Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 28 July, OCI Holdings (010060 KS) announced that it plans to conduct a tender offer to purchase up to 45% stake in OCI Co (456040 KS). </li>
<li>The tender offer price of OCI Co is 139,000 won. The method of this tender offer is to issue new common shares of OCI Holdings.</li>
<li>In the short term (one month), we expect OCI Co's shares to outperform OCI Holdings shares. This deal is structured to mainly benefit the OCI Group's insiders.</li>
</ul>


On 28 July, OCI Holdings (010060 KS) announced that it plans to conduct a tender offer to purchase up to 45% stake in OCI Co (456040 KS). 
The tender offer price of OCI Co is 139,000 won. The method of this tender offer is to issue new common shares of OCI Holdings.
In the short term (one month), we expect OCI Co's shares to outperform OCI Holdings shares. This deal is structured to mainly benefit the OCI Group's insiders.


OCI Holdings Announces a Tender Offer to Buy 45% Stake in OCI Co

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

<ul>
<li>Around a third of the way though the review period, there could be 4 changes for the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX)</a> at the December rebalance.</li>
<li>The impact on the potential inclusions ranges from 0.6-21 days of ADV while the impact on the potential deletions varies from 2.5-16 days of ADV.</li>
<li>The potential adds have outperformed the potential deletions over the last few months and there could be more to go with short selling banned.</li>
</ul>


Around a third of the way though the review period, there could be 4 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
The impact on the potential inclusions ranges from 0.6-21 days of ADV while the impact on the potential deletions varies from 2.5-16 days of ADV.
The potential adds have outperformed the potential deletions over the last few months and there could be more to go with short selling banned.


KOSPI200 Index Rebalance Preview: 4 Changes Likely in December

<ul>
<li>In a recent discussion with a client, one of the questions that was raised was regarding the impact the local investors are having on the corporate governance reforms in Korea.</li>
<li>The number of local investors in the Korean stock market has jumped in the past few years from 5.3 million in 2017 to 14.4 million in 2022.</li>
<li>All in all, I think Korea is about 3-5 years behind Japan in various corporate governance reforms. So it has a lot of catching up to do.</li>
</ul>


In a recent discussion with a client, one of the questions that was raised was regarding the impact the local investors are having on the corporate governance reforms in Korea.
The number of local investors in the Korean stock market has jumped in the past few years from 5.3 million in 2017 to 14.4 million in 2022.
All in all, I think Korea is about 3-5 years behind Japan in various corporate governance reforms. So it has a lot of catching up to do.


Locals Driving Corporate Reforms and 10 Korean Companies Recently Announcing Share Cancellations

<ul>
<li>Hahn &amp; Co hold 79.9% of <a href="https://www.smartkarma.com/entities/ssangyong-cement-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:9345:1" rel="noopener">Ssangyong Cement Industrial (003410 KS)</a> and have made a tender offer to acquire the remaining 20.1% at KRW 7,000/share.</li>
<li>
<a href="https://www.smartkarma.com/entities/ssangyong-cement-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:9345:1" rel="noopener">Ssangyong Cement Industrial (003410 KS)</a> should be deleted from the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX)</a> once Hahn &amp; Co acquire 90% of the company.</li>
<li>
<a href="https://www.smartkarma.com/entities/aekyung-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:20295:1" rel="noopener">Aekyung Chemical (161000 KS)</a> is a potential addition to the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX)</a> but inclusion is dependent on Hahn &amp; Co reaching 90% of shares out.</li>
</ul>


Hahn &amp; Co hold 79.9% of Ssangyong Cement Industrial (003410 KS) and have made a tender offer to acquire the remaining 20.1% at KRW 7,000/share.

Ssangyong Cement Industrial (003410 KS) should be deleted from the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) once Hahn &amp; Co acquire 90% of the company.

Aekyung Chemical (161000 KS) is a potential addition to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) but inclusion is dependent on Hahn &amp; Co reaching 90% of shares out.


