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/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 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/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> while there was short covering 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/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC) (981 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>. Shorts increased on Real Estate, Consumer Discretionary, Consumer Staples and Materials, and decreased on Financials , Information Technology, Health Care and Communication Services.</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/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro Inc (4704 JP)</a>, <a href="https://www.smartkarma.com/entities/seiko-epson-corp" target="_blank" data-smartkarma-citation="entities:16793:1" rel="noopener">Seiko Epson (6724 JP)</a> and <a href="https://www.smartkarma.com/entities/bank-of-kyoto-ltd" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank Of Kyoto (8369 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/ana-holdings-inc" target="_blank" data-smartkarma-citation="entities:5308:1" rel="noopener">Ana Holdings (9202 JP)</a>, <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a> and <a href="https://www.smartkarma.com/entities/kubota-corp" target="_blank" data-smartkarma-citation="entities:12926:1" rel="noopener">Kubota Corp (6326 JP)</a>. Sectorally, shorts increased on Information Technology and Financials, while decreasing on Consumer Discretionary,  Industrials, Consumer Staples and Real Estate.</p></div><div><p>In Korea, there were short positions put on in <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <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/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> while shorts were covered in <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>, <a href="https://www.smartkarma.com/entities/mirae-asset-daewoo-co-ltd-b50c4d95-1687-46cb-9b58-f79ce0e72670" target="_blank" data-smartkarma-citation="entities:12061:1" rel="noopener">Mirae Asset Daewoo (006800 KS)</a>, <a href="https://www.smartkarma.com/entities/hanwha-life-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:2163:1" rel="noopener">Hanwha Life Insurance (088350 KS)</a> and <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>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a>, <a href="https://www.smartkarma.com/entities/foxconn-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:11950:1" rel="noopener">Foxconn Technology (2354 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/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a> and <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 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 Smoore International (6969 HK), Tencent Holdings (700 HK), JD.com (HK) (9618 HK) and Haidilao (6862 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK), China Mobile (941 HK) and HSBC Holdings (5 HK). Shorts increased on Real Estate, Consumer Discretionary, Consumer Staples and Materials, and decreased on Financials , Information Technology, Health Care and Communication Services.In Japan, stocks that saw the most shorts were Itochu Corp (8001 JP), Trend Micro Inc (4704 JP), Seiko Epson (6724 JP) and Bank Of Kyoto (8369 JP) while shorts decreased on Honda Motor (7267 JP), Ana Holdings (9202 JP), Kao Corp (4452 JP) and Kubota Corp (6326 JP). Sectorally, shorts increased on Information Technology and Financials, while decreasing on Consumer Discretionary,  Industrials, Consumer Staples and Real Estate.In Korea, there were short positions put on in Samsung Electronics (005930 KS), Hyundai Motor Co (005380 KS), Kakao Corp (035720 KS) and LG Display (034220 KS) while shorts were covered in S Oil Corp (010950 KS), Mirae Asset Daewoo (006800 KS), Hanwha Life Insurance (088350 KS) and Doosan Infracore (042670 KS). Stocks in Taiwan that saw the highest increase in shorts were Pegatron Corp (4938 TT), Foxconn Technology (2354 TT), Yageo Corporation (2327 TT) and Unimicron Technology (3037 TT) while shorts were covered on United Microelectronics Corp (2303 TT), TSMC (2330 TT), Evergreen Marine Corp (2603 TT) and Delta Electronics (2308 TT).

Asia Short Interest: Smoore, JD, SMIC, China Mobile, Itochu, Honda, Ana, Samsung, Pegatron, TSMC

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

<p>The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective.  China (<strong>CSI 300, MSCI China</strong>) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (<strong>TAIEX</strong>) continues to be worthy of an overweight within the EM universe, while South Korea (<strong>KOSPI</strong>) and India (<strong>SENSEX</strong>) display improving price and RS trends -- add exposure.</p>

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective.  China (CSI 300, MSCI China) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while South Korea (KOSPI) and India (SENSEX) display improving price and RS trends -- add exposure.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<div class="content-highlight">
<p><strong>Vaiv Company</strong> is getting ready for an IPO on the KOSDAQ exchange in the coming weeks. Vaiv Company, which specializes in artificial intelligence and big data, was recently renamed from Daum Soft previously.</p>
<p>There is likely to be a healthy demand for this IPO driven by the company's solid technology in AI &amp; big data analysis, strong backers (including Kakao Corp), and recent solid share price performance of one of its competitors Saltlux (304100 KS), whose share price is up 18% from its IPO price (it was up as much as 90%+ from its IPO price).</p>
</div><p>The bankers used two companies including Wise I-tech and Selvas AI as comparable companies to Vaiv Co. Using their annualized net profit from 3Q 2019 to 2Q 2020 and applying their recent prices, the average P/E of 28.6x was derived. The bankers then applied Viav's estimated net profit of 8.6 billion won in 2022 and discounted this at a 15% cost of capital to derive the present value of 6 billion won or EPS of 1,059 won. Applying a P/E of 28.6x results in an implied price per share of 30,348 won. Applying an additional IPO discount range of 7.7% - 24.2% results in an IPO price range of 23,000 won to 28,000 won. </p>


Vaiv Company is getting ready for an IPO on the KOSDAQ exchange in the coming weeks. Vaiv Company, which specializes in artificial intelligence and big data, was recently renamed from Daum Soft previously.
There is likely to be a healthy demand for this IPO driven by the company's solid technology in AI &amp; big data analysis, strong backers (including Kakao Corp), and recent solid share price performance of one of its competitors Saltlux (304100 KS), whose share price is up 18% from its IPO price (it was up as much as 90%+ from its IPO price).
The bankers used two companies including Wise I-tech and Selvas AI as comparable companies to Vaiv Co. Using their annualized net profit from 3Q 2019 to 2Q 2020 and applying their recent prices, the average P/E of 28.6x was derived. The bankers then applied Viav's estimated net profit of 8.6 billion won in 2022 and discounted this at a 15% cost of capital to derive the present value of 6 billion won or EPS of 1,059 won. Applying a P/E of 28.6x results in an implied price per share of 30,348 won. Applying an additional IPO discount range of 7.7% - 24.2% results in an IPO price range of 23,000 won to 28,000 won. 

