The Company specializes in Closed Die as well as Open Die Forgings.

Sumitomo Electric Industries, Ltd. manufactures electric wires, cables, and their related equipment.  The Company's products include optical fibers, wire harnesses, antennas for broadcasting stations, and electric monitoring systems.  Sumitomo Electric also produces disc brakes and antilock braking systems for automobiles and printed circuit board.

Samvardhana Motherson International Limited manufactures and distributes automotive parts. The Company offers products such as HVAC systems, air intake manifolds, highway vehicle cabins, air compressors, and pedal box assembly. Samvardhana Motherson International markets its products worldwide.

Samvardhana Motherson International Ltd (MOTHERSO IN)

Aisin Corporation manufactures and distributes motor vehicle parts. The Company produces drive train, transmissions, clutches, disc brakes, anti-skid brake system, suspensions, oil pumps, power windows, power door locks, and more. Aisin operates sales and production subsidiaries worldwide.

Hyundai Mobis Co., Ltd. manufactures and markets automotive parts and equipment, such as  automotive service components, modules, and systems. The Company also contractsenvironmental projects, including sewage treatment plant and industrial waste water treatment plant construction.

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Hyundai Mobis (012330 KS)

Looking at Hyundai Mobis Spin-Off from a Swing Trading Perspective

This post looks at the Hyundai Mobis spin-off situation from a swing trade perspective, specifically a pair trade with Hyundai Motor.

Sanghyun Park

Hyundai Mobis: Plans to Spin Off Parts & Module Units

On 12 August, it was reported in numerous local media that Hyundai Mobis (012330 KS) plans to spin off its auto parts and module business units...

Douglas Kim

Lower Corporate Tax Rate in Korea Could Be an Extra Alpha Kicker

We believe that there is a relatively high probability that the Korean government will lower the highest corporate tax rate bracket from 25% to 22%...

Douglas Kim

A Substantial Trade Seems Lurking on Hyundai Mobis with Chung's Possible Stake Purchase

This post investigates a substantial trade that seems to be lurking on Hyundai Mobis at this price level, particularly relative to Glovis and...

Sanghyun Park

Joe Biden's Visit to South Korea: Hyundai Motor Ready to Announce $7 Billion Investment in EVs in US

Hyundai Motor is likely to announce investments of nearly $7 billion for building a mega EV facility in Georgia which was leaked in the media in...

Douglas Kim

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