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

<h2>Share buyback</h2><p>LG U+ announced a well-anticipated share buyback. Well, the announcement was made earlier than initially expected. Also, the size is much smaller than ₩300B that the local street anticipated.</p><p>It is a ₩100.0B buyback, representing 1.49% of the total shares at the last closing price and 1.35% of the total equity.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Overview (₩B)"}'>Buyback overview</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":436611361}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">436,611,361</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">3</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target qty."}'><strong>Target qty.</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6493506.493506493}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[2]C[0]"><strong>6,493,506</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of SO"}'><strong>- % of SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.014872509223383432}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-7]C[0]"><strong>1.49%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares after buyback"}'>Treasury shares after buyback</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6493509.493506493}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[-11]C[0]+R[-8]C[0]">6,493,509</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of SO"}'>- % of SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.014872516094482693}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-15]C[0]">1.49%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total value"}'>Total value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":100}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">₩100.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Equity"}'>Equity</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7418.124854889}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>₩7,418.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of equity"}'>- % of equity</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.013480495671907417}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-6]C[0]/R[-1]C[0]">1.35%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Daily buyback impact</h2><p>The buyback is a year. Well, the usual period for a buyback in Korea is 3 months. But we see more and more companies do a year-long buyback of late.</p><p>The buyback begins tomorrow and runs for a year until June 8 next year. We have a daily equal-weighted buyback of 25,871 shares, representing a measly 0.89% of the 30-day average daily trade volume.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Execution"}'>Execution</td></tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Buyback begins"}'><strong>Buyback begins</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":44356}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 6. 9</strong></td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Buyback ends"}'><strong>Buyback ends</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":44720}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2022. 6. 8</strong></td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Banker"}'>Banker</td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":2,"2":"KB Securities Co., Ltd."}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>KB Securities Co., Ltd.</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Method"}'>Method</td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":2,"2":"Openly in the market (no off-hours block trade)"}'>Openly in the market (no off-hours block trade)</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Number of trading days"}'>Number of trading days</td>
<td style="text-align: right; width: 352.514px;" data-sheets-numberformat='{"1":2,"2":"#,##0"}'>251</td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":"Daily equal-weighted buyback qty."}'><strong>Daily equal-weighted buyback qty.</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":25870.54379883065}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[-35]C[0]/251"><strong>25,871</strong></td>
</tr>
<tr>
<td style="width: 352.5px;" data-sheets-value='{"1":2,"2":" - % of 1-month average daily trade volume"}'><strong>- % of 30-day average daily trade volume</strong></td>
<td style="text-align: right; width: 352.514px;" data-sheets-value='{"1":3,"3":0.008940932608776117}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[-1]C[0]/googlefinance(R[-43]C[0], "volumeavg")'><strong>0.89%</strong></td>
</tr>
<tr><td colspan="2" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: DART &amp; Google Finance"}'>Source: DART &amp; Google Finance</td></tr>
</tbody>
</table>

Share buybackLG U+ announced a well-anticipated share buyback. Well, the announcement was made earlier than initially expected. Also, the size is much smaller than ₩300B that the local street anticipated.It is a ₩100.0B buyback, representing 1.49% of the total shares at the last closing price and 1.35% of the total equity.





Buyback overview

Shares outstanding
436,611,361


Treasury shares
3


Target qty.
6,493,506


- % of SO
1.49%


Treasury shares after buyback
6,493,509


- % of SO
1.49%


Total value
₩100.0B


Equity
₩7,418.1B


- % of equity
1.35%

Source: DART

Daily buyback impactThe buyback is a year. Well, the usual period for a buyback in Korea is 3 months. But we see more and more companies do a year-long buyback of late.The buyback begins tomorrow and runs for a year until June 8 next year. We have a daily equal-weighted buyback of 25,871 shares, representing a measly 0.89% of the 30-day average daily trade volume.





Execution

Buyback begins
2021. 6. 9


Buyback ends
2022. 6. 8


Banker
KB Securities Co., Ltd.


