Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 26 October, a Singaporean private equity firm called Flashlight Capital Partners started to go activist on KT&amp;G demanding that the company spin-off its ginseng business to improve shareholder value.</li>
<li>While a spin-off of the ginseng business is not likely near term, the company could buyback more shares and sell more non-core assets which could soothe Flashlight Capital Partners.</li>
<li>Back in June 2022, we wrote a prescient insight called<em> KT&amp;G Is a Prime Candidate for Corporate Activism in Korea. </em>
</li>
</ul>


On 26 October, a Singaporean private equity firm called Flashlight Capital Partners started to go activist on KT&amp;G demanding that the company spin-off its ginseng business to improve shareholder value.
While a spin-off of the ginseng business is not likely near term, the company could buyback more shares and sell more non-core assets which could soothe Flashlight Capital Partners.
Back in June 2022, we wrote a prescient insight called KT&amp;G Is a Prime Candidate for Corporate Activism in Korea. 



Flashlight Capital Partners Goes Activist on KT&G

<ul>
<li>In this insight, we discuss the major reasons why KT&amp;G Corporation (033780 KS) is a prime candidate for corporate activism in Korea.</li>
<li>KT&amp;G shares are up 0.6% YTD, outperforming KOSPI which is down 16.3%. We believe KT&amp;G shares are well poised to continue to outperform the market in the next 6-12 months. </li>
<li>Corporate activists may be looking to force KT&amp;G to cancel treasury shares. Also, there can be a case made to separate the non-tobacco businesses (including ginseng) from KT&amp;G. </li>
</ul>


In this insight, we discuss the major reasons why KT&amp;G Corporation (033780 KS) is a prime candidate for corporate activism in Korea.
KT&amp;G shares are up 0.6% YTD, outperforming KOSPI which is down 16.3%. We believe KT&amp;G shares are well poised to continue to outperform the market in the next 6-12 months. 
Corporate activists may be looking to force KT&amp;G to cancel treasury shares. Also, there can be a case made to separate the non-tobacco businesses (including ginseng) from KT&amp;G. 


KT&G Is a Prime Candidate for Corporate Activism in Korea

<ul>
<li>One of the biggest news facing KT&amp;G this year as been a class action lawsuit against KT&amp;G's directors by Flashlight Capital Partners.</li>
<li>KT&amp;G announced that it will cancel 3.5 million shares (about 315 billion won) on 16 February, which represent 2.6% of its outstanding shares and 16.7% of treasury shares.</li>
<li>One of the major reasons why we remain positive on KT&amp;G is that there is a relatively high probability of the company announcing cigarette price hikes in 2H 2024.</li>
</ul>


One of the biggest news facing KT&amp;G this year as been a class action lawsuit against KT&amp;G's directors by Flashlight Capital Partners.
KT&amp;G announced that it will cancel 3.5 million shares (about 315 billion won) on 16 February, which represent 2.6% of its outstanding shares and 16.7% of treasury shares.
One of the major reasons why we remain positive on KT&amp;G is that there is a relatively high probability of the company announcing cigarette price hikes in 2H 2024.


A First Major Class Action Lawsuit Against KT&G's Directors by FCP + KT&G's Results Analysis in 2023

Douglas Research Advisory

Cross Asset Strategy

<ul>
<li>Capitalizing on the lower share prices combined with the government's pressure for Corporate Value up improvements, the share buybacks surged in Korea in 2024.</li>
<li>As of 27 December 2024, the total treasury shares planned acquisition amount by Korean companies increased by 215% YoY to 11.83 trillion won in 2024.</li>
<li>There have been some mixed share price performances among the companies announcing meaningful share buyback/cancellation announcements this year.</li>
</ul>


Capitalizing on the lower share prices combined with the government's pressure for Corporate Value up improvements, the share buybacks surged in Korea in 2024.
As of 27 December 2024, the total treasury shares planned acquisition amount by Korean companies increased by 215% YoY to 11.83 trillion won in 2024.
There have been some mixed share price performances among the companies announcing meaningful share buyback/cancellation announcements this year.


Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of KRX stocks as of Dec 13th which has an aggregated short interest worth USD3.7bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in SEM, KT&amp;G, Samsung C&amp;T.</li>
</ul>


We analyzed the changes in short interest of KRX stocks as of Dec 13th which has an aggregated short interest worth USD3.7bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in SEM, KT&amp;G, Samsung C&amp;T.


KRX Short Interest Weekly (Dec 13th):SEM, KT&G, Samsung C&T

South Korea

KT&G Corporation processes, produces, and sells cigarettes and other tobacco products.  The Company, through its subsidiaries, manufactures ginseng products such as red ginseng tea and herbal medicines.  KT&G is also involved in real estate development of its former factory sites.

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KT&G Corporation (033780 KS)

Flashlight Capital Partners Goes Activist on KT&G

On 26 October, a Singaporean firm called Flashlight Capital Partners started to go activist on KT&G demanding that the company spin-off its ginseng...

Douglas Kim

KT&G Is a Prime Candidate for Corporate Activism in Korea

In this insight, we discuss the major reasons why KT&G Corporation (033780 KS) is a prime candidate for corporate activism in Korea.

Douglas Kim

A First Major Class Action Lawsuit Against KT&G's Directors by FCP + KT&G's Results Analysis in 2023

One of the biggest news facing KT&G this year has been a class action lawsuit against KT&G's directors by Flashlight Capital Partners.

Douglas Kim

KRX Short Interest Weekly (Dec 13th):SEM, KT&G, Samsung C&T

We analyzed KRX short interest report for the past week and highlighted short interest changes in SEM, KT&G, Samsung C&T.

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Flashlight Capital Partners Goes Activist on KT&G

On 26 October, a Singaporean firm called Flashlight Capital Partners started to go activist on KT&G demanding that the company spin-off its ginseng...

Douglas Kim

KT&G Is a Prime Candidate for Corporate Activism in Korea

In this insight, we discuss the major reasons why KT&G Corporation (033780 KS) is a prime candidate for corporate activism in Korea.

Douglas Kim

A First Major Class Action Lawsuit Against KT&G's Directors by FCP + KT&G's Results Analysis in 2023

One of the biggest news facing KT&G this year has been a class action lawsuit against KT&G's directors by Flashlight Capital Partners.

Douglas Kim

Surging Share Buybacks in Korea in 2024

Capitalizing on the lower share prices combined with the government's pressure for Corporate Value up improvements, the share buybacks surged in...

Douglas Kim

KRX Short Interest Weekly (Dec 13th):SEM, KT&G, Samsung C&T

We analyzed KRX short interest report for the past week and highlighted short interest changes in SEM, KT&G, Samsung C&T.

Ke Yan, CFA, FRM