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.

Equity Capital Markets

LG Energy Solution / Equity Capital Markets

<ul>
<li>From a valuation point of view, the biggest issue is the size of the recall provisions.</li>
<li>There is a risk that the float-adjusted market cap threshold may not be met if there is too much voluntary lockup.</li>
<li>Many institutional investors will preemptively sell the existing constituents of the battery sector indexes and then repurchase them when the LG ES joins the indexes.</li>
</ul>


From a valuation point of view, the biggest issue is the size of the recall provisions.
There is a risk that the float-adjusted market cap threshold may not be met if there is too much voluntary lockup.
Many institutional investors will preemptively sell the existing constituents of the battery sector indexes and then repurchase them when the LG ES joins the indexes.


LG Energy Solution IPO: Offering Details & Issues for Consideration

Event-Driven

<ul>
<li>The rebalancing implementation of the FnGuide Secondary Battery Index will be on December 13. So, the ETF operator's rebalancing trading will take place at the close on December 10.</li>
<li>Among the stocks to which the ceiling is applied, the stocks with a relatively sizeable passive impact (at the current prices) are <strong>SK Innovation, Ecopro BM, and Posco Chemical</strong>.</li>
<li>Among the companies that have been listed since June, the companies that directly operate the rechargeable battery business are the following three: <strong>Enchem</strong>, GI Tech, and Onejoon.</li>
</ul>


The rebalancing implementation of the FnGuide Secondary Battery Index will be on December 13. So, the ETF operator's rebalancing trading will take place at the close on December 10.
Among the stocks to which the ceiling is applied, the stocks with a relatively sizeable passive impact (at the current prices) are SK Innovation, Ecopro BM, and Posco Chemical.
Among the companies that have been listed since June, the companies that directly operate the rechargeable battery business are the following three: Enchem, GI Tech, and Onejoon.


FnGuide Secondary Battery Index Rebalancing Preview in December: Watch Enchem

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

SK IE Technology   / Equity Capital Markets

<ul>
<li>SK IE Technology’s (SKIE) shareholder aims to raise around US$430m via selling part of its shareholding.</li>
<li>The deal comes close to the six-month lock-up expiry post listing and hence, there is a high likelihood that the selldown might have been expected.</li>
<li>In this note, we will run the deal through our ECM framework.</li>
</ul>


SK IE Technology’s (SKIE) shareholder aims to raise around US$430m via selling part of its shareholding.
The deal comes close to the six-month lock-up expiry post listing and hence, there is a high likelihood that the selldown might have been expected.
In this note, we will run the deal through our ECM framework.


SK IE Technology Placement - Is Probably Expected

<p>The quarterly rebalancing of the WISE Secondary Cell Index is this Friday. So, rebalancing trading takes place this Thursday at the close.</p><div class="content-highlight"><ul>
<li><strong>The TIGER ETF (305540) is the only ETF that tracks this index. However, the recent AUM has risen sharply, and as of yesterday's closing price, the AUM is approaching KRW 1 trillion.</strong></li>
<li><strong>There is no add (or delete) in this rebalancing that will cause a substantial passive impact like SKIET in the previous rebalancing.</strong></li>
<li><strong>But the AUM is massive, so the level of stock price fluctuations potentially resulting from index weight changes is expected to be large enough to deserve our attention.</strong></li>
</ul></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Index summary"}'>Index summary</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Index name"}'>Index name</td>
<td data-sheets-value='{"1":2,"2":"Wise Secondary Cell"}'><div><div>Wise Secondary Cell</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ETF"}'>ETF</td>
<td data-sheets-value='{"1":2,"2":"Mirae Asset TIGER Secondary Cell ETF"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'><div><div>Mirae Asset TIGER Secondary Cell ETF</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td data-sheets-value='{"1":2,"2":"305540"}' data-sheets-formula='="305540"'>305540</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"AUM"}'><strong>AUM</strong></td>
<td data-sheets-value='{"1":3,"3":999.267}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[1]C[0]*R[2]C[0]/1000000000"><strong>₩999.3B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SO"}'><strong>SO</strong></td>
<td data-sheets-value='{"1":3,"3":44650000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>44,650,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Number of constituents"}'>Number of constituents</td>
<td data-sheets-value='{"1":3,"3":26}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Weight type"}'>Weight type</td>
<td data-sheets-value='{"1":2,"2":"Float-adjusted market cap"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div>Float-adjusted market cap</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Cap"}'>Cap</td>
<td data-sheets-value='{"1":3,"3":0.1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>10.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Rebalancing cycle"}'>Rebalancing cycle</td>
<td data-sheets-value='{"1":2,"2":"Quarterly"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Quarterly</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Rebalancing month"}'>Rebalancing month</td>
<td data-sheets-value='{"1":2,"2":"January, April, July, and October"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div>January, April, July, and October</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Announcement date"}'>Announcement date</td>
<td data-sheets-value='{"1":2,"2":"Only ETF operator is notified"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div>Only ETF operator is notified</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implementation date"}'>Implementation date</td>
<td data-sheets-value='{"1":2,"2":"The trading day following the option expiration dates"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div>The trading day following the option expiration dates</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Next implementation date"}'>Next implementation date</td>
<td data-sheets-value='{"1":2,"2":"October 15, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div>October 15, 2021</div></div></td>
</tr>
<tr><td colspan="2"><div><div></div></div></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Rebalancing trading"}'><strong>Rebalancing trading</strong></td>
<td data-sheets-value='{"1":2,"2":"At the close on October 14, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div><strong>At the close on October 14, 2021</strong></div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Screening base date"}'><strong>Screening base date</strong></td>
<td data-sheets-value='{"1":2,"2":"The last trading day of the month preceding the date of regular rebalancing"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div><strong>The last trading day of the month preceding the date of regular rebalancing</strong></div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Screening period"}'><strong>Screening period</strong></td>
<td data-sheets-value='{"1":2,"2":"The three months preceding the screening base date"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div><div><strong>The three months preceding the screening base date</strong></div></div></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX &amp; TIGER ETF"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=PDF!R[9]C[0]">Source: KRX &amp; TIGER ETF</td></tr>
</tbody>
</table>