KOSPI200 Index Adhoc Rebalance: Potential Replacements for SsangyongC&E

<ul>
<li>We review the major tender offers of Korean companies in 2023. Some of the major M&amp;A tender offers that have closed this year include Osstem Implant and SM Entertainment.</li>
<li>Among the 15 companies targeted for tender offers, there are 5 companies including Osstem Implant, SM Entertainment, Lutronic Corp where the purpose of the tender offers is for M&amp;A. </li>
<li>There were a total of 18 companies that submitted tender offer results announcements in 2023 (as of 11 December), up 157% YoY.</li>
</ul>


We review the major tender offers of Korean companies in 2023. Some of the major M&amp;A tender offers that have closed this year include Osstem Implant and SM Entertainment.
Among the 15 companies targeted for tender offers, there are 5 companies including Osstem Implant, SM Entertainment, Lutronic Corp where the purpose of the tender offers is for M&amp;A. 
There were a total of 18 companies that submitted tender offer results announcements in 2023 (as of 11 December), up 157% YoY.


A Review of Tender Offers of Korean Companies in 2023

South Korea

Cosmochemical Co., Ltd. manufactures and markets titanium dioxide used in synthetic resins, rubber, paper, paint, and TV cathode-ray tubes.  The Company also produces titanium dioxide byproducts, ferrous sulfate, koferis, ferosol for wastewater treatment agent uses, and sports equipment.

Korea Petrochemical Ind Co., Ltd. manufactures chemical products such as high density polyethylene and polypropylene.  The Company also produces basic organic chemicals including ethylene, propylene, and mixed C4s.  Korea Petrochemical supplies its products to the industrial and home appliances, film, pipe, toy, electric wire, and medical instrument manufacturers.

PI Advanced Materials Co., Ltd. manufactures and sells plastics films. The Company produces and sells polyimide films and other products. PI Advanced Materials conducts businesses in South Korea.

Miwon Commercial Co., Ltd. manufactures sulfurs, sulfuric acids, and surfactants.  The Company also provides paint additives, photo and functional chemicals, plastic and rubber additives, polyurethane, PP foam sheets, and chemical goods.

DukSan Neolux Co., Ltd. manufacture electronic components and chemical material. The Company specializes in producing chemincals used in semiconductor industry.

SK Chemicals Co.,Ltd manufactures environmentally friendly materials. The Company produces and sells composites, high-performance materials, energy saving materials, and other products. SK Chemicals also offers total healthcare solutions services. SK Chemicals serves customers worldwide.

Huchems Fine Chemical Corp. develops and provides fine chemical products. The main products include polyurethane, ammonium nitrate, nitric acid, and ammonia.

SK Discovery Co.,Ltd. wholesales and distributes natural gas. The Company wholesales and distributes propylene, propane, and other natural gas SK Discovery markets its products throughout South Korea.

Foosung Co., Ltd. manufactures and sells chemical compounds and also car accessories such as car mats.

Chunbo Co.,Ltd manufactures and sells chemical materials. The Company produces and sells display, semiconductor, and secondary battery application materials, as well as pharmaceutical intermediates and specialty chemicals. Chunbo markets its products worldwide.

USI Corporation manufactures and markets polyethylene resins, a raw material used in the manufacture of plastic. The Company's products are low density polyethylene (LDPE), ethylene vinyl acetate copolymers (EVA), high density polyethylene (HDPE), and linear low density polyethylene (LLDPE).

Suzhou Kingswood Printing Ink Company Limited produces and sells offset printing inks, researches and develops modified polymer materials and vegetable oils for the production of printing inks. The Company's major products are environmentally friendly offset printing inks.

LSB Industries, Inc., through its subsidiaries, manufactures and sells chemical products for the mining, agricultural, and industrial markets.  The Company also manufactures and sells commercial and residential climate control products, as well as provides specialized engineering services and other activities.

Jiangsu Huifeng Agrochemical Co., Ltd. develops and produces chemical pesticide. The Company's products include prochloraz-manganese chloride, bromoxynial octanoate, ioxynil octanoate, and diflufenican.

