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>Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200) </li>
<li>
Samsung Electronics (005930)' basis does not reflect special dividends, even though speculations have not disappeared entirely.</li>
<li>As the current basis hasn't widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.</li>
</ul>


Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200) 

Samsung Electronics (005930)' basis does not reflect special dividends, even though speculations have not disappeared entirely.
As the current basis hasn't widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.


Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>On 15 November, Ecopro Group announced a major equity grant for 2,706 employees that work for various affiliates of the Ecopro Group.</li>
<li>The company announced that it will provide equity grant shares worth about 10 million won per employee (for most of the Ecopro Group full time employees as of 30 September).</li>
<li>We like what Ecopro Group is trying to do with this equity grant program and we believe this equity grant program will positively impact Ecopro Co and Ecopro BM. </li>
</ul>


On 15 November, Ecopro Group announced a major equity grant for 2,706 employees that work for various affiliates of the Ecopro Group.
The company announced that it will provide equity grant shares worth about 10 million won per employee (for most of the Ecopro Group full time employees as of 30 September).
We like what Ecopro Group is trying to do with this equity grant program and we believe this equity grant program will positively impact Ecopro Co and Ecopro BM. 


Ecopro Group: Major Equity Grants for 2,706 Employees

<ul>
<li>At current prices, we like a pair trade between SK Telecom (go long) and LG Uplus (go short). </li>
<li>We believe the share price gap has widened too much in the past month in favor of LG Uplus and this gap is likely to close in the coming weeks.</li>
<li>While LG Uplus tries to expand its non-telecom businesses, this may involve greater spending on marketing and promotions (as % of sales), which could be a drag on its earnings.</li>
</ul>


At current prices, we like a pair trade between SK Telecom (go long) and LG Uplus (go short). 
We believe the share price gap has widened too much in the past month in favor of LG Uplus and this gap is likely to close in the coming weeks.
While LG Uplus tries to expand its non-telecom businesses, this may involve greater spending on marketing and promotions (as % of sales), which could be a drag on its earnings.


A Pair Trade Between SK Telecom & LG Uplus

<ul>
<li>On 2 November, it was reported that Sweden's EQT Partners is to acquire a 36.87% stake in SK Shieldus. </li>
<li>EQT Partners is expected to invest more than 2 trillion won in SK Shieldus which is expected to be valued at about 4.5 trillion won to 5.2 trillion won.</li>
<li>Our base case valuation of SK Square is NAV per share of 59,272, which is 59% higher than current price.</li>
</ul>


On 2 November, it was reported that Sweden's EQT Partners is to acquire a 36.87% stake in SK Shieldus. 
EQT Partners is expected to invest more than 2 trillion won in SK Shieldus which is expected to be valued at about 4.5 trillion won to 5.2 trillion won.
Our base case valuation of SK Square is NAV per share of 59,272, which is 59% higher than current price.


Sweden's EQT Partners to Invest Big in SK Shieldus: Impact on SK Square

<ul>
<li>Our base case target price of 276,567 won suggests a 37% upside from current levels for SK Inc. Our base case valuation assumes a 30% holdco discount.</li>
<li>At DPS of 8,000 won, this would represent dividend yield of 4% at current price of 202,000 won.</li>
<li>The three largest holdcos/quasi holdcos in Korea which include Samsung C&amp;T, SK Inc, and LG Corp have strongly outperformed KOSPI this year. </li>
</ul>


Our base case target price of 276,567 won suggests a 37% upside from current levels for SK Inc. Our base case valuation assumes a 30% holdco discount.
At DPS of 8,000 won, this would represent dividend yield of 4% at current price of 202,000 won.
The three largest holdcos/quasi holdcos in Korea which include Samsung C&amp;T, SK Inc, and LG Corp have strongly outperformed KOSPI this year. 


SK Inc: Solid Dividends, Ongoing Buyback, and Emphasis on Value Should Lead to Outperformance

South Korea

SK Telecom Co., Ltd. is a Korean mobile and telecommunications operator. The Company provides cellular voice, wireless data, and wireless internet services. SK Telecom also offers fixed line services and platform services.

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SK Telecom (017670 KS)

Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

This post screens targetable names on KOSPI for dividend arbitrage based on relatively reliable DPS estimates and current basis widening.

Sanghyun Park

Ecopro Group: Major Equity Grants for 2,706 Employees

On 15 November, Ecopro Group announced a major equity grant for 2,706 employees that work for various affiliates of the Ecopro Group.

Douglas Kim

A Pair Trade Between SK Telecom & LG Uplus

At current prices, we like a pair trade between SK Telecom and LG Uplus. The price gap has widened too much in the past month in favor of LG Uplus...

Douglas Kim

Sweden's EQT Partners to Invest Big in SK Shieldus: Impact on SK Square

On 2 November, it was reported that Sweden's EQT Partners is to acquire a 36.87% stake in SK Shieldus. The investment in SK Shieldus by EQT...

Douglas Kim

SK Inc: Solid Dividends, Ongoing Buyback, and Emphasis on Value Should Lead to Outperformance

Our base case target price of 276,567 won suggests a 37% upside from current levels for SK Inc. Our base case valuation assumes a 30% holdco discount.

Douglas Kim

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