Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

The Korea Exchange announced its KOSDAQ150 and KRX300 indices rebalances today. There were 17 new additions and 17 deletions for KOSDAQ150. Most of the stocks that were expected to be included in KOSDAQ 150 were officially included in the rebalance. However there were a few surprises. For example <a href="https://www.smartkarma.com/entities/nanos-co-ltd" target="_blank" data-smartkarma-citation="entities:16796:1" rel="noopener">Nanos Co Ltd (151910 KS),</a>which was one of the stocks that was expected to be included in KOSDAQ150, did not get included in this indext this time. On the other hand, the following stocks including <a href="https://www.smartkarma.com/entities/sang-a-frontec-co-ltd" target="_blank" data-smartkarma-citation="entities:20692:1" rel="noopener">Sang A Frontec (089980 KS)</a>, Novarex (194700 KS(, CIS (222080 KS), MedPacto (215980 KS), <a href="https://www.smartkarma.com/entities/koreacenter-com-co-ltd" target="_blank" data-smartkarma-citation="entities:28329:1" rel="noopener">Koreacenter.com Co Ltd (290510 KS)</a>, and Soulbrain (357780 KS) which were not on the top of the lists of getting selected into the KOSDAQ150 index by the locals, were formally selected be part of the new KOSDAQ150 inclusions.  The Korea Exchange also made changes to the KRX300 index. Although the KRX300 index is not currently as important as KOSPI200 and KOSDAQ150 indices, it is increasingly gaining in importance among the local institutional investors. The KRX300 had 33 new additions and 35 deletions.

The Korea Exchange announced its KOSDAQ150 and KRX300 indices rebalances today. There were 17 new additions and 17 deletions for KOSDAQ150. Most of the stocks that were expected to be included in KOSDAQ 150 were officially included in the rebalance. However there were a few surprises. For example Nanos Co Ltd (151910 KS),which was one of the stocks that was expected to be included in KOSDAQ150, did not get included in this indext this time. On the other hand, the following stocks including Sang A Frontec (089980 KS), Novarex (194700 KS(, CIS (222080 KS), MedPacto (215980 KS), Koreacenter.com Co Ltd (290510 KS), and Soulbrain (357780 KS) which were not on the top of the lists of getting selected into the KOSDAQ150 index by the locals, were formally selected be part of the new KOSDAQ150 inclusions.  The Korea Exchange also made changes to the KRX300 index. Although the KRX300 index is not currently as important as KOSPI200 and KOSDAQ150 indices, it is increasingly gaining in importance among the local institutional investors. The KRX300 had 33 new additions and 35 deletions. 

KOSDAQ150 and KRX300 Indices Rebalances (Overlapping Additions & Deletions)

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/2301" target="_blank" data-smartkarma-citation="entities:2301:1">Jeil Pharma Holdings (002620 KS)</a>' swap price for the tender offer to the <a href="https://www.smartkarma.com/entities/27529" target="_blank" data-smartkarma-citation="entities:27529:1">Jeil Pharmaceutical (271980 KS)</a> shareholders is set at ₩23,950 based on the Oct 19~23 VWAP at a 0% discount. The current spread is at 12.76% at the Oct 23 closing prices of ₩23,400 for Holdings and ₩46,800 for Pharmaceutical.</li>
<li>This is a small company and retail shareholders account for more than 80% of daily trading. So, liquidity may be an issue to many arb traders. Not only that, the major shareholder has nearly enough shares to meet the target (7M).</li>
<li>But the market is now hearing an interesting development within the major shareholder. It seems that only about 70% of the target will be taken by the major shareholder. Then, an actual room for arb traders to sneak in is about 30% of the target, which of course is still risky proration wise but not terribly thin either.</li>
<li>So, this event is certainly worthy of our attention. It'd not be easy to borrow Holdings shares, but if you can, then I suggest making this arb trade while the spread remains juicy enough.</li>
</ul>



