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

Samsung Fire & Marine Insuranc / Event-Driven

<ul>
<li>Based on last Friday's closing price, the three stocks with a 20D MA sigma below -1.0 are LG Electronics 1P, Samsung SDI 1P, and Samsung E-M 1P.</li>
<li>Among the preferred shares with a yearend dividend yield of 5% or higher based on the FnGuide consensus, Kumho Petro Chemical 1P has a dividend yield of close to 10%.</li>
<li>
Four prefs have a Pref/Ord dividend yield spread of more than 2%p among those with a yearend dividend yield of more than 5%.</li>
</ul>


Based on last Friday's closing price, the three stocks with a 20D MA sigma below -1.0 are LG Electronics 1P, Samsung SDI 1P, and Samsung E-M 1P.
Among the preferred shares with a yearend dividend yield of 5% or higher based on the FnGuide consensus, Kumho Petro Chemical 1P has a dividend yield of close to 10%.

Four prefs have a Pref/Ord dividend yield spread of more than 2%p among those with a yearend dividend yield of more than 5%.


Samsung SDI's share price experienced sharp volatility yesterday. After the market closed on Wednesday, a local media outlet reported that Samsung SDI plans to spin out the battery business division. As a result, the share price of Samsung SDI fell more than 6% as soon as the market opened yesterday. Then, at 2:13 pm, Samsung SDI issued a public notice denying this report. So, the share price reduced the decline to some extent, but it ended with a drop of more than 3%.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/299/original/1.png?1631832824" class="editor-image img-responsive" data-smartkarma-image-id="230299"></figure></section><a href="https://engkind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptNo=20210916000166&amp;docno=&amp;formProcsCd=070&amp;language=english" target="_blank" rel="noopener">Below is the public notice filed by Samsung SDI to deny the spinout report (KRX KIND).</a><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/300/original/2.png?1631832874" class="editor-image img-responsive" data-smartkarma-image-id="230300"></figure></section><hr><div class="content-highlight">The local media that reported this is a newspaper called The Elec. Although it is not a first-tier press, it specializes in the local tech sector, and its articles are highly reliable.</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/301/original/3.png?1631833019" class="editor-image img-responsive" data-smartkarma-image-id="230301"></figure></section><a href="http://www.thelec.kr/news/articleView.html?idxno=14352" target="_blank" rel="noopener">Here is the link to the news article.</a> (English translation isn't available, but Google Translate will do the job nicely.)The main points of the article in this newspaper are as follows.<div class="content-highlight"><ul>
<li>Samsung SDI's key executives recently had a meeting to discuss the spin-off of the energy solution division responsible for the battery business. It is to attract investment in the battery business.</li>
<li>It is the first time within Samsung SDI that top management has discussed the spin-off of the battery business. However, a specific plan and schedule have not been decided yet.</li>
<li>Samsung SDI's management also discussed the sale of the electronic materials business, which accounts for about 20% of total sales, as another way to raise funds for investment.</li>
</ul></div>

Samsung SDI's share price experienced sharp volatility yesterday. After the market closed on Wednesday, a local media outlet reported that Samsung SDI plans to spin out the battery business division. As a result, the share price of Samsung SDI fell more than 6% as soon as the market opened yesterday. Then, at 2:13 pm, Samsung SDI issued a public notice denying this report. So, the share price reduced the decline to some extent, but it ended with a drop of more than 3%.Below is the public notice filed by Samsung SDI to deny the spinout report (KRX KIND).The local media that reported this is a newspaper called The Elec. Although it is not a first-tier press, it specializes in the local tech sector, and its articles are highly reliable.Here is the link to the news article. (English translation isn't available, but Google Translate will do the job nicely.)The main points of the article in this newspaper are as follows.
Samsung SDI's key executives recently had a meeting to discuss the spin-off of the energy solution division responsible for the battery business. It is to attract investment in the battery business.
It is the first time within Samsung SDI that top management has discussed the spin-off of the battery business. However, a specific plan and schedule have not been decided yet.
Samsung SDI's management also discussed the sale of the electronic materials business, which accounts for about 20% of total sales, as another way to raise funds for investment.