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

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Event-Driven

<p>Mirae Asset's latest buyback began this Monday. It plans to buy back a total of 16M common shares from June 8 to September 7. It is 1.97% of the total SO and 2.43% of the ordinary shares. This buyback brings up the total treasury shares from 17.16% to 19.59%. </p><p>The banker set the daily limit at the usual 10% of the target (1.6M). If purchased at an equal amount daily, it will be 6% of the 1M DTV. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/138/938/original/1.png?1591717458" class="editor-image img-responsive" data-smartkarma-image-id="138938"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/138/936/original/2.png?1591717112" class="editor-image img-responsive" data-smartkarma-image-id="138936"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/138/937/original/3.png?1591717131" class="editor-image img-responsive" data-smartkarma-image-id="138937"></figure>

Mirae Asset's latest buyback began this Monday. It plans to buy back a total of 16M common shares from June 8 to September 7. It is 1.97% of the total SO and 2.43% of the ordinary shares. This buyback brings up the total treasury shares from 17.16% to 19.59%. The banker set the daily limit at the usual 10% of the target (1.6M). If purchased at an equal amount daily, it will be 6% of the 1M DTV. 

Mirae Asset Daewoo Buyback & 2PB Dividend Play

<p>The HDC-OP and Mirae Asset consortium completed the Asiana Airlines takeover. Here are the details of the deal structure. HDC-OP takes 55M shares at ₩4,700 from Kumho Industrial and gets other 350M new shares at ₩5,000 from the rights offer. It spends a total of ₩2tril. On the other hand, Mirae Asset buys 14M shares from Kumho in addition to the 85M shares from the rights offer for a total of ₩500bil. So, the combined total that the consortium pays amounts to ₩2.5tril.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/112/183/original/1.png?1577594099" class="editor-image img-responsive" data-smartkarma-image-id="112183"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/112/205/original/4.png?1577632935" class="editor-image img-responsive" data-smartkarma-image-id="112205"></figure><p></p><p>As a result, Asiana's total shares increase from 221M shares to 659M shares, in which HDC-OP controls 61.5%, followed by Mirae Asset with a 15.0% stake.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/112/199/original/2.png?1577632420" class="editor-image img-responsive" data-smartkarma-image-id="112199"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/112/200/original/3.png?1577632455" class="editor-image img-responsive" data-smartkarma-image-id="112200"></figure><p>Below is the HDC group governance structure after the Asiana takeover. Asiana sits below HDC-OP as a grandson company, which means that all the great-grandson companies must be wholly-owned. They include Asiana IDT and Air Busan.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/112/206/original/5.png?1577633139" class="editor-image img-responsive" data-smartkarma-image-id="112206"></figure>

The HDC-OP and Mirae Asset consortium completed the Asiana Airlines takeover. Here are the details of the deal structure. HDC-OP takes 55M shares at ₩4,700 from Kumho Industrial and gets other 350M new shares at ₩5,000 from the rights offer. It spends a total of ₩2tril. On the other hand, Mirae Asset buys 14M shares from Kumho in addition to the 85M shares from the rights offer for a total of ₩500bil. So, the combined total that the consortium pays amounts to ₩2.5tril.As a result, Asiana's total shares increase from 221M shares to 659M shares, in which HDC-OP controls 61.5%, followed by Mirae Asset with a 15.0% stake.Below is the HDC group governance structure after the Asiana takeover. Asiana sits below HDC-OP as a grandson company, which means that all the great-grandson companies must be wholly-owned. They include Asiana IDT and Air Busan.

HDC-OP's Asiana Takeover Deal: Structure & Forthcoming Issues

South Korea

Mirae Asset Daewoo Co.,Ltd. provides comprehensive wealth management services. The Company offers fixed income securities brokerage, securities dealing, equity underwriting, and other services. Mirae Asset Daewoo also deals with mergers and acquisitions, foreign currency, and financial derivatives.

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Mirae Asset Daewoo Co Ltd (006805 KS)

Asia Short Interest: Smoore, JD, SMIC, China Mobile, Itochu, Honda, Ana, Samsung, Pegatron, TSMC

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

Remain Overweight EM Relative To EAFE

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is...

Vermilion Research

Vaiv Company (Daum Soft) IPO Preview

Vaiv Company is getting ready for an IPO on the KOSDAQ exchange in the coming weeks. Vaiv Company, which specializes in artificial intelligence...

Douglas Kim

Mirae Asset Daewoo Buyback & 2PB Dividend Play

Mirae Asset's latest buyback began this Monday. It plans to buy back a total of 16M common shares from June 8 to September 7. It is 1.97% of the...

Sanghyun Park

HDC-OP's Asiana Takeover Deal: Structure & Forthcoming Issues

The HDC-OP and Mirae Asset consortium completed the Asiana Airlines takeover. Here are the details of the deal structure. HDC-OP takes 55M shares...

Sanghyun Park

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