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>SK Group plans to merge SK Innovation and 90%-owned SK E&amp;S by month-end. Chosun Ilbo's report solidifies market confidence due to its credibility and likely intentional leak by SK Group.</li>
<li>Initially considered but deemed lower priority than SK IE Technology sale; SK Group opts for this alternative due to challenging market conditions for SKITE sale.</li>
<li>SK Innovation and SKIET rise with hopes of resolving liquidity issues and avoiding sacrifice. SK Inc is negatively impacted by concerns over valuation double counting from this merger.</li>
</ul>


SK Group plans to merge SK Innovation and 90%-owned SK E&amp;S by month-end. Chosun Ilbo's report solidifies market confidence due to its credibility and likely intentional leak by SK Group.
Initially considered but deemed lower priority than SK IE Technology sale; SK Group opts for this alternative due to challenging market conditions for SKITE sale.
SK Innovation and SKIET rise with hopes of resolving liquidity issues and avoiding sacrifice. SK Inc is negatively impacted by concerns over valuation double counting from this merger.


Digging into Chosun Ilbo's Report on SK Group's SK Innovation & SK E&S Merger Plans

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in foreign holdings of KRX Stocks as of Jun 14th which has an aggregated holding worth USD547.8bn.</li>
<li>We estimate that foreign flows to be inflows of USD1,575mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.</li>
<li>We highlight foreign changes in Sk Hynix, Samsung Electronics, Hanmi Semicon, Kia.</li>
</ul>


We analyzed the changes in foreign holdings of KRX Stocks as of Jun 14th which has an aggregated holding worth USD547.8bn.
We estimate that foreign flows to be inflows of USD1,575mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
We highlight foreign changes in Sk Hynix, Samsung Electronics, Hanmi Semicon, Kia.


KRX Foreign Holding Weekly (Jun 14th): Sk Hynix, Samsung Electronics, Hanmi Semicon, Kia

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

<ul>
<li>On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law in 2H 2024.</li>
<li>Meanwhile, starting <strong>1 July,</strong> the financial regulators will make it more difficult for Korean companies to conduct spin-offs that have separate allocation of treasury shares as new shares.</li>
<li>The top five stocks with highest percentage of treasury shares/outstanding shares are up on average 40.5% YTD. </li>
</ul>


On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law in 2H 2024.
Meanwhile, starting 1 July, the financial regulators will make it more difficult for Korean companies to conduct spin-offs that have separate allocation of treasury shares as new shares.
The top five stocks with highest percentage of treasury shares/outstanding shares are up on average 40.5% YTD. 


Changes in Law for Allocation of Treasury Shares as New Shares Post Spin-Offs in Korea in 2H 2024

<ul>
<li>Regardless of the divorce proceedings, SK still urgently needs SK Inc's stock price to rise for other reasons. That reason is to position SK Hynix directly under SK Inc.</li>
<li>SK Inc boosts stake in SK Square with SK Telecom shares, followed by a public tender offer to exchange SK Square shares for new SK Inc shares.</li>
<li>SK Inc's involvement in the divorce lawsuit makes it a focus for traders seeking relative outperformance among the SK companies involved in this situation.</li>
</ul>


Regardless of the divorce proceedings, SK still urgently needs SK Inc's stock price to rise for other reasons. That reason is to position SK Hynix directly under SK Inc.
SK Inc boosts stake in SK Square with SK Telecom shares, followed by a public tender offer to exchange SK Square shares for new SK Inc shares.
SK Inc's involvement in the divorce lawsuit makes it a focus for traders seeking relative outperformance among the SK companies involved in this situation.


Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix

Equity Bottom-Up

HDC Hyundai Development Co-Engineering & Construction / Equity Bottom-Up

HDC Hyundai Development Co-Engineering & Construction

<ul>
<li>In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 2Q 2024.</li>
<li>Of the 38 pair trades, 26 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.  </li>
<li>These pairs could generate trading opportunities in terms of their pricing gaps closing reversal. [CJ Corp vs CJ Cheiljedang &amp; Hanjin KAL Corp vs Korean Air Lines].</li>
</ul>


In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 2Q 2024.
Of the 38 pair trades, 26 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.  
These pairs could generate trading opportunities in terms of their pricing gaps closing reversal. [CJ Corp vs CJ Cheiljedang &amp; Hanjin KAL Corp vs Korean Air Lines].


Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2024

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)

Digging into Chosun Ilbo's Report on SK Group's SK Innovation & SK E&S Merger Plans

This post investigates Chosun Ilbo's exclusive report on the SK Innovation and SK E&S merger plans, likely to be announced at SK Group's highest...

Sanghyun Park

KRX Foreign Holding Weekly (Jun 14th): Sk Hynix, Samsung Electronics, Hanmi Semicon, Kia

We analyzed KRX foreign holding data for the past week and highlighted foreign holding changes in Sk Hynix, Samsung Electronics, Hanmi Semicon, Kia.

Ke Yan, CFA, FRM

Changes in Law for Allocation of Treasury Shares as New Shares Post Spin-Offs in Korea in 2H 2024

On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law...

Douglas Kim

Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix

This post delves into the prospective merger among SK Inc, SK Square, and SK Telecom, examining intriguing trading perspectives.

Sanghyun Park

Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in...

Douglas Kim

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52-week Range

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