Method
Openly in the market (no off-hours block trade)


Number of trading days
251


Daily equal-weighted buyback qty.
25,871


- % of 30-day average daily trade volume
0.89%

Source: DART &amp; Google Finance



LG U+ Buyback Announcement: Details & Impacts

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>After the market close today (8 June), <a href="https://www.smartkarma.com/entities/lg-uplus-corp" target="_blank" data-smartkarma-citation="entities:1113:1" rel="noopener">LG Uplus Corp (032640 KS)</a> announced that it will complete share buyback worth 100 billion won as well the start of interim dividends starting this year. LG Uplus currently has a market cap of 6.7 trillion won so this buyback would be worth 1.5% of outstanding shares. The start of the 100 billion won worth of share buyback program starts on 9 June 2021 and ends on 8 June 2022.</p><p>There have been some rumors in the local media (previous to today's announcement) that there could be a buyback worth nearly 300 billion won. So today's announcement of 100 billion won in share buyback would be only about 1/3 of the amount mentioned in recent local media. With regards to share buyback, LG Uplus follows SK Telecom and KT Corp that have both announced share buyback programs in the past year. </p><div class="content-highlight">
<h2><strong>Conclusion:</strong></h2>
<p>LG Uplus' announcement to buyback 100 billion won worth of shares should have slightly positive impact on its share price. Its decision to make dividend payments bi-annually is also a step in the right direction. In the near term, there is an increasing probability that LG Uplus partners with Disney to provide Disney Plus OTT services in Korea. </p>
<p>Over a longer-term, there has definitely been a rotation from growth to value oriented stocks and sectors this year. The telcos have remained a key favorite and has been outperforming the market significantly. In the midst of these near-term and longer term catalysts and sector rotation, we have a positive view of LG Uplus. </p>
</div>

After the market close today (8 June), LG Uplus Corp (032640 KS) announced that it will complete share buyback worth 100 billion won as well the start of interim dividends starting this year. LG Uplus currently has a market cap of 6.7 trillion won so this buyback would be worth 1.5% of outstanding shares. The start of the 100 billion won worth of share buyback program starts on 9 June 2021 and ends on 8 June 2022.There have been some rumors in the local media (previous to today's announcement) that there could be a buyback worth nearly 300 billion won. So today's announcement of 100 billion won in share buyback would be only about 1/3 of the amount mentioned in recent local media. With regards to share buyback, LG Uplus follows SK Telecom and KT Corp that have both announced share buyback programs in the past year. 
Conclusion:
LG Uplus' announcement to buyback 100 billion won worth of shares should have slightly positive impact on its share price. Its decision to make dividend payments bi-annually is also a step in the right direction. In the near term, there is an increasing probability that LG Uplus partners with Disney to provide Disney Plus OTT services in Korea. 
Over a longer-term, there has definitely been a rotation from growth to value oriented stocks and sectors this year. The telcos have remained a key favorite and has been outperforming the market significantly. In the midst of these near-term and longer term catalysts and sector rotation, we have a positive view of LG Uplus. 


LG Uplus: A 100 Billion Won in Buyback, Bi-Annual Dividends, & A Potential Partnership with Disney

<div class="content-highlight">
<p>In this insight, we update on the progress of the M&amp;A of<a href="https://biz.chosun.com/distribution/channel/2021/06/07/PIS7RH6QEZHHPP7AT5BQPVIJKE/" target="_blank" rel="noopener"> Ebay Korea. I</a>n the past several weeks, there have been four parties that have showed interest in acquiring Ebay Korea, including Shinsegae/Naver consortium, Lotte Group, MBK Partners, and SK Telecom. Only the Shinsege/Naver consortium and the Lotte Group have put in preliminary bids for Ebay Korea.</p>
<p>The overall price of Ebay Korea (3rd largest e-commerce player in Korea) has recently come down from 5 trillion won or more to about 3 to 4 trillion won. However, apparently Ebay Korea is still seeking a valuation close to 5 trillion won. </p>
</div>


In this insight, we update on the progress of the M&amp;A of Ebay Korea. In the past several weeks, there have been four parties that have showed interest in acquiring Ebay Korea, including Shinsegae/Naver consortium, Lotte Group, MBK Partners, and SK Telecom. Only the Shinsege/Naver consortium and the Lotte Group have put in preliminary bids for Ebay Korea.
The overall price of Ebay Korea (3rd largest e-commerce player in Korea) has recently come down from 5 trillion won or more to about 3 to 4 trillion won. However, apparently Ebay Korea is still seeking a valuation close to 5 trillion won. 


Who Will Acquire Ebay Korea -  Shinsegae/Naver Consortium or Lotte Group?

