Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<ul>
<li>In this insight, we discuss the recent buying and selling by the Korea National Pension Service (NPS) of Korean stocks.</li>
<li>Of the 176 Korean stocks in which NPS reported changes in ownerships in 2Q 2022, NPS increased its stakes in 115 companies and reduced stakes in 61 companies.</li>
<li>NPS mostly increased stakes in aerospace, defense, construction equipment, and energy sectors while reducing stakes in telecom and tourism related stocks.</li>
</ul>


In this insight, we discuss the recent buying and selling by the Korea National Pension Service (NPS) of Korean stocks.
Of the 176 Korean stocks in which NPS reported changes in ownerships in 2Q 2022, NPS increased its stakes in 115 companies and reduced stakes in 61 companies.
NPS mostly increased stakes in aerospace, defense, construction equipment, and energy sectors while reducing stakes in telecom and tourism related stocks.


NPS Sells SK Bioscience, Naver, & LG Electronics and Buys Kakao Bank, Lotte Corp, & Samyang Foods

Event-Driven

Lotte Chilsung Beverage Co / Event-Driven

<ul>
<li>After the market close today, Lotte Chilsung Beverage Co announced that there will be a block deal sale of the company (200,000 shares), representing 2.15% of total outstanding shares.</li>
<li>The discount rate range is 185,250 won to 189,150 won, which are 3% to 5% discount from the closing price today (195,000 won). </li>
<li>We have a Positive view on Lotte Chilsung Beverage and we would take this deal. </li>
</ul>


After the market close today, Lotte Chilsung Beverage Co announced that there will be a block deal sale of the company (200,000 shares), representing 2.15% of total outstanding shares.
The discount rate range is 185,250 won to 189,150 won, which are 3% to 5% discount from the closing price today (195,000 won). 
We have a Positive view on Lotte Chilsung Beverage and we would take this deal. 


Lotte Chilsung Beverage: Block Deal Sale by Hotel Lotte

<ul>
<li>On 23 March, it was announced that Lotte Confectionery (280360 KS) (market cap of 744 billion won) will merge with Lotte Food (002270 KS) (market cap of 395 billion won).</li>
<li>We believe this merger will have a positive impact on the shares of Lotte Confectionery and Lotte Food.</li>
<li>Lotte Confectionery and Lotte Food are not currently included in the KOSPI200. There will be a growing likelihood that the combined entity could be included in the KOSPI200 index. </li>
</ul>


On 23 March, it was announced that Lotte Confectionery (280360 KS) (market cap of 744 billion won) will merge with Lotte Food (002270 KS) (market cap of 395 billion won).
We believe this merger will have a positive impact on the shares of Lotte Confectionery and Lotte Food.
Lotte Confectionery and Lotte Food are not currently included in the KOSPI200. There will be a growing likelihood that the combined entity could be included in the KOSPI200 index. 


A Merger Between Lotte Confectionery and Lotte Food: An Alpha Generating Event

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.

<p>One noteworthy news came out on Hanssem. One of Korea's local first-tier economic newspapers, Seoul Economic Daily, put out an exclusive report after the market closed on Monday, precisely at 4:50 pm local time. The report says that IMM Private Equity, which will acquire a 27.7% stake held by Hanssem's major shareholder, has decided to cancel Hanssem's treasury stock (26.7%) after the acquisition.</p><p><a href="https://signalm.sedaily.com/NewsView/22RMLWH489/GX1101" target="_blank" rel="noopener">Here is the link to the news report by Seoul Economic Daily.</a></p><div class="content-highlight"><p>Hanssem currently has <strong>6,274,504 treasury shares</strong>, representing <strong>26.66%</strong> of the shares outstanding.</p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/124/original/1.png?1632755230" class="editor-image img-responsive" data-smartkarma-image-id="232124"></figure></section><div class="content-caption">(Source: FnGuide)</div><p>This news flowed into the market around 5 pm and made some impact in the after-hours single-price trading window. The share closed with a 0.84% gain during the regular trading hours and enjoyed an additional 3%p increase in the last 30 minutes of the after-hours single-price trading window. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/125/original/2.png?1632756022" class="editor-image img-responsive" data-smartkarma-image-id="232125"></figure></section><div class="content-caption">(Source: Shinhan HTS)</div><p>However, as the number of shares traded during this after-hours trading window was less than 3,000, it is still too early to accurately estimate the impact this news will have on the share price in the short term.</p>