Time to Short Samsung SDI on Inevitable ECO of Battery Unit or Massive Rights Offer

Last Friday, Samsung SDI's share price rose 3.69% to ₩674,000. On the other hand, LG Chem fell 1.56% from the previous day, and SK Innovation fell 1.6%.A report released by a local brokerage on Friday morning appears to have had an impact on Samsung SDI's Friday stock price. Kiwoom Securities said that Samsung SDI's EV battery business would turn to the black by expanding supply to major European automakers.However, I believe that expectations for 2Q earnings have already been reflected in the price before Friday. After the stock price was corrected due to Morgan Stanley's sell-off report at the end of May, the stock rebounded sharply on the back of 2Q earnings improvement and the possibility of capacity expansion in the US.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/962/original/Screen+Shot+2021-06-19+at+1.01.28+AM.png?1624078954" class="editor-image img-responsive" data-smartkarma-image-id="213962"></figure></section><div class="content-caption">(Samsung SDI 3-month chart)</div>In fact, Kiwoom Securities' annual operating profit estimate of ₩1,095.5B is in line with the market consensus, compiled by FnGuide based on the 19 local brokerages covering Samsung SDI.<table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
<col width="70">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"Samsung SDI Co Ltd"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-53]C[-4]">Street consensus</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":44366}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"m\". \"d","3":1}' data-sheets-formula="=today()">2021. 6. 19</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":2,"2":"T-1M"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-1M</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":2,"2":"T-3M"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-3M</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":2,"2":"T-6M"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-6M</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":2,"2":"T-1Y"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-1Y</td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"Sales"}'>Sales</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":13880}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,880.0B</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":13864.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,864.2B</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":13813.5}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,813.5B</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":14205}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩14,205.0B</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":13343.4}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,343.4B</td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"OP"}'>OP</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":1098.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩1,098.2B</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":1092.3}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩1,092.3B</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":1127.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩1,127.2B</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":1199.6}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩1,199.6B</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":1011.9}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩1,011.9B</td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"NP to controlling stake"}'>NP to controlling stake</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":1020.3}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩1,020.3B</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":994}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩994.0B</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":999.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩999.8B</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":991.6}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩991.6B</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":886.3}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩886.3B</td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"12M forward PER"}'>12M forward PER</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":41.06}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">41.06x</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":40}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">40.00x</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":43.93}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">43.93x</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":40.32}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">40.32x</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":38.34}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">38.34x</td>
</tr>
<tr><td colspan="6" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: FnGuide"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Source: FnGuide</td></tr>
</tbody>
</table>Then, the reason why only Samsung SDI's share price rose on Friday must have been that the market saw a new momentum other than 2Q earnings or US investment. It is believed that it was a British media report that Samsung SDI could build a battery plant in the UK. According to British media, the British government discusses plans to build an electric vehicle battery plant with six companies, including Samsung SDI.This British investment included not only Samsung SDI but also LG Energy Solutions. However, the reason why Samsung SDI's stock price has reacted more sensitively is that new investments in major markets such as the US have been delayed recently. In other words, the market came to think that Samsung SDI would be more active in new investment in the UK than other companies.However, Samsung SDI denies the report regarding the UK investment. Samsung SDI is already operating a battery plant in Hungary. Samsung SDI is receiving enormous support from the Hungarian government, including corporate tax reductions. At the beginning of this year, Samsung SDI also invested close to ₩1T to expand its plant in Hungary. Unless the UK government provides as much tax support as the Hungarian government does, it is unreasonable to make additional investments in new countries like the UK.Therefore, Samsung SDI's investment in the UK should be viewed as temporary market noise.

Last Friday, Samsung SDI's share price rose 3.69% to ₩674,000. On the other hand, LG Chem fell 1.56% from the previous day, and SK Innovation fell 1.6%.A report released by a local brokerage on Friday morning appears to have had an impact on Samsung SDI's Friday stock price. Kiwoom Securities said that Samsung SDI's EV battery business would turn to the black by expanding supply to major European automakers.However, I believe that expectations for 2Q earnings have already been reflected in the price before Friday. After the stock price was corrected due to Morgan Stanley's sell-off report at the end of May, the stock rebounded sharply on the back of 2Q earnings improvement and the possibility of capacity expansion in the US.(Samsung SDI 3-month chart)In fact, Kiwoom Securities' annual operating profit estimate of ₩1,095.5B is in line with the market consensus, compiled by FnGuide based on the 19 local brokerages covering Samsung SDI.










