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.

Event-Driven

Hankyung, one of Korea's two most well-established economic news outlets, put out an exclusive report very early morning before the market opened that Samsung Biologics would begin to produce Pfizer's COVID-19 vaccines starting August.<a href="https://n.news.naver.com/article/015/0004544831" target="_blank" rel="noopener">Here is the link to the news report by Hankyung.</a>Then, a bit later, another prestigious newspaper, Chosun Ilbo, published a similar story saying that it had quoted an industry expert familiar with the inside of Samsung Biologics.<a href="https://biz.chosun.com/it-science/bio-science/2021/05/12/KDFVFJQLYJCNLAPQL6RUAX6YBQ/" target="_blank" rel="noopener">Here is the link to the news report by Chosun Ilbo.</a>But Samsung Biologics quickly denied the news report in an official filing before the market opened. It stated in a filing that the news report about Samsung Biologics planning to produce Pfizer COVID-19 vaccines is not true.<a href="https://engkind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptNo=20210512000039&amp;docno=&amp;formProcsCd=070&amp;language=english" target="_blank" rel="noopener">Here is the link to the filing by Samsung Biologics.</a><hr><h2>Clarifications about statements in a filing about a market rumor</h2>When we have this kind of market rumor, a company typically gives one of two statement types in a filing.<ol>
<li>
No comment to make at this time: It is generally considered an acknowledgment. If this statement is given in a filing, a company will have to update the situation within one month in another filing.
</li>
<li>
Not true at this time: It is generally considered a denial. If this statement is given in a filing, a company can not reverse it within three months. If a company gives a modified filing within three months, it will face a stiff penalty.</li>
</ol><hr>Samsung Biologics' filing was the second type. So, it was a clear denial.So, it has two possibilities:<ol>
<li>The Pfizer deal must not have materialized yet, and it will take at least three months.</li>
<li>Or, it is not true at all.</li>
</ol>Nonetheless, Samsung Biologics' share price still ended up with a 4.77% gain.Why is that? It is mainly because the local market still believes that there is some substantial CMO deal talking going on with clients other than Pfizer.It is rare for a well-established newspaper like Hankyung, the newspaper initially reported the Pfizer deal news, to put out an exclusive report like this one without any substance. Hankyung must have heard something. Just, it might have gotten the client name wrong. That is what the local street seems to believe.In fact, some names are being tossed around as potential CMO deal clients, including Moderna.<a href="http://www.financialreview.co.kr/news/articleView.html?idxno=20317" target="_blank" rel="noopener">Here is the news link of a local news outlet speculating Moderna being Samsung Biologics' new CMO client. </a>

Hankyung, one of Korea's two most well-established economic news outlets, put out an exclusive report very early morning before the market opened that Samsung Biologics would begin to produce Pfizer's COVID-19 vaccines starting August.Here is the link to the news report by Hankyung.Then, a bit later, another prestigious newspaper, Chosun Ilbo, published a similar story saying that it had quoted an industry expert familiar with the inside of Samsung Biologics.Here is the link to the news report by Chosun Ilbo.But Samsung Biologics quickly denied the news report in an official filing before the market opened. It stated in a filing that the news report about Samsung Biologics planning to produce Pfizer COVID-19 vaccines is not true.Here is the link to the filing by Samsung Biologics.Clarifications about statements in a filing about a market rumorWhen we have this kind of market rumor, a company typically gives one of two statement types in a filing.

No comment to make at this time: It is generally considered an acknowledgment. If this statement is given in a filing, a company will have to update the situation within one month in another filing.


Not true at this time: It is generally considered a denial. If this statement is given in a filing, a company can not reverse it within three months. If a company gives a modified filing within three months, it will face a stiff penalty.
Samsung Biologics' filing was the second type. So, it was a clear denial.So, it has two possibilities:
The Pfizer deal must not have materialized yet, and it will take at least three months.
Or, it is not true at all.
Nonetheless, Samsung Biologics' share price still ended up with a 4.77% gain.Why is that? It is mainly because the local market still believes that there is some substantial CMO deal talking going on with clients other than Pfizer.It is rare for a well-established newspaper like Hankyung, the newspaper initially reported the Pfizer deal news, to put out an exclusive report like this one without any substance. Hankyung must have heard something. Just, it might have gotten the client name wrong. That is what the local street seems to believe.In fact, some names are being tossed around as potential CMO deal clients, including Moderna.Here is the news link of a local news outlet speculating Moderna being Samsung Biologics' new CMO client. 

