Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<p>On 19 March, <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a> announced that it will split the operating division (surviving company) and the investment division (Newco company that is being split off). The split off Newco will then be merged with <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>. </p><p><strong>Need to Repay Doosan Infracore Shorts - </strong>As of 18 March, there were 12.56 million shares shorts outstanding for Doosan Infracore, representing 3.4% of total outstanding shares. At the current price of 9,880 won, this represents 124 billion won. There were 61 million shares of Doosan Infracore that were traded on Monday, 21 March and probably a good chunk of these shorted shares were covered. According to Korean regulations, prior to the Newco being formed, the investors that were shorted on the company need to repay them and this was one of the main reasons why Doosan Infracore's shares jumped 21% on Monday. </p><div class="content-highlight"><p><em>The Insight has been marked Bullish since we expect the split off and merger of Doosan Infracore's investment assets to DHIC is likely to result in a higher re-rating of the company's core operating business (construction equipment). There are also signs that the overseas construction business is rebounding in China, which should have a positive impact on Doosan Infracore. In addition, the creation of the Newco (and the getting rid of the previous company's shareholders' list) results in the need for the Doosan Infracore's shorts to cover. </em></p></div>

On 19 March, Doosan Infracore (042670 KS) announced that it will split the operating division (surviving company) and the investment division (Newco company that is being split off). The split off Newco will then be merged with Doosan Heavy Industries &amp; Construction (034020 KS). Need to Repay Doosan Infracore Shorts - As of 18 March, there were 12.56 million shares shorts outstanding for Doosan Infracore, representing 3.4% of total outstanding shares. At the current price of 9,880 won, this represents 124 billion won. There were 61 million shares of Doosan Infracore that were traded on Monday, 21 March and probably a good chunk of these shorted shares were covered. According to Korean regulations, prior to the Newco being formed, the investors that were shorted on the company need to repay them and this was one of the main reasons why Doosan Infracore's shares jumped 21% on Monday. The Insight has been marked Bullish since we expect the split off and merger of Doosan Infracore's investment assets to DHIC is likely to result in a higher re-rating of the company's core operating business (construction equipment). There are also signs that the overseas construction business is rebounding in China, which should have a positive impact on Doosan Infracore. In addition, the creation of the Newco (and the getting rid of the previous company's shareholders' list) results in the need for the Doosan Infracore's shorts to cover. 

Doosan Infracore: Investco Split Off & Merger Ratio Announced

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> and <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>. Shorts increased in Financials and Health Care stocks, and decreased on Consumer Discretionary, Industrials, Communication Services, Information Technology and Real Estate names.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a>, <a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> and <a href="https://www.smartkarma.com/entities/miura-co-ltd" target="_blank" data-smartkarma-citation="entities:20185:1" rel="noopener">Miura Co Ltd (6005 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-corp-aichi" target="_blank" data-smartkarma-citation="entities:12942:1" rel="noopener">Fuji Machine Mfg (6134 JP)</a>, <a href="https://www.smartkarma.com/entities/casio-computer-co-ltd" target="_blank" data-smartkarma-citation="entities:18338:1" rel="noopener">Casio Computer (6952 JP)</a> and <a href="https://www.smartkarma.com/entities/ricoh-company-ltd" target="_blank" data-smartkarma-citation="entities:15359:1" rel="noopener">Ricoh Company Ltd (7752 JP)</a>. Sectorally, shorts increased on Consumer Discretionary, Real Estate and Financials, while shorts were covered on Consumer Staples.</p></div><div><p>In Korea, the biggest increase in shorts were seen on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Hyundai Heavy Industries (009540 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" data-smartkarma-citation="entities:26190:1" rel="noopener">Sk Chemicals Co Ltd/New (285130 KS)</a>, <a href="https://www.smartkarma.com/entities/s-oil-corp" target="_blank" data-smartkarma-citation="entities:1667:1" rel="noopener">S Oil Corp (010950 KS)</a> and <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a>, <a href="https://www.smartkarma.com/entities/wiwynn-corp" target="_blank" data-smartkarma-citation="entities:27838:1" rel="noopener">Wiwynn Corp (6669 TT)</a>, <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a> and <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a>, <a href="https://www.smartkarma.com/entities/century-iron-steel-indus" target="_blank" data-smartkarma-citation="entities:8853:1" rel="noopener">Century Iron &amp; Steel Indus (9958 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a> and <a href="https://www.smartkarma.com/entities/formosa-petrochemical-corp" target="_blank" data-smartkarma-citation="entities:20875:1" rel="noopener">Formosa Petrochemical (6505 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Ping An Insurance (H) (2318 HK), Alibaba Group (9988 HK), Haier Electronics Group Co (1169 HK) and Ping An Healthcare and Technology Company Limited (1833 HK) while there was short covering on Meituan (3690 HK), Tencent Holdings (700 HK), Sunny Optical (2382 HK) and AIA Group Ltd (1299 HK). Shorts increased in Financials and Health Care stocks, and decreased on Consumer Discretionary, Industrials, Communication Services, Information Technology and Real Estate names.In Japan, stocks that saw the most shorts were Itochu Corp (8001 JP), Nippon Building Fund (8951 JP), Mercari Inc (4385 JP) and Miura Co Ltd (6005 JP) while shorts decreased on Toshiba Corp (6502 JP), Fuji Machine Mfg (6134 JP), Casio Computer (6952 JP) and Ricoh Company Ltd (7752 JP). Sectorally, shorts increased on Consumer Discretionary, Real Estate and Financials, while shorts were covered on Consumer Staples.In Korea, the biggest increase in shorts were seen on Hyundai Motor Co (005380 KS), Hyundai Heavy Industries (009540 KS) and Samsung SDI (006400 KS) while shorts were covered on Amorepacific Corp (090430 KS), Sk Chemicals Co Ltd/New (285130 KS), S Oil Corp (010950 KS) and HMM Co., Ltd. (011200 KS). Stocks in Taiwan that saw the highest increase in shorts were Asustek Computer (2357 TT), Wiwynn Corp (6669 TT), Acer Inc (2353 TT) and Largan Precision (3008 TT) while shorts were covered on Unimicron Technology (3037 TT), Century Iron &amp; Steel Indus (9958 TT), Yageo Corporation (2327 TT) and Formosa Petrochemical (6505 TT). 

