Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>
<strong>KT&amp;G is a high conviction pick in 2024.</strong><strong>We believe KT&amp;G Corporation (033780 KS) is likely to announce cigarette price hikes in 2H 2024.</strong>
</li>
<li>Three major reasons include a) no cigarette price hikes in nearly 9 years, b) Korean legislative election will be in April 2024, and c) reduce government tax revenue shortfall.</li>
<li>We believe that the Korean government could raise cigarette prices to about 7,000 won to 8,000 won per pack from current price of 4,500 won. </li>
</ul>



KT&amp;G is a high conviction pick in 2024.We believe KT&amp;G Corporation (033780 KS) is likely to announce cigarette price hikes in 2H 2024.

Three major reasons include a) no cigarette price hikes in nearly 9 years, b) Korean legislative election will be in April 2024, and c) reduce government tax revenue shortfall.
We believe that the Korean government could raise cigarette prices to about 7,000 won to 8,000 won per pack from current price of 4,500 won. 


2024 High Conviction: [KT&G - Likely To Announce Cigarette Price Hikes in 2H24]

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>Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&amp;G Corporation are predicted to be excluded.</li>
<li>The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.</li>
<li>We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.</li>
</ul>


Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&amp;G Corporation are predicted to be excluded.
The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.


Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

Cross Asset Strategy

<ul>
<li>NPS adjusted holdings of 101 stocks in Korea as of 5 April 2023, of which it reduced ownership in 53 of them and raised ownership in 47 of them.</li>
<li>In this insight, we discuss 39 stocks major stocks in Korea which have experienced changes in their ownerships by the NPS in the past several weeks. </li>
<li>NPS has noticeably increased stakes in reopening related plays and it has also reduced stakes in numerous rechargeable battery related plays in the past several weeks. </li>
</ul>


NPS adjusted holdings of 101 stocks in Korea as of 5 April 2023, of which it reduced ownership in 53 of them and raised ownership in 47 of them.
In this insight, we discuss 39 stocks major stocks in Korea which have experienced changes in their ownerships by the NPS in the past several weeks. 
NPS has noticeably increased stakes in reopening related plays and it has also reduced stakes in numerous rechargeable battery related plays in the past several weeks. 


Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>The 200 largest weighted companies in the GEM index reported average EPS growth of +14.2%y/y for 4Q22-to-date, slightly down from the +15.7% reported for 3Q22.</li>
<li>Only 54% of companies delivered positive sales surprises, and only 49% delivered positive EPS surprises, significantly down from the trend seen over the past 2 years.</li>
<li>Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.</li>
</ul>


The 200 largest weighted companies in the GEM index reported average EPS growth of +14.2%y/y for 4Q22-to-date, slightly down from the +15.7% reported for 3Q22.
Only 54% of companies delivered positive sales surprises, and only 49% delivered positive EPS surprises, significantly down from the trend seen over the past 2 years.
Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.


Global Emerging Markets: Reporting Season Summary, 4Q2022

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<ul>
<li>After a multi-year drop in ownership, Global EM fund exposure in the Tobacco sector is on the rise.</li>
<li>Tobacco remains heavily under-owned, but key EM funds are raising allocations, led by GQG Partners, Virtus, BNY Mellon and Allianz. </li>
<li>ITC Limited has been a key beneficiary of inflows and stands as the most widely owned stock in the sector, followed by KT&amp;G Corp.</li>
</ul>


After a multi-year drop in ownership, Global EM fund exposure in the Tobacco sector is on the rise.
Tobacco remains heavily under-owned, but key EM funds are raising allocations, led by GQG Partners, Virtus, BNY Mellon and Allianz. 
ITC Limited has been a key beneficiary of inflows and stands as the most widely owned stock in the sector, followed by KT&amp;G Corp.


Investors Return to Tobacco Stocks After Multi-Year Decline

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)

2024 High Conviction: [KT&G - Likely To Announce Cigarette Price Hikes in 2H24]

KT&G is a high conviction pick in 2024. We believe KT&G is likely to announce cigarette price hikes in 2H 2024. The company has not raised...

Douglas Kim

Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

This post presents a Long Short basket trade idea on the four potential constituent changes in the KODEX Top 5 Plus TR ETF rebalancing in June.

Sanghyun Park

Recent NPS Buys and Sells in Korea

In this insight, we discuss 39 stocks major stocks in Korea which have experienced changes in their ownerships by the NPS in the past several weeks.

Douglas Kim

Global Emerging Markets: Reporting Season Summary, 4Q2022

In this quarterly insight, we analyse recent GEM reporting trends with reference to Sales and EPS growth, size and percentage of positive...

Wium Malan, CFA

Investors Return to Tobacco Stocks After Multi-Year Decline

After a multi-year drop in ownership, Global Emerging Market fund exposure in the Tobacco Industry group is on the rise.

Steven Holden

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