Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 20 January, KCGI private equity fund formally started its corporate governance activist campaign on Osstem Implant (048260 KS).</li>
<li>KCGI officially going activist on the company, its strong fundamentals and deep discount valuations suggest that Osstem Implant's price is likely to outperform KOSPI by a wide margin in 2023.</li>
<li>KCGI has demanded Kyoo-Ok Choi (Chairman of Osstem Implant) to resign.</li>
</ul>


On 20 January, KCGI private equity fund formally started its corporate governance activist campaign on Osstem Implant (048260 KS).
KCGI officially going activist on the company, its strong fundamentals and deep discount valuations suggest that Osstem Implant's price is likely to outperform KOSPI by a wide margin in 2023.
KCGI has demanded Kyoo-Ok Choi (Chairman of Osstem Implant) to resign.


KCGI Formally Goes Activist on Osstem Implant

<ul>
<li>The case involving KCGI (a local corporate activist private equity fund) and Osstem Implant (048260 KS) is one of the more interesting situations rising in the Korea's M&amp;A/corporate activism markets. </li>
<li>Osstem Implant is the number one dental implant company in Korea/Asia and the fourth largest player in this segment globally. </li>
<li>We believe Osstem Implant could outperform the market in 2023 due to improving fundamentals, cheap valuations, and a potential M&amp;A fight between KCGI and Chairman Choi.</li>
</ul>


The case involving KCGI (a local corporate activist private equity fund) and Osstem Implant (048260 KS) is one of the more interesting situations rising in the Korea's M&amp;A/corporate activism markets. 
Osstem Implant is the number one dental implant company in Korea/Asia and the fourth largest player in this segment globally. 
We believe Osstem Implant could outperform the market in 2023 due to improving fundamentals, cheap valuations, and a potential M&amp;A fight between KCGI and Chairman Choi.


Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi

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 should pay attention to two significant flows. INFLOW: Covering of those holding short positions &amp; OUTFLOW: Rebalancing of local PASSIVEs that failed to remove SillaJen.</li>
<li>Osstem, which was in a similar situation, showed this shooting star pattern on its trade resumption day. Of course, this setup will work limitedly because SillaJen is shorting-restricted.</li>
<li>Nevertheless, SillaJen will likely show this pattern more dramatically in the shooting phase as its short interest is more than three times that of Osstem.</li>
</ul>


We should pay attention to two significant flows. INFLOW: Covering of those holding short positions &amp; OUTFLOW: Rebalancing of local PASSIVEs that failed to remove SillaJen.
Osstem, which was in a similar situation, showed this shooting star pattern on its trade resumption day. Of course, this setup will work limitedly because SillaJen is shorting-restricted.
Nevertheless, SillaJen will likely show this pattern more dramatically in the shooting phase as its short interest is more than three times that of Osstem.


SillaJen Trade Resumption: Day Trading Setup Betting on Shooting Star Pattern

<ul>
<li>The KRX gives three heads-up types: WARNING (illegal trading), ADMINISTRATIVE (insolvency), &amp; ATTENTION (inappropriate accounting). Those losing eligibility are ADMINISTRATIVE (KOSPI 200) and ADMINISTRATIVE + ATTENTION (KOSDAQ 150).</li>
<li>
Those designated as WARNING keep the eligibility for KOSPI 200/KOSDAQ 150 unless delisting is decided. We can find these heads-up designations on the KRX website, which is available in English.</li>
<li>
 Osstem is currently an ATTENTION issue, so ineligible at this point. Knotus was designated as a WARNING issue in June and underwent a trade suspension. Nevertheless, it maintains eligibility.</li>
</ul>


The KRX gives three heads-up types: WARNING (illegal trading), ADMINISTRATIVE (insolvency), &amp; ATTENTION (inappropriate accounting). Those losing eligibility are ADMINISTRATIVE (KOSPI 200) and ADMINISTRATIVE + ATTENTION (KOSDAQ 150).

Those designated as WARNING keep the eligibility for KOSPI 200/KOSDAQ 150 unless delisting is decided. We can find these heads-up designations on the KRX website, which is available in English.

 Osstem is currently an ATTENTION issue, so ineligible at this point. Knotus was designated as a WARNING issue in June and underwent a trade suspension. Nevertheless, it maintains eligibility.


Clarifying KRX's Confusing Heads-Up Designation System for KOSPI 200/KOSDAQ 150 Review

<ul>
<li>From August 26 to September 2, the net buying of investors classified as "Other Corporation" was substantial at 500K shares or 3.5% of SO, which amounted to about ₩60B.</li>
<li>It seems almost sure that the KCGI has made a move. As a result, the possibility that the Hanjin Kal event will be repeated is also relatively high.</li>
<li>The first inflection point would be when the KCGI passes the 5% stake and makes a regulatory filing. We will see a pretty intense momentum trading on proxy battle expectations.</li>
</ul>


From August 26 to September 2, the net buying of investors classified as "Other Corporation" was substantial at 500K shares or 3.5% of SO, which amounted to about ₩60B.
It seems almost sure that the KCGI has made a move. As a result, the possibility that the Hanjin Kal event will be repeated is also relatively high.
The first inflection point would be when the KCGI passes the 5% stake and makes a regulatory filing. We will see a pretty intense momentum trading on proxy battle expectations.


Explaining the Unusual Flow Situation of Osstem Implant

South Korea

Osstem Implant Co., Ltd. manufactures dental implant system. The Company also markets dental management software. Osstem Implant provides products for dental surgery and exports abroad.

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Osstem Implant (048260 KS)

KCGI Formally Goes Activist on Osstem Implant

KCGI officially going activist on the company, its strong fundamentals and deep discount valuations suggest that Osstem Implant's price is likely...

Douglas Kim

Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi

We believe Osstem Implant could outperform the market in 2023 due to improving fundamentals, cheap valuations, and a potential M&A fight between...

Douglas Kim

SillaJen Trade Resumption: Day Trading Setup Betting on Shooting Star Pattern

SillaJen will resume trading today, and this post discusses the day trading setup betting that it will show a shooting star pattern, seen in the...

Sanghyun Park

Clarifying KRX's Confusing Heads-Up Designation System for KOSPI 200/KOSDAQ 150 Review

Different heads-ups confuse the KOSPI 200/KOSDAQ 150 rebalancing implementation rules. So, this post aims to clarify their differences and how they...

Sanghyun Park

Explaining the Unusual Flow Situation of Osstem Implant

This post investigates the unusual flow situation of Osstem Implant from late last month. Apparently, the KCGI Fund, the most prominent local...

Sanghyun Park

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