The quarterly rebalancing of the WISE Secondary Cell Index is this Friday. So, rebalancing trading takes place this Thursday at the close.
The TIGER ETF (305540) is the only ETF that tracks this index. However, the recent AUM has risen sharply, and as of yesterday's closing price, the AUM is approaching KRW 1 trillion.
There is no add (or delete) in this rebalancing that will cause a substantial passive impact like SKIET in the previous rebalancing.
But the AUM is massive, so the level of stock price fluctuations potentially resulting from index weight changes is expected to be large enough to deserve our attention.






Index summary

Index name
Wise Secondary Cell


ETF
Mirae Asset TIGER Secondary Cell ETF


Ticker
305540


AUM
₩999.3B


SO
44,650,000


Number of constituents
26


Weight type
Float-adjusted market cap


Cap
10.00%


Rebalancing cycle
Quarterly


Rebalancing month
January, April, July, and October


Announcement date
Only ETF operator is notified


Implementation date
The trading day following the option expiration dates


Next implementation date
October 15, 2021



Rebalancing trading
At the close on October 14, 2021


Screening base date
The last trading day of the month preceding the date of regular rebalancing


Screening period
The three months preceding the screening base date

Source: KRX &amp; TIGER ETF



TIGER WISE Secondary Cell Index: October 14 Rabalancing Trading

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<p>With ex-dividend date coming up in Korea on 29 December, we take a look at the dividend yield differential between the common and preferred shares and the discount on the preferred shares.</p><p>We recommend buying preferred shares (and hedging with the common shares) with large dividend yield differentials versus the common shares and that are trading towards the bottom of their discount range versus the common. Apart from the dividend yield pickup we also expect to earn returns on the narrowing of the discount on the preferred shares.</p><p>With short selling only permitted on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-index" target="_blank" data-smartkarma-citation="entities:22911:1" rel="noopener">Korea Stock Exchange Kospi Index (KOSPI INDEX)</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> constituents, shorts selling on the preferred shares is not possible since they are not eligible for index inclusion.</p><p>We see attractive risk/reward for the preferred shares on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a>, <a href="https://www.smartkarma.com/entities/amorepacific-group" target="_blank" data-smartkarma-citation="entities:12179:1" rel="noopener">Amorepacific Group (002790 KS)</a>, <a href="https://www.smartkarma.com/entities/s-oil-corp" target="_blank" data-smartkarma-citation="entities:1667:1" rel="noopener">S Oil Corp (010950 KS)</a>, <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a> and <a href="https://www.smartkarma.com/entities/sk-innovation-co-ltd" target="_blank" data-smartkarma-citation="entities:1268:1" rel="noopener">SK Innovation (096770 KS)</a>. </p>

With ex-dividend date coming up in Korea on 29 December, we take a look at the dividend yield differential between the common and preferred shares and the discount on the preferred shares.We recommend buying preferred shares (and hedging with the common shares) with large dividend yield differentials versus the common shares and that are trading towards the bottom of their discount range versus the common. Apart from the dividend yield pickup we also expect to earn returns on the narrowing of the discount on the preferred shares.With short selling only permitted on Korea Stock Exchange Kospi Index (KOSPI INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) constituents, shorts selling on the preferred shares is not possible since they are not eligible for index inclusion.We see attractive risk/reward for the preferred shares on Hyundai Motor Co (005380 KS), LG Household &amp; Health Care (051900 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS), Amorepacific Group (002790 KS), S Oil Corp (010950 KS), Amorepacific Corp (090430 KS), Samsung SDI (006400 KS) and SK Innovation (096770 KS). 

South Korea

SK Innovation Co., Ltd. refines, markets, and distributes oil.  The Company produces a variety of petroleum products, such as gasoline, kerosene, liquefied petroleumgas (LPG), and diesel oil.  SK Energy also manufactures petrochemical p roducts, including paraxylene, synthetic resins, styrene monomer, and ethylene.

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SK Innovation (096770 KS)

LG Energy Solution IPO: Offering Details & Issues for Consideration

LG Energy Solutions' IPO prospectus is finally out. This post presents the offering details as well as the pricing and valuations. It then...

Sanghyun Park

FnGuide Secondary Battery Index Rebalancing Preview in December: Watch Enchem

The FnGuide Secondary Battery Index (KODEX ETF) rebalancing in December is expected to see several names with a sizeable passive impact.

Sanghyun Park

SK IE Technology Placement - Is Probably Expected

SK IE Technology’s (SKIE) shareholder aims to raise around US$430m via selling part of its shareholding. The deal is probably expected.

Sumeet Singh

TIGER WISE Secondary Cell Index: October 14 Rabalancing Trading

This post looks at the latest situation of the TIGER WISE Secondary Cell rebalancing trading scheduled for this Thursday.

Sanghyun Park

Korea Preferred Shares - Trade Ideas

With dividend ex-date coming up in just over 2 months, we highlight preferred shares that trade at a big discount to the common shares and at a...

Brian Freitas

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