Street consensus
2021. 6. 19
T-1M
T-3M
T-6M
T-1Y


Sales
₩13,880.0B
₩13,864.2B
₩13,813.5B
₩14,205.0B
₩13,343.4B


OP
₩1,098.2B
₩1,092.3B
₩1,127.2B
₩1,199.6B
₩1,011.9B


NP to controlling stake
₩1,020.3B
₩994.0B
₩999.8B
₩991.6B
₩886.3B


12M forward PER
41.06x
40.00x
43.93x
40.32x
38.34x

Source: FnGuide

Then, the reason why only Samsung SDI's share price rose on Friday must have been that the market saw a new momentum other than 2Q earnings or US investment. It is believed that it was a British media report that Samsung SDI could build a battery plant in the UK. According to British media, the British government discusses plans to build an electric vehicle battery plant with six companies, including Samsung SDI.This British investment included not only Samsung SDI but also LG Energy Solutions. However, the reason why Samsung SDI's stock price has reacted more sensitively is that new investments in major markets such as the US have been delayed recently. In other words, the market came to think that Samsung SDI would be more active in new investment in the UK than other companies.However, Samsung SDI denies the report regarding the UK investment. Samsung SDI is already operating a battery plant in Hungary. Samsung SDI is receiving enormous support from the Hungarian government, including corporate tax reductions. At the beginning of this year, Samsung SDI also invested close to ₩1T to expand its plant in Hungary. Unless the UK government provides as much tax support as the Hungarian government does, it is unreasonable to make additional investments in new countries like the UK.Therefore, Samsung SDI's investment in the UK should be viewed as temporary market noise.

Samsung SDI Ord's Price Gain on a Market Noise Last Friday: Two Pair Trades Worth Considering