Asia Short Interest Weekly: Haier, Sunny Optical, Itochu, Mercari, Toshiba, HMM, Asustek, Acer

<p><a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-holdings" target="_blank" data-smartkarma-citation="entities:24075:1" rel="noopener">Hyundai Heavy Industries Holdings (267250 KS)</a> (HHIH) announced on February 6th a big share buyback program involving 488,000 shares for the purpose of cancellation, representing 3% of shares outstanding.</p><p>Among the recent large-cap share buybacks in Korea, the biggest one has been by <a href="https://www.smartkarma.com/entities/sk-innovation-co-ltd" target="_blank" data-smartkarma-citation="entities:1268:1" rel="noopener">Sk Innovation (096770 KS)</a>, which announced a major share buyback program at the end of January 2020. Although SK Innovation's share buyback accounts for 5% of shares outstanding, which is bigger than HHIH's share buyback (representing 3% of shares outstanding), one could argue that HHIH's share buyback could have a greater impact on its share price as compared to the one conducted by SK Innovation since HHIH's share buyback involves share cancellation whereas the one by SK Innovation does not.   </p><div class="content-highlight"><p>Our base case valuation of Hyundai Heavy Industries Holdings is 405,150 won, which represents a 33% upside from current levels. </p></div>

Hyundai Heavy Industries Holdings (267250 KS) (HHIH) announced on February 6th a big share buyback program involving 488,000 shares for the purpose of cancellation, representing 3% of shares outstanding.Among the recent large-cap share buybacks in Korea, the biggest one has been by Sk Innovation (096770 KS), which announced a major share buyback program at the end of January 2020. Although SK Innovation's share buyback accounts for 5% of shares outstanding, which is bigger than HHIH's share buyback (representing 3% of shares outstanding), one could argue that HHIH's share buyback could have a greater impact on its share price as compared to the one conducted by SK Innovation since HHIH's share buyback involves share cancellation whereas the one by SK Innovation does not.   Our base case valuation of Hyundai Heavy Industries Holdings is 405,150 won, which represents a 33% upside from current levels. 

Hyundai Heavy Industries Holdings: A Big Share Buyback & SOTP Valuation Sensitivity Analysis

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

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

<p>Hyundai Electric announces a ₩150bil rights offer. Capital increase rate is 77% with a 44% dilution. There will be a 0.62 new share for each old share as 20% will go to ESOP. Again, this also has a 20% oversubscription privilege. Its major shareholder HHIH (267250) is saying it will go for full subscription including 20% oversubscription. </p>

Hyundai Electric announces a ₩150bil rights offer. Capital increase rate is 77% with a 44% dilution. There will be a 0.62 new share for each old share as 20% will go to ESOP. Again, this also has a 20% oversubscription privilege. Its major shareholder HHIH (267250) is saying it will go for full subscription including 20% oversubscription. 