Equity Bottom-Up

<div class="content-highlight"><p><strong>SK Telecom reported better than expected earnings in 1Q 2021.</strong> It reported sales of 4.8 trillion won (up 7.4% YoY and 0.2% higher than consensus estimates) and operating profit of 388.8 billion won (up 29% YoY and 12.4% higher than the consensus). We continue to remain positive on SK Telecom and post better than expected earnings in 1Q 2021, we expect SK Telecom to continue to outperform the market. </p></div><p>The following were the most important takeaways from SK Telecom's earnings in 1Q 2021: </p><ul>
<li>
<strong>Guidance raised for 5G subscribers</strong> - At the end of 1Q 2021, SK Telecom had 6.74 million 5G subscribers. The company raised its year-end 5G subscribers to 10 million, up from 9 million in the beginning part of this year. </li>
<li>
<strong>Timing of the holdco spin-off</strong> - SK Telecom plans to complete the newco holding company spin-off in November 2021.</li>
<li>
<strong>Big Push for Subscription Based Services - </strong>In 2H 2021, the company plans to introduce T-Membership subscription based services. By 2025, the company is targeting 1.5 trillion won and 35 million subscribers for the T-membership subscription services.</li>
</ul>

SK Telecom reported better than expected earnings in 1Q 2021. It reported sales of 4.8 trillion won (up 7.4% YoY and 0.2% higher than consensus estimates) and operating profit of 388.8 billion won (up 29% YoY and 12.4% higher than the consensus). We continue to remain positive on SK Telecom and post better than expected earnings in 1Q 2021, we expect SK Telecom to continue to outperform the market. The following were the most important takeaways from SK Telecom's earnings in 1Q 2021: 

Guidance raised for 5G subscribers - At the end of 1Q 2021, SK Telecom had 6.74 million 5G subscribers. The company raised its year-end 5G subscribers to 10 million, up from 9 million in the beginning part of this year. 

Timing of the holdco spin-off - SK Telecom plans to complete the newco holding company spin-off in November 2021.

Big Push for Subscription Based Services - In 2H 2021, the company plans to introduce T-Membership subscription based services. By 2025, the company is targeting 1.5 trillion won and 35 million subscribers for the T-membership subscription services.


SK Telecom - Major Highlights of Better than Expected 1Q 2021 Earnings

<p>SK Telecom made another surprising announcement. It just said that it would cancel 8.7M treasury shares (all of them are ordinary shares) on May 6.</p><p>They represent 10.76% of the total shares and 90.61% of the current treasury shares. They are worth ₩2.64T at the last close. After this cancellation, SKT's treasury shareholding comes down to only 900,000 shares, representing a meager 1.11% of the shares outstanding.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Cancellation overview (₩B)"}'>Cancellation overview</td></tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":80745711}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">80,745,711</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":9585568}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">9,585,568</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Target qty."}'><strong>Target quantity for cancellation</strong></td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":8685568}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[2]C[0]"><strong>8,685,568</strong></td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":" - % of SO"}'><strong>- % of shares outstanding</strong></td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":0.10756692699132961}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-7]C[0]"><strong>10.76%</strong></td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":" - % of common treasury shares"}'><strong>- % of treasury shares</strong></td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":0.9061088503049585}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-2]C[0]/R[-6]C[0]"><strong>90.61%</strong></td>
</tr>
<tr>
<td style="width: 351.818px;"><strong>Shares outstanding after cancellation</strong></td>
<td style="text-align: right; width: 350.909px;"><strong>72,060,143</strong></td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Treasury shares after cancellation"}'>Treasury shares after cancellation</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":900000}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[-11]C[0]-R[-6]C[0]">900,000</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":" - % of SO"}'>- % of SO</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":0.011146102856162849}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-15]C[0]">1.25%</td>
</tr>
<tr><td colspan="2" style="width: 351.818px;" data-sheets-value='{"1":2,"2":" - % of pref"}'>Source: DART</td></tr>
</tbody>
</table><p><strong>Why canceling shares now?</strong></p><ul>
<li>SKT's treasury shares should come in handy for an eventual merger with SK Holdings. So, the initial speculation was transferring all the treasury shares to SKT intermediary Holdco so that SK Holdings can enjoy an increased amount of voting shares in SKT Opco after a merger.</li>
<li>That means, if there is no such merger in the future, SKT's treasury shares would not be much of use. The announced split is an equity spinoff, but this isn't a typical holding company conversion requiring a post-split tender offer to move SKT Opco under SKT intermediary Holdco. That is, these treasury shares regaining voting rights for SKT Opco wouldn't mean much for the major shareholder.</li>
<li><strong>So, keeping the treasury shares can send a wrong signal to SKT shareholders that a merger with SK Holdings may not be completely thrown away even though the management confirmed no such plan.</strong></li>
<li><strong>Obviously, the short-term priority is getting approval on the split from SKT shareholders, and anything that may impede it should be addressed now.</strong></li>
</ul>