Korea has a total of 121 preferred shares trading in the public stock market. At the last close, 10 preferred shares are below -1.5σ relative to their respective ordinary shares on a 20-day moving average. Three of them are below -2.0σ, including Samsung SDI 1P. <table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Preferred shares"}'>Preferred share</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Ord"}'>Ordinary share</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":2,"2":"Disparity to ordinary share"}'>Disparity to ordinary share</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":2,"2":"Sigma on a 20-day moving average"}'>Sigma on a 20-day moving average</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Sungshin Cement Co Ltd 1P"}'>Sungshin Cement Co Ltd 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Sungshin Cement Co Ltd"}'>Sungshin Cement Co Ltd</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":-0.3779527559055118}' data-sheets-numberformat='[null,3,"0.00%",1]'>-37.80%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-2.652932322814385}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-2.65</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Samsung SDI Co Ltd 1P"}'>Samsung SDI Co Ltd 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Samsung SDI Co Ltd"}'>Samsung SDI Co Ltd</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":0.35769828926905134}' data-sheets-numberformat='[null,3,"0.00%",1]'>35.77%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-2.4869804295474376}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-2.49</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Kumkang Kind Co Ltd 1P"}'>Kumkang Kind Co Ltd 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Kumkang Kind Co Ltd"}'>Kumkang Kind Co Ltd</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":-0.8367346938775511}' data-sheets-numberformat='[null,3,"0.00%",1]'>-83.67%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-2.2511038028914796}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-2.25</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Mirae Asset Securities Co Ltd 1P"}'>Mirae Asset Securities Co Ltd 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Mirae Asset Securities Co Ltd"}'>Mirae Asset Securities Co Ltd</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":0.348}' data-sheets-numberformat='[null,3,"0.00%",1]'>34.80%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-1.8353464801840684}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.84</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Hyundai Engineering &amp; Construction Co. 1P"}'>Hyundai Engineering &amp; Construction Co. 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Hyundai Engineering &amp; Construction Co."}'>Hyundai Engineering &amp; Construction Co.</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":-3.1254752851711025}' data-sheets-numberformat='[null,3,"0.00%",1]'>-312.55%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-1.7804411287688098}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.78</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"SK Securities Co., Ltd 1P"}'>SK Securities Co., Ltd 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"SK Securities Co., Ltd"}'>SK Securities Co., Ltd</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":-4.303482587064677}' data-sheets-numberformat='[null,3,"0.00%",1]'>-430.35%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-1.778269782640592}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.78</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Hanyang Securities Co., Ltd. 1P"}'>Hanyang Securities Co., Ltd. 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Hanyang Securities Co., Ltd."}'>Hanyang Securities Co., Ltd.</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":-0.5769230769230769}' data-sheets-numberformat='[null,3,"0.00%",1]'>-57.69%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-1.7597547389001398}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.76</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Doosan Corp 2PB"}'>Doosan Corp 2PB</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Doosan Corp"}'>Doosan Corp</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":-0.016107382550335572}' data-sheets-numberformat='[null,3,"0.00%",1]'>-1.61%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-1.6412907716398928}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.64</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Duksung Co Ltd 1P"}'>Duksung Co Ltd 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Duksung Co Ltd"}'>Duksung Co Ltd</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":-0.6386554621848739}' data-sheets-numberformat='[null,3,"0.00%",1]'>-63.87%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-1.5966699157401607}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.60</td>
</tr>
<tr>
<td style="width: 252.727px;" data-sheets-value='{"1":2,"2":"Daesang Corp 1P"}'>Daesang Corp 1P</td>
<td style="width: 226.364px;" data-sheets-value='{"1":2,"2":"Daesang Corp"}'>Daesang Corp</td>
<td style="text-align: right; width: 100px;" data-sheets-value='{"1":3,"3":0.24910394265232974}' data-sheets-numberformat='[null,3,"0.00%",1]'>24.91%</td>
<td style="text-align: right; width: 81.8182px;" data-sheets-value='{"1":3,"3":-1.5934323730589053}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.59</td>
</tr>
<tr><td colspan="4" style="width: 252.727px;">Source: KRX</td></tr>
</tbody>
</table>Among the largest cap preferred shares having a market cap of +₩500B, 3 names are below -1.0σ (or close) on a 20-day moving average. Samsung SDI 1P tops the list at -2.49σ, followed by LG Chem 1P with -1.26σ and Hyundai Motor 1P with -0.91σ.<table class="table table-striped">
<colgroup>
<col width="200">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Preferred share"}'>Preferred share</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Market cap"}'>Market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Disparity to ordinary share"}'>Disparity to ordinary share</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Sigma on a 20-day moving average"}'>Sigma on a 20-day moving average</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samsung Electronics Co Ltd 1P"}'>Samsung Electronics Co Ltd 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60070.7291}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩60,070.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.08863920099875156}' data-sheets-numberformat='[null,3,"0.00%",1]'>8.86%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.17793857994805093}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>0.18</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Motor Co 2PB"}'>Hyundai Motor Co 2PB</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3995.1568845}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,995.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5186813186813187}' data-sheets-numberformat='[null,3,"0.00%",1]'>51.87%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.569196648465938}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-0.57</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"LG Chem Ltd 1P"}'>LG Chem Ltd 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3137.0304}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩3,137.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5436241610738255}' data-sheets-numberformat='[null,3,"0.00%",1]'>54.36%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-1.2600935362723429}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-1.26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Motor Co 1P"}'>Hyundai Motor Co 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2691.4136925}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩2,691.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5142857142857142}' data-sheets-numberformat='[null,3,"0.00%",1]'>51.43%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.9053094049952057}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-0.91</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"LG Household &amp; Healthcare Ltd 1P"}'>LG Household &amp; Healthcare Ltd 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1530.679113}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩1,530.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5162574651625746}' data-sheets-numberformat='[null,3,"0.00%",1]'>51.63%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.5138709182936434}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>1.51</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"LG Electronics Inc. 1P"}'>LG Electronics Inc. 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1213.3310352}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩1,213.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5277591973244147}' data-sheets-numberformat='[null,3,"0.00%",1]'>52.78%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.09711712745185148}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-0.10</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Amorepacific Corp 1P"}'>Amorepacific Corp 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1055.783}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩1,055.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6472663139329806}' data-sheets-numberformat='[null,3,"0.00%",1]'>64.73%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.9736023999998425}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>0.97</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Mirae Asset Securities Co Ltd 2PB"}'>Mirae Asset Securities Co Ltd 2PB</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":681.8}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩681.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.513}' data-sheets-numberformat='[null,3,"0.00%",1]'>51.30%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.1642296122273978}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-0.16</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samsung SDI Co Ltd 1P"}'>Samsung SDI Co Ltd 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":668.191048}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩668.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.35769828926905134}' data-sheets-numberformat='[null,3,"0.00%",1]'>35.77%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-2.4869804295474376}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-2.49</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samsung Fire &amp; Marine Insurance Co Ltd 1P"}'>Samsung Fire &amp; Marine Insurance Co Ltd 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":513.912}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩513.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2222222222222222}' data-sheets-numberformat='[null,3,"0.00%",1]'>22.22%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.3047924743702875}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>-0.30</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Investment Holdings Co., Ltd. 1P"}'>Korea Investment Holdings Co., Ltd. 1P</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":510.8394872}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]'>₩510.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1533980582524272}' data-sheets-numberformat='[null,3,"0.00%",1]'>15.34%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7986505752954771}' data-sheets-numberformat='[null,2,"#,##0.00",1]'>0.80</td>
</tr>
<tr><td colspan="4">Source: KRX</td></tr>
</tbody>
</table>