Hyundai Electrics Rights Offer: Summary & Approach

Thematic (Sector/Industry)

<p><strong>The top 10 events impacting the Korean stock market, economy, &amp; politics in May were as follows:</strong></p><ul>
<li>US GOVERNMENT PRESSURES KOREAN GOVERNMENT TO BAN HUAWEI</li>
<li>WHO WILL BUY NEXON? </li>
<li>CONTINUED WEAKNESS OF SEMICONDUCTOR SECTOR</li>
<li>NEW ADDITIONS &amp; DELETIONS TO KOSPI 200</li>
<li>STRONG GROWTH OF 5G SUBSCRIBERS</li>
<li>TERRIBLE KOSPI PERFORMANCE &amp; A FEW OUT-PERFORMERS INCLUDING LG ELECTRONICS</li>
<li>HYUNDAI HEAVY INDUSTRIES INCORPORATES BLOCKCHAIN INTO ITS SUPPLY CHAIN SYSTEM</li>
<li>AEKYUNG GROUP INITIALLY SHOWING THE MOST INTEREST IN ACQUIRING ASIANA AIRLINES</li>
<li>ANOTHER SELL-DOWN OF CELLTRION SHARES BY ONE EQUITY PARTNERS</li>
<li>KRW CONTINUES TO BE WEAK</li>
</ul><p><strong>The top three reports we wrote in May related to the Korean market were as follows (in terms of views &amp; appreciates): </strong></p><ul>
<li><strong><a href="https://www.smartkarma.com/insights/who-officially-decides-gaming-addiction-disorder-as-a-disease-impact-on-the-nexon-sale" target="_blank" data-smartkarma-citation="insights:30032">WHO Officially Decides Gaming Addiction Disorder as A "Disease" - Impact on the Nexon Sale?</a></strong></li>
<li><strong><a href="https://www.smartkarma.com/insights/trump-pressures-the-korean-government-to-ban-huawei-in-korea-the-biggest-gray-rhino-event-of-2019" target="_blank" data-smartkarma-citation="insights:29985">Trump Pressures the Korean Government to Ban Huawei in Korea - The Biggest Gray Rhino Event of 2019?</a></strong></li>
<li><strong><a href="https://www.smartkarma.com/insights/new-additions-deletions-to-kospi-200-kospi-100-kospi-50-kosdaq-150-krx-300-indices" target="_blank" data-smartkarma-citation="insights:29945">New Additions &amp; Deletions to KOSPI 200, KOSPI 100, KOSPI 50, KOSDAQ 150, &amp; KRX 300 Indices</a></strong></li>
</ul><p>Our model portfolio was down net 4.1% in May (cash is 35% of model portfolio), outperforming KOSPI which was down 7.3% in May. Our model portfolio is equal-weighted at the beginning of each month. The top performing stocks in our model portfolio in May included <a href="https://www.smartkarma.com/entities/lg-electronics-inc" target="_blank" data-smartkarma-citation="entities:8814:1">Lg Electronics (066570 KS)</a>, Shinheung SEC (243840 KS), and <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1">LG Corp (003550 KS)</a>. The worst performing stocks in our model portfolio in the past month included <a href="https://www.smartkarma.com/entities/nongshim-co-ltd" target="_blank" data-smartkarma-citation="entities:14122:1">Nongshim Co Ltd (004370 KS)</a>, <a href="https://www.smartkarma.com/entities/cms-edu-co-ltd" target="_blank" data-smartkarma-citation="entities:26183:1">CMS Edu Co Ltd (225330 KS)</a>, and <a href="https://www.smartkarma.com/entities/s-fuelcell-co-ltd" target="_blank" data-smartkarma-citation="entities:27423:1">S-Fuelcell (288620 KS)</a>. </p><p>We are raising the cash portion of the model portfolio to 60% (from 65% previously) starting June to be more conservative. We are also taking out TBT (US), XLB (US), and <a href="https://www.smartkarma.com/entities/sindoh-co-ltd" target="_blank" data-smartkarma-citation="entities:11641:1">Sindoh Co Ltd (029530 KS)</a> from our model portfolio. </p>