Jiangsu Huifeng Agrochemical Co (002496 CH)

Hebei Jianxin Chemical Company Ltd. develops, manufactures and sells dye intermediates. The Company's products include 2-Amino-1,4-benzenedisulfonic acid monosodium salt, 3-Hydroxy-N,N-diethylaniline, 3-aminophenol and thermal-press sensitive dyes.

Nantex Industry Co., Ltd. manufactures and markets chemical products. The Company produces a variety of synthetic resins and rubbers.  Natex Industry's main products are butadiene-acrylonitrile copolymer rubber (NBR), and styrene butadiene rubber (SBR).

ASAHI ORGANIC CHEMICALS INDUSTRY CO., LTD. produces polyvinyl chloride resin valves & pipes, phenol resin products, and resin-coated sand. The Company develops semiconductor-related products as well as housing-related products such as flooring materials.

Shenzhen Batian Ecotypic Engineering Co., Ltd. develops, manufactures, and distributes mixed fertilizers and organic fertilizers.

Alpha HPA Limited operates as a chemical company. The Company produces high purity aluminium oxides, hydroxides, nitrates, and sulphates. These products are found in a wide range of high technology industries. Alpha HPA serves customers worldwide. Alpha HPA provides purification techniques to achieve purity levels with a reduced carbon profile.

Lianhe Chemical Technology Co.,Ltd. researches, manufactures and markets pharmaceuticals and pharmaceutical intermediates, agricultural chemicals and intermediates and other fine chemicals.

Lianhe Chemical Technology Co, Ltd. (002250 CH)

OCI Company Ltd. produces and sells chemical products. The Company manufactures basic chemicals, petrochemicals, carbon materials, rechargeable battery materials, and other products. OCI markets its products worldwide.

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OCI Co (456040 KS)

OCI Holdings Announces a Tender Offer to Buy 45% Stake in OCI Co

On 28 July, OCI Holdings (010060 KS) announced that it plans to conduct a tender offer to purchase up to 45% stake in OCI Co (456040 KS). The...

Douglas Kim

KOSPI200 Index Rebalance Preview: 4 Changes Likely in December

There could be 4 changes for the KOSPI200 in December. The impact on the potential inclusions ranges from 0.6-21 days of ADV while the impact on...

Brian Freitas

KOSPI200 Index Adhoc Rebalance: Potential Replacements for SsangyongC&E

HahnCo is looking to take SsangyongCE private. That will open up an index spot in the KOSPI200. AekyungChemical could be added to the index in...

Brian Freitas

A Review of Tender Offers of Korean Companies in 2023

We review the major tender offers of Korean companies in 2023. There were a total of 18 companies that submitted tender offer results announcements...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

OCI Holdings Announces a Tender Offer to Buy 45% Stake in OCI Co

On 28 July, OCI Holdings (010060 KS) announced that it plans to conduct a tender offer to purchase up to 45% stake in OCI Co (456040 KS). The...

Douglas Kim

KOSPI200 Index Rebalance Preview: 4 Changes Likely in December

There could be 4 changes for the KOSPI200 in December. The impact on the potential inclusions ranges from 0.6-21 days of ADV while the impact on...

Brian Freitas

Locals Driving Corporate Reforms and 10 Korean Companies Recently Announcing Share Cancellations

On 17 April, Celltrion Inc announced that it will buyback shares worth 75 billion won. Including 75 billion won of share repurchase last month,...

Douglas Kim

KOSPI200 Index Adhoc Rebalance: Potential Replacements for SsangyongC&E

HahnCo is looking to take SsangyongCE private. That will open up an index spot in the KOSPI200. AekyungChemical could be added to the index in...

Brian Freitas

A Review of Tender Offers of Korean Companies in 2023

We review the major tender offers of Korean companies in 2023. There were a total of 18 companies that submitted tender offer results announcements...

Douglas Kim