SK Telecom made another surprising announcement. It just said that it would cancel 8.7M treasury shares (all of them are ordinary shares) on May 6.They represent 10.76% of the total shares and 90.61% of the current treasury shares. They are worth ₩2.64T at the last close. After this cancellation, SKT's treasury shareholding comes down to only 900,000 shares, representing a meager 1.11% of the shares outstanding.





Cancellation overview

Shares outstanding
80,745,711


Treasury shares
9,585,568


Target quantity for cancellation
8,685,568


- % of shares outstanding
10.76%


- % of treasury shares
90.61%


Shares outstanding after cancellation
72,060,143


Treasury shares after cancellation
900,000


- % of SO
1.25%

Source: DART

Why canceling shares now?
SKT's treasury shares should come in handy for an eventual merger with SK Holdings. So, the initial speculation was transferring all the treasury shares to SKT intermediary Holdco so that SK Holdings can enjoy an increased amount of voting shares in SKT Opco after a merger.
That means, if there is no such merger in the future, SKT's treasury shares would not be much of use. The announced split is an equity spinoff, but this isn't a typical holding company conversion requiring a post-split tender offer to move SKT Opco under SKT intermediary Holdco. That is, these treasury shares regaining voting rights for SKT Opco wouldn't mean much for the major shareholder.
So, keeping the treasury shares can send a wrong signal to SKT shareholders that a merger with SK Holdings may not be completely thrown away even though the management confirmed no such plan.
Obviously, the short-term priority is getting approval on the split from SKT shareholders, and anything that may impede it should be addressed now.


SK Telecom Share Cancellation: Why Doing It Now & Potential Impacts

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

SK Telecom (017670 KS)

LG U+ Buyback Announcement: Details & Impacts

LG U+ finally announced a buyback. This post has the details and impacts of the buyback along with trading angles with the local peers.

Sanghyun Park

LG Uplus: A 100 Billion Won in Buyback, Bi-Annual Dividends, & A Potential Partnership with Disney

After the market close today (8 June), LG Uplus Corp (032640 KS) announced that it will complete share buyback worth 100 billion won as well the...

Douglas Kim

Who Will Acquire Ebay Korea - Shinsegae/Naver Consortium or Lotte Group?

In this insight, we update on the progress of the M&A of Ebay Korea. Only the Shinsege/Naver consortium and the Lotte Group have put in preliminary...

Douglas Kim

SK Telecom - Major Highlights of Better than Expected 1Q 2021 Earnings

SK Telecom reported better than expected earnings in 1Q 2021. It reported operating profit of 388.8 billion won (up 29% YoY and 12.4% higher than...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

LG U+ Buyback Announcement: Details & Impacts

LG U+ finally announced a buyback. This post has the details and impacts of the buyback along with trading angles with the local peers.

Sanghyun Park

LG Uplus: A 100 Billion Won in Buyback, Bi-Annual Dividends, & A Potential Partnership with Disney

After the market close today (8 June), LG Uplus Corp (032640 KS) announced that it will complete share buyback worth 100 billion won as well the...

Douglas Kim

Who Will Acquire Ebay Korea - Shinsegae/Naver Consortium or Lotte Group?

In this insight, we update on the progress of the M&A of Ebay Korea. Only the Shinsege/Naver consortium and the Lotte Group have put in preliminary...

Douglas Kim

SK Telecom - Major Highlights of Better than Expected 1Q 2021 Earnings

SK Telecom reported better than expected earnings in 1Q 2021. It reported operating profit of 388.8 billion won (up 29% YoY and 12.4% higher than...

Douglas Kim

SK Telecom Share Cancellation: Why Doing It Now & Potential Impacts

SK Telecom made a huge treasury share cancellation announcement this morning. This post discusses why doing it now and examines potential impacts.

Sanghyun Park