The top 10 events impacting the Korean stock market, economy, &amp; politics in May were as follows:
US GOVERNMENT PRESSURES KOREAN GOVERNMENT TO BAN HUAWEI
WHO WILL BUY NEXON? 
CONTINUED WEAKNESS OF SEMICONDUCTOR SECTOR
NEW ADDITIONS &amp; DELETIONS TO KOSPI 200
STRONG GROWTH OF 5G SUBSCRIBERS
TERRIBLE KOSPI PERFORMANCE &amp; A FEW OUT-PERFORMERS INCLUDING LG ELECTRONICS
HYUNDAI HEAVY INDUSTRIES INCORPORATES BLOCKCHAIN INTO ITS SUPPLY CHAIN SYSTEM
AEKYUNG GROUP INITIALLY SHOWING THE MOST INTEREST IN ACQUIRING ASIANA AIRLINES
ANOTHER SELL-DOWN OF CELLTRION SHARES BY ONE EQUITY PARTNERS
KRW CONTINUES TO BE WEAK
The top three reports we wrote in May related to the Korean market were as follows (in terms of views &amp; appreciates): 
WHO Officially Decides Gaming Addiction Disorder as A "Disease" - Impact on the Nexon Sale?
Trump Pressures the Korean Government to Ban Huawei in Korea - The Biggest Gray Rhino Event of 2019?
New Additions &amp; Deletions to KOSPI 200, KOSPI 100, KOSPI 50, KOSDAQ 150, &amp; KRX 300 Indices
Our model portfolio was down net 4.1% in May (cash is 35% of model portfolio), outperforming KOSPI which was down 7.3% in May. Our model portfolio is equal-weighted at the beginning of each month. The top performing stocks in our model portfolio in May included Lg Electronics (066570 KS), Shinheung SEC (243840 KS), and LG Corp (003550 KS). The worst performing stocks in our model portfolio in the past month included Nongshim Co Ltd (004370 KS), CMS Edu Co Ltd (225330 KS), and S-Fuelcell (288620 KS). We are raising the cash portion of the model portfolio to 60% (from 65% previously) starting June to be more conservative. We are also taking out TBT (US), XLB (US), and Sindoh Co Ltd (029530 KS) from our model portfolio. 

Korea Stock Market Monthly Recap #36 (May 2019)

South Korea

HD Korea Shipbuilding & Offshore Engineering Co., Ltd. operates as a shipbuilding and offshore company. The Company provides industrial plant engineering, special and naval shipbuilding, marine engine and machinery, industrial machinery and energy services. HD Korea Shipbuilding & Offshore Engineering markets its products worldwide.

HD Korea Shipbuilding & Offshore Engineering (009540 KS)

HD Korea Shipbuilding & Offshore Engineering

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
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Dividend (Yield)	0.00

HD Korea Shipbuilding & Offshore Engineering (009540 KS)

Doosan Infracore: Investco Split Off & Merger Ratio Announced

We expect the split off and merger of Doosan Infracore's investment assets to DHIC is likely to result in a higher re-rating of the company's core...

Douglas Kim

Asia Short Interest Weekly: Haier, Sunny Optical, Itochu, Mercari, Toshiba, HMM, Asustek, Acer

This Insight looks at short interest movements in stocks across Asian markets and highlights stocks that have seen large increase/ decrease in...

Brian Freitas

Hyundai Electrics Rights Offer: Summary & Approach

Hyundai Electric announces a ₩150bil rights offer. Capital increase rate is 77% with a 44% dilution. There will be a 0.62 new share for each old...

Sanghyun Park

Korea Stock Market Monthly Recap #36 (May 2019)

The top 10 events impacting the Korean stock market, economy, & politics in May were as follows: US GOVERNMENT PRESSURES KOREAN GOVERNMENT TO...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Doosan Infracore: Investco Split Off & Merger Ratio Announced

We expect the split off and merger of Doosan Infracore's investment assets to DHIC is likely to result in a higher re-rating of the company's core...

Douglas Kim

Asia Short Interest Weekly: Haier, Sunny Optical, Itochu, Mercari, Toshiba, HMM, Asustek, Acer

This Insight looks at short interest movements in stocks across Asian markets and highlights stocks that have seen large increase/ decrease in...

Brian Freitas

Hyundai Heavy Industries Holdings: A Big Share Buyback & SOTP Valuation Sensitivity Analysis

Hyundai Heavy Industries Holdings (267250 KS) (HHIH) announced on February 6th a big share buyback program involving 488,000 shares for the purpose...

Douglas Kim

Hyundai Electrics Rights Offer: Summary & Approach

Hyundai Electric announces a ₩150bil rights offer. Capital increase rate is 77% with a 44% dilution. There will be a 0.62 new share for each old...

Sanghyun Park

Korea Stock Market Monthly Recap #36 (May 2019)

The top 10 events impacting the Korean stock market, economy, & politics in May were as follows: US GOVERNMENT PRESSURES KOREAN GOVERNMENT TO...

Douglas Kim