Korea has a total of 121 preferred shares trading in the public stock market. At the last close, 10 preferred shares are below -1.5σ relative to their respective ordinary shares on a 20-day moving average. Three of them are below -2.0σ, including Samsung SDI 1P. 








Preferred share
Ordinary share
Disparity to ordinary share
Sigma on a 20-day moving average


Sungshin Cement Co Ltd 1P
Sungshin Cement Co Ltd
-37.80%
-2.65


Samsung SDI Co Ltd 1P
Samsung SDI Co Ltd
35.77%
-2.49


Kumkang Kind Co Ltd 1P
Kumkang Kind Co Ltd
-83.67%
-2.25


Mirae Asset Securities Co Ltd 1P
Mirae Asset Securities Co Ltd
34.80%
-1.84


Hyundai Engineering &amp; Construction Co. 1P
Hyundai Engineering &amp; Construction Co.
-312.55%
-1.78


SK Securities Co., Ltd 1P
SK Securities Co., Ltd
-430.35%
-1.78


Hanyang Securities Co., Ltd. 1P
Hanyang Securities Co., Ltd.
-57.69%
-1.76


Doosan Corp 2PB
Doosan Corp
-1.61%
-1.64


Duksung Co Ltd 1P
Duksung Co Ltd
-63.87%
-1.60


Daesang Corp 1P
Daesang Corp
24.91%
-1.59

Source: KRX

Among the largest cap preferred shares having a market cap of +₩500B, 3 names are below -1.0σ (or close) on a 20-day moving average. Samsung SDI 1P tops the list at -2.49σ, followed by LG Chem 1P with -1.26σ and Hyundai Motor 1P with -0.91σ.








Preferred share
Market cap
Disparity to ordinary share
Sigma on a 20-day moving average


