Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>SKC announced aggressive plans to expand its rechargeable battery, semiconductor, and ecofriendly materials and it plans to invest about 5 trillion to 6 trillion won in these businesses by 2027. </li>
<li>We believe that the company will use a combination of asset sales, sale of its treasury shares, and additional debt and equity raising in the next 3-5 years. </li>
<li>While the market welcomes sale of non-core businesses such as SK Pucore and sale of treasury shares, it is likely to have greater concerns about additional debt and equity raising. </li>
</ul>


SKC announced aggressive plans to expand its rechargeable battery, semiconductor, and ecofriendly materials and it plans to invest about 5 trillion to 6 trillion won in these businesses by 2027. 
We believe that the company will use a combination of asset sales, sale of its treasury shares, and additional debt and equity raising in the next 3-5 years. 
While the market welcomes sale of non-core businesses such as SK Pucore and sale of treasury shares, it is likely to have greater concerns about additional debt and equity raising. 


SKC: Aggressive Plans to Expand Rechargeable Battery & Semiconductor Materials - But At What Price?

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

<ul>
<li>We should seize the arbitrage trading opportunities between SSF and subscription rights during the rights trading window. SK Innovation's SSF is highly liquid, being traded at nearly 0.5x spot.</li>
<li>The key is to catch the timing of basis widening. SK Innovation traditionally experiences significant intraday basis fluctuations, making it a crucial factor in maximizing our profitability.</li>
<li>The ex-date play, betting on the tendency for prices to close above the base price on the ex-date, may not hold significant appeal. This pattern has become less pronounced recently.</li>
</ul>


We should seize the arbitrage trading opportunities between SSF and subscription rights during the rights trading window. SK Innovation's SSF is highly liquid, being traded at nearly 0.5x spot.
The key is to catch the timing of basis widening. SK Innovation traditionally experiences significant intraday basis fluctuations, making it a crucial factor in maximizing our profitability.
The ex-date play, betting on the tendency for prices to close above the base price on the ex-date, may not hold significant appeal. This pattern has become less pronounced recently.


What Arb Trading Opportunities Should We Target in SK Innovation's Rights Offering?

<ul>
<li>The market's attention has shifted to the second part, which is the additional utilization of a portion of the harvest result for shareholder returns.</li>
<li>There is a significant possibility that the timing to allocate the ₩200B for shareholder returns will be advanced to late July or early August.</li>
<li>We should set up a position aiming for the potential for a special dividend, which may lead to momentum trading flow just before the quarterly ex-div date later this month.</li>
</ul>


The market's attention has shifted to the second part, which is the additional utilization of a portion of the harvest result for shareholder returns.
There is a significant possibility that the timing to allocate the ₩200B for shareholder returns will be advanced to late July or early August.
We should set up a position aiming for the potential for a special dividend, which may lead to momentum trading flow just before the quarterly ex-div date later this month.


SK Square's Special Dividend Momentum Trading: Entry Timing at Month End.

<ul>
<li>The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week's seminar served as a proactive way to inform the market about it.</li>
<li>The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies' treasury stock holdings.</li>
<li>Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.</li>
</ul>


The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week's seminar served as a proactive way to inform the market about it.
The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies' treasury stock holdings.
Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.


Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Chinese data centre outfit <a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata (CD US)</a> has no end of alleged suitors, rumoured to include SOE-backed China Merchants, <a href="https://www.smartkarma.com/entities/gds-holdings-adr" target="_blank" data-smartkarma-citation="entities:23649:1" rel="noopener">GDS (GDS US)</a>, PE outfit PAG, and <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT (EQT SS)</a>-backed EdgeConneX.</li>
<li>Now Bain Capital, Chindata's largest shareholder with 42.17% (and 87.39% of the voting power) has made a non-binding proposal of $8/share per ADS, a 33% premium to last close.</li>
<li>Chindata's board has made no decision on the proposal. It's hardly a knockout Offer. But the key question is whether Bain will get regular approval to take Chindata private. </li>
</ul>


Chinese data centre outfit Chindata (CD US) has no end of alleged suitors, rumoured to include SOE-backed China Merchants, GDS (GDS US), PE outfit PAG, and EQT (EQT SS)-backed EdgeConneX.
Now Bain Capital, Chindata's largest shareholder with 42.17% (and 87.39% of the voting power) has made a non-binding proposal of $8/share per ADS, a 33% premium to last close.
Chindata's board has made no decision on the proposal. It's hardly a knockout Offer. But the key question is whether Bain will get regular approval to take Chindata private. 


South Korea

SK Holdings Co., Ltd. is a holdings company that is engaged in various industries including energy, chemicals, information technology, semiconductors, marketing, and services businesses in South Korea and internationally.

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SK Inc (034730 KS)

SKC: Aggressive Plans to Expand Rechargeable Battery & Semiconductor Materials - But At What Price?

While the market welcomes SKC's sale of non-core businesses such as SK Pucore and sale of treasury shares, it is likely to have greater concerns...

Douglas Kim

What Arb Trading Opportunities Should We Target in SK Innovation's Rights Offering?

This post delves into potential arbitrage trading prospects that could be capitalized upon through SK Innovation's ₩1T rights offering.

Sanghyun Park

SK Square's Special Dividend Momentum Trading: Entry Timing at Month End.

This post examines SK Square's shareholder return progress amidst schedule changes in the SK Shieldus deal and explores momentum trading...

Sanghyun Park

Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names

Financial authorities in Korea are practically pushing forward with a 10% limit on treasury stock. This post explores the potential targets that...

Sanghyun Park

Is Bain Permitted To Take Over Chindata?

Trading at a 15.3% gross spread to terms, which is indicative of the non-binding nature of the Offer, and what might be involved in the due...

David Blennerhassett

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