One noteworthy news came out on Hanssem. One of Korea's local first-tier economic newspapers, Seoul Economic Daily, put out an exclusive report after the market closed on Monday, precisely at 4:50 pm local time. The report says that IMM Private Equity, which will acquire a 27.7% stake held by Hanssem's major shareholder, has decided to cancel Hanssem's treasury stock (26.7%) after the acquisition.Here is the link to the news report by Seoul Economic Daily.Hanssem currently has 6,274,504 treasury shares, representing 26.66% of the shares outstanding.(Source: FnGuide)This news flowed into the market around 5 pm and made some impact in the after-hours single-price trading window. The share closed with a 0.84% gain during the regular trading hours and enjoyed an additional 3%p increase in the last 30 minutes of the after-hours single-price trading window. (Source: Shinhan HTS)However, as the number of shares traded during this after-hours trading window was less than 3,000, it is still too early to accurately estimate the impact this news will have on the share price in the short term.

IMM PE Has Reportedly Decided to Cancel Hanssem's 26.7% Treasury Shares

Equity Capital Markets

<div class="content-highlight">
<p><a href="https://www.kedglobal.com/newsView/ked202105310007" target="_blank" rel="noopener">Lotte Rental</a> is getting ready to complete its IPO in Korea in 2H 2021 (around September). It has been reported in the media that the company may be seeking a valuation of about 2 trillion won ($1.8 billion). </p>
</div>
<p>The company generated total revenue of 2.3 trillion won (up 9.8% YoY) and an operating profit of 164.3 billion won (up 25.9% YoY) in 2020. From 2018 to 2020, it had an average operating margin of 6.6%. Despite the company's improving income statement, it has a leveraged balance sheet and it will try to improve its balance sheet through an IPO. </p>


Lotte Rental is getting ready to complete its IPO in Korea in 2H 2021 (around September). It has been reported in the media that the company may be seeking a valuation of about 2 trillion won ($1.8 billion). 

The company generated total revenue of 2.3 trillion won (up 9.8% YoY) and an operating profit of 164.3 billion won (up 25.9% YoY) in 2020. From 2018 to 2020, it had an average operating margin of 6.6%. Despite the company's improving income statement, it has a leveraged balance sheet and it will try to improve its balance sheet through an IPO. 

South Korea

LOTTE Corporation is a pure holding company of Lotte Group Korea. It was established in 2017. Lotte Group Korea develops various high quality products and services in the five main business areas: food production/sales, distribution, sightseeing service, heavy chemical/construction and finance/investment.

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LOTTE Corporation (004990 KS)

NPS Sells SK Bioscience, Naver, & LG Electronics and Buys Kakao Bank, Lotte Corp, & Samyang Foods

NPS moves the Korean stock market more than any other investor. In this insight, we discuss the recent buying and selling by the Korea National...

Douglas Kim

Lotte Chilsung Beverage: Block Deal Sale by Hotel Lotte

After the market close today, Lotte Chilsung Beverage Co announced that there will be a block deal sale of the company (200,000 shares),...

Douglas Kim

A Merger Between Lotte Confectionery and Lotte Food: An Alpha Generating Event

The merger between Lotte Confectionery and Lotte Food is an alpha generating event. There are numerous opportunities to streamline their operations...

Douglas Kim

IMM PE Has Reportedly Decided to Cancel Hanssem's 26.7% Treasury Shares

IMM PE has reportedly decided to cancel Hanssem's treasury shares (26.7%). This post examines two reasons behind this decision and the dynamic we...

Sanghyun Park

Initial Thoughts on the Lotte Rental IPO

Lotte Rental is getting ready to complete its IPO in Korea in 2H 2021. It has been reported in the media that the company may be seeking a...

Douglas Kim

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