Samsung Electronics Co Ltd 1P
₩60,070.7B
8.86%
0.18


Hyundai Motor Co 2PB
₩3,995.2B
51.87%
-0.57


LG Chem Ltd 1P
₩3,137.0B
54.36%
-1.26


Hyundai Motor Co 1P
₩2,691.4B
51.43%
-0.91


LG Household &amp; Healthcare Ltd 1P
₩1,530.7B
51.63%
1.51


LG Electronics Inc. 1P
₩1,213.3B
52.78%
-0.10


Amorepacific Corp 1P
₩1,055.8B
64.73%
0.97


Mirae Asset Securities Co Ltd 2PB
₩681.8B
51.30%
-0.16


Samsung SDI Co Ltd 1P
₩668.2B
35.77%
-2.49


Samsung Fire &amp; Marine Insurance Co Ltd 1P
₩513.9B
22.22%
-0.30


Korea Investment Holdings Co., Ltd. 1P
₩510.8B
15.34%
0.80

Source: KRX



Korea Share Class Pair Trade: Assessing 3 Large Cap Prefs Below -1σ

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Over the last week, Korean preferred shares have outperformed the ordinary shares by a huge margin. On most stocks, the narrowing discount was accompanied by a huge jump in volume on the preferred shares.Is this the beginning of a trend where the discount on the preferred shares continues to narrow, or does this present an opportunity to sell out of the preferred shares and buy the ordinary shares? We recommend buying preferred shares that are trading at discounts of greater than 40% and near the wider end of their 2 year range, while switching out of preferred shares that are trading at discounts of less than 20% and are nearer to their tightest discounts over the last 2 years.With the ban on short selling, implementation of a pure arbitrage strategy is difficult and would depend on long sell availability. However, the strategy can be implemented in names that have relatively liquid single stock futures.

Over the last week, Korean preferred shares have outperformed the ordinary shares by a huge margin. On most stocks, the narrowing discount was accompanied by a huge jump in volume on the preferred shares.Is this the beginning of a trend where the discount on the preferred shares continues to narrow, or does this present an opportunity to sell out of the preferred shares and buy the ordinary shares? We recommend buying preferred shares that are trading at discounts of greater than 40% and near the wider end of their 2 year range, while switching out of preferred shares that are trading at discounts of less than 20% and are nearer to their tightest discounts over the last 2 years.With the ban on short selling, implementation of a pure arbitrage strategy is difficult and would depend on long sell availability. However, the strategy can be implemented in names that have relatively liquid single stock futures.

Korea Preferred Shares - An Eventful Week & Trade Ideas

South Korea

Samsung SDI Co., Ltd. specializes in developing Lithium Ion Battery (LIB) technology. The Company also manufactures cathode ray tubes (CRTs) for televisions and computer monitors. Samsung SDI also produces liquid crystal display (LCD) components and rechargeable batteries for cellular phones, personal digital assistants (PDAs), Energy Storage Systems and solar panels.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
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Samsung SDI Co Ltd (006405 KS)

Korea Prefs Yearend Dividend Plays

This post examines and discusses various dividend plays for Korea's preferred shares based on their expected dividend yields as we advance towards...

Sanghyun Park

Time to Short Samsung SDI on Inevitable ECO of Battery Unit or Massive Rights Offer

This post discusses the situation of Samsung SDI requiring either spinoff of the battery unit or a massive capital increase. So, the time has come...

Sanghyun Park

Samsung SDI Ord's Price Gain on a Market Noise Last Friday: Two Pair Trades Worth Considering

Samsung SDI's share price rose 3.69% on an unsubstantiated market noise. Here are two pair trades worth considering to capitalize on the current...

Sanghyun Park

Korea Preferred Shares - An Eventful Week & Trade Ideas

Over the last week, Korean preferred shares have outperformed the ordinary shares by a huge margin. On most stocks, the narrowing discount was...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Korea Prefs Yearend Dividend Plays

This post examines and discusses various dividend plays for Korea's preferred shares based on their expected dividend yields as we advance towards...

Sanghyun Park

Time to Short Samsung SDI on Inevitable ECO of Battery Unit or Massive Rights Offer

This post discusses the situation of Samsung SDI requiring either spinoff of the battery unit or a massive capital increase. So, the time has come...

Sanghyun Park

Samsung SDI Ord's Price Gain on a Market Noise Last Friday: Two Pair Trades Worth Considering

Samsung SDI's share price rose 3.69% on an unsubstantiated market noise. Here are two pair trades worth considering to capitalize on the current...

Sanghyun Park

Korea Share Class Pair Trade: Assessing 3 Large Cap Prefs Below -1σ

This post tracks the 20-day sigma of Korea's preferred shares relative to their respective ordinary share and assesses the 3 large-cap preferred...

Sanghyun Park

Korea Preferred Shares - An Eventful Week & Trade Ideas

Over the last week, Korean preferred shares have outperformed the ordinary shares by a huge margin. On most stocks, the narrowing discount was...

Brian Freitas