Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>Nexteel reported disappointing IPO book building results from institutional investors. The IPO price has been confirmed at 11,500 won which is at the low end of the IPO valuation range.</li>
<li>A total of 700 institutions participated, with a demand ratio of 236 to 1. It is scheduled to be listed on the KOSPI exchange on 21 August. </li>
<li>Despite the weak IPO book building results, we maintain our positive view of the Nexteel IPO. Our base case valuation of Nexteel is implied market cap of 485.8 billion won.</li>
</ul>


Nexteel reported disappointing IPO book building results from institutional investors. The IPO price has been confirmed at 11,500 won which is at the low end of the IPO valuation range.
A total of 700 institutions participated, with a demand ratio of 236 to 1. It is scheduled to be listed on the KOSPI exchange on 21 August. 
Despite the weak IPO book building results, we maintain our positive view of the Nexteel IPO. Our base case valuation of Nexteel is implied market cap of 485.8 billion won.


Nexteel IPO Book Building Results Analysis

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.</li>
<li>The <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.</li>
<li>Another week of inflows for the <a href="https://www.smartkarma.com/entities/ishares-msci-emerging-markets-223f5da3-7054-4e4f-bc55-b7f0852c2581" target="_blank" data-smartkarma-citation="entities:31998:1" rel="noopener">iShares Emerging Markets ex-China (EMXC US)</a> ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!</li>
</ul>


The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!


Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

<ul>
<li>The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.</li>
<li>We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.</li>
<li>On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.</li>
</ul>


The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.


KOSPI Size Indices - Potential Migrations as Focus Is on Price to Book

<ul>
<li>The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.</li>
<li>We currently see 3 migrations from MidCap to LargeCap, 3 new adds to LargeCap, 6 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.</li>
<li>Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.</li>
</ul>


The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We currently see 3 migrations from MidCap to LargeCap, 3 new adds to LargeCap, 6 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.


KOSPI Size Indices - The Outperformance Continues

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.

<ul>
<li>We need to focus on the top 2 candidates among the Mid→Large candidates in the screening table mentioned above and the bottom 4 candidates among the Large→Mid candidates.</li>
<li>Since they are relatively far from the borderline, there is a significant likelihood that their classification will change. So, flow trading timing on these candidates could be brought forward.</li>
<li>Monitoring Doosan Robotics's market cap potentially nearing ₩3T and keeping an eye on the listing date of Ecopro Materials, we should make changes to the Mid→Large candidates from early December.</li>
</ul>


We need to focus on the top 2 candidates among the Mid→Large candidates in the screening table mentioned above and the bottom 4 candidates among the Large→Mid candidates.
Since they are relatively far from the borderline, there is a significant likelihood that their classification will change. So, flow trading timing on these candidates could be brought forward.
Monitoring Doosan Robotics's market cap potentially nearing ₩3T and keeping an eye on the listing date of Ecopro Materials, we should make changes to the Mid→Large candidates from early December.


A Proactive Long Short Basket Setup Targeting KOSPI Size Index's Next Rebal

South Korea

Husteel Co., Ltd. manufactures and markets a variety of steel pipes such as line pipes, structural pipes, PFP pipes, and polyethylene-coated steel pipes.  The Company's products apply to convey liquid, gas, or vapor, and to complement buildings.  Husteel supplies its products mainly to automobile, and construction industries.

Hyundai BNG Steel Co., Ltd. manufactures cold rolled stainless steel sheets, special steel bars, and seamless steel tubes.

Choil Aluminum Co., Ltd. manufactures and markets aluminum sheets, plates, ingots, foils. and fins.  The Company supplies its products to the construction materials, electric, electronic, shipbuilding, automobile, and packaging industries.

Dongkuk Steel Mill Co., Ltd. manufactures a variety of steel products.  The Company's products include rod steel for reinforced concrete, shape steel, and steel sheet for the construction and shipbuilding industries.