Samsung Biologics CMO Deal Noise & Samsung C&T Synthetic Subsidiary Stub Trade

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.</div>Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. <div class="content-highlight">
In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).
In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  
</div>Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos.

In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. 
In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).
In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  
Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos. 

Closing the Gap: Korean Holdcos Vs. Opcos

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

In Korea the safest way to invest is to align your interest as a minority shareholder with those of the family?  Usually the key asset of the chaebol is apparent but what about SK Group? It seems we have an opportunity to hone in what the key asset is.

In Korea the safest way to invest is to align your interest as a minority shareholder with those of the family?  Usually the key asset of the chaebol is apparent but what about SK Group? It seems we have an opportunity to hone in what the key asset is.

The Chaebol Dilemma - What's the Family Jewel(S)?

The result of the guilty verdict was expected by the local media but what does this mean for the future of the Samsung Group? 5 key takeaways on what to expect and impact on the Samsung Group and its affiliates.

The result of the guilty verdict was expected by the local media but what does this mean for the future of the Samsung Group? 5 key takeaways on what to expect and impact on the Samsung Group and its affiliates. 

JY Lee & The Ides of March.....and What It Means for You

In this insight, we provide an updated valuation analysis of <a href="https://www.smartkarma.com/entities/samsung-c-t-corporation" target="_blank" data-smartkarma-citation="entities:481:1" rel="noopener">Samsung C&amp;T (028260 KS) </a>and key catalysts of the company.  <div class="content-highlight">Our base case valuation of Samsung C&amp;T is market cap of 43.2 trillion won and implied price of 231,387 won, which represents a 52% upside from current levels.</div><h2>Key Catalysts </h2><ul>
<li>Higher dividends expectation </li>
<li>Turnaround of the housing construction business in Korea</li>
<li>Potential reorganization of Samsung C&amp;T into a Holdco</li>
<li>Recent outperformance of holdcos/semi-holdcos in Korea </li>
</ul>

In this insight, we provide an updated valuation analysis of Samsung C&amp;T (028260 KS) and key catalysts of the company.  Our base case valuation of Samsung C&amp;T is market cap of 43.2 trillion won and implied price of 231,387 won, which represents a 52% upside from current levels.Key Catalysts 
Higher dividends expectation 
Turnaround of the housing construction business in Korea
Potential reorganization of Samsung C&amp;T into a Holdco
Recent outperformance of holdcos/semi-holdcos in Korea 


Samsung C&T: Valuation Sensitivity Analysis & Key Catalysts

South Korea

Samsung C&T Corporation conducts diversified business support services and resort operation activities. The Company offers a range of services in areas including clothing retail, construction, energy, real estate, food service, and resort accommodations. Samsung C&T also operates a resort with amusement rides, a zoo, water park, golf clubs, and restaurants.

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

Samsung C&T (028260 KS)

Samsung Biologics CMO Deal Noise & Samsung C&T Synthetic Subsidiary Stub Trade

This post investigates what has happened to Samsung Biologics with the CMO deal rumor yesterday and discusses Samsung C&T synthetic subsidiary stub...

Sanghyun Park

Closing the Gap: Korean Holdcos Vs. Opcos

In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the...

Douglas Kim

The Chaebol Dilemma - What's the Family Jewel(S)?

What is the key asset of the SK Group and how should we play this over the course of time ? Here's at least what we should consider

Ken S. Kim

JY Lee & The Ides of March.....and What It Means for You

The impact of the JY Lee jail sentencing and what it means for Samsung Electronics, Samsung C&T and its affiliates down the line.

Ken S. Kim

Samsung C&T: Valuation Sensitivity Analysis & Key Catalysts

We provide an updated valuation of Samsung C&T and key catalysts of the company. Our base case valuation of Samsung C&T is implied price of 231,387...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)