Jeil Pharma Holdings (002620 KS)' swap price for the tender offer to the Jeil Pharmaceutical (271980 KS) shareholders is set at ₩23,950 based on the Oct 19~23 VWAP at a 0% discount. The current spread is at 12.76% at the Oct 23 closing prices of ₩23,400 for Holdings and ₩46,800 for Pharmaceutical.
This is a small company and retail shareholders account for more than 80% of daily trading. So, liquidity may be an issue to many arb traders. Not only that, the major shareholder has nearly enough shares to meet the target (7M).
But the market is now hearing an interesting development within the major shareholder. It seems that only about 70% of the target will be taken by the major shareholder. Then, an actual room for arb traders to sneak in is about 30% of the target, which of course is still risky proration wise but not terribly thin either.
So, this event is certainly worthy of our attention. It'd not be easy to borrow Holdings shares, but if you can, then I suggest making this arb trade while the spread remains juicy enough.


Huge Spread Opening in Jeil Pharma Holdings Tender Event: Spread Is Now at +12%

<a href="https://www.smartkarma.com/entities/2301" target="_blank" data-smartkarma-citation="entities:2301:1">Jeil Pharma Holdings (002620 KS)</a> made it official that it will target a total 7,000,000 <a href="https://www.smartkarma.com/entities/27529" target="_blank" data-smartkarma-citation="entities:27529:1">Jeil Pharmaceutical (271980 KS)</a> shares (47.6% of total shares) at ₩53,874 in order to complete the holding company conversion.<a href="https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20181004000582" target="_blank">Here is the link of the regulatory filing about this</a>. (Source: DART)Below is my own summary of this tender event.

Jeil Pharma Holdings (002620 KS) made it official that it will target a total 7,000,000 Jeil Pharmaceutical (271980 KS) shares (47.6% of total shares) at ₩53,874 in order to complete the holding company conversion.Here is the link of the regulatory filing about this. (Source: DART)Below is my own summary of this tender event.

Jeil Pharma Holdings (002620)​: ₩377bil Tender Event Summary

South Korea

Jeil Pharmaceutical Co.,Ltd. develops and distributes pharmaceutical products. The Company produces solid pharmaceuticals, injections, finished drugs, and antibiotics for the treatment of oncology, urology, neuropsychiatry, and endocrinology. Jeil Pharmaceutical markets its products worldwide.

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Jeil Pharmaceutical (271980 KS)

KOSDAQ150 and KRX300 Indices Rebalances (Overlapping Additions & Deletions)

We highlight the KOSDAQ150 and KRX300 indices rebalances. There are some interesting new names, especially among those that are over lapping in...

Douglas Kim

Huge Spread Opening in Jeil Pharma Holdings Tender Event: Spread Is Now at +12%

Jeil Pharma Holdings (002620 KS)' swap price for the tender offer to the Jeil Pharmaceutical (271980 KS) shareholders is set at ₩23,950 based on...

Sanghyun Park

Jeil Pharma Holdings (002620): ₩377bil Tender Event Summary

Jeil Pharma Holdings (002620 KS) made it official that it will target a total 7,000,000 Jeil Pharmaceutical (271980 KS) shares (47.6% of total...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

KOSDAQ150 and KRX300 Indices Rebalances (Overlapping Additions & Deletions)

We highlight the KOSDAQ150 and KRX300 indices rebalances. There are some interesting new names, especially among those that are over lapping in...

Douglas Kim

Huge Spread Opening in Jeil Pharma Holdings Tender Event: Spread Is Now at +12%

Jeil Pharma Holdings (002620 KS)' swap price for the tender offer to the Jeil Pharmaceutical (271980 KS) shareholders is set at ₩23,950 based on...

Sanghyun Park

Jeil Pharma Holdings (002620)​: ₩377bil Tender Event Summary

Jeil Pharma Holdings (002620 KS) made it official that it will target a total 7,000,000 Jeil Pharmaceutical (271980 KS) shares (47.6% of total...

Sanghyun Park

Jeil Pharma Holdings (002620): ₩377bil Tender Event Summary