KISCO Holdings Co., Ltd. manufactures a variety of steel products. The Company's products include steel plates, steel pipes, reinforcing bars, steel channels, hot rolled steel bars, steel angles, and forged steel bars.

Posco Coated & Color Steel Company, Ltd. manufactures second process steel sheets and coils. The Company's main products include hot-dip galvanized coils and sheets, hot-dip aluminized steel sheets, and pre-painted steel sheets.

Posco Coated & Color Steel Co Ltd(Parent (058430 KS)

Dongkuk Industries Co., Ltd. manufactures cold rolled low carbon steel, hot-dip galvanized steel, pickled & oiled coil, ceramics, ferrite and refractories.  The Company also operates international trading and construction services.

Daehan Steel Co., Ltd. manufactures steel bars for concrete reinforcement. The Company's product includes round steel bar and deformed steel bar.  Daehan Steel provides the product for construction industry.

KISCO Corp. provides a wide range of steel products. The Company produces deformed bars including high tensile steel bars for nuclear power plants and low-allow steel bars for liquefied natural gas underground storage facilities.

Namsun Aluminum Co., Ltd. manufactures aluminum products, such as aluminum sash and circlet.

Jiin Yeeh Ding Enterprise Co., Ltd sells precious and single metals, and processes mixed waste hardware. The Company offers gold, silver, platinum, palladium and copper powder for electronic, automobile, chemical, petrochemical products.

Meteoric Resources NL is a gold and copper-gold exploration company.  The Company's primary exploration activities are situated in the Tennant Creek gold field in the Northern Territory and in the Peak Hill and Yilgarn regions of Western Australia.

GreenX Metals Limited provides exploration and mining services. The Company explores and develops copper and other critical mineral projects. GreenX Metals serves customers worldwide.

Monnet Ispat Limited manufactures a range of steel products, ferro alloys and sponge iron.  The Company also produces power for captive consumption.

Base Resources Limited is a resources developer. The Company develops and produces mineral sand. Base Resources serves customers in Africa and Australia.

Yunnan Luoping Zinc & Electricity Co., Ltd. mines, extracts, and refines lead and zinc products. The company also generates, transmits, and distributes electricity.

Shanghai Prosolar Resources Development Company Ltd. is an industrial investment company. The Company is also engaged in iron ore mining, production, and sales.

Araya Industrial Co., Ltd. manufactures and sells bicycles, bicycle rims, and related parts.  The Company also produces construction materials including steel pipes.

Quintain Steel Co., Ltd. manufactures steel wire rods, galvanized iron wires, galvanized steel wires, and spheroidized wires.

Ningxia Xinri Hengli Steel Wire Co Ltd manufactures and markets ropes and wire products.  Through its subsidiaries, the Company also invests in construction engineering, coal mining, apparel processing, and agricultural machinery processing businesses.

Ningxia Xinri Hengli Steel Wire (600165 CH)

Nexteel.Co.Ltd operates steel manufacturing businesses. The Company produces round pipes, square pipes, painting square pipes, and other products. Nexteel conducts businesses in South Korea.

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

Nexteel (092790 KS)

Nexteel IPO Book Building Results Analysis

Nexteel reported disappointing IPO book building results from institutional investors. The IPO price has been confirmed at 11,500 won which is at...

Douglas Kim

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

KOSPI Size Indices - Potential Migrations as Focus Is on Price to Book

We see 35 migrations and 7 new inclusions for the KOSPI Size indices. Stocks migrating higher have outperformed stocks migrating lower. Some stocks...

Brian Freitas

KOSPI Size Indices - The Outperformance Continues

We see 34 migrations and 6 new inclusions for the KOSPI Size indices. Stocks migrating higher have outperformed stocks migrating lower. Some stocks...

Brian Freitas

A Proactive Long Short Basket Setup Targeting KOSPI Size Index's Next Rebal

This post explores a proactive Long Short basket setup targeting the KOSPI Size Index's next rebalancing, whose entry timing should be early December.

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)