Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 15 February, KT Corp (030200 KS) announced that it will spin off the cloud and IDC business. </li>
<li>KT will spin off the cloud and internet data center (IDC) business to set up subsidiary tentatively named KT Cloud starting 1 April.</li>
<li>KT's valuations remain attractive and the spin-off of KT Cloud Business is also likely to aid on the continued outperformance of KT shares in the coming months. </li>
</ul>


On 15 February, KT Corp (030200 KS) announced that it will spin off the cloud and IDC business. 
KT will spin off the cloud and internet data center (IDC) business to set up subsidiary tentatively named KT Cloud starting 1 April.
KT's valuations remain attractive and the spin-off of KT Cloud Business is also likely to aid on the continued outperformance of KT shares in the coming months. 


KT Corp: Announces a Spin-Off of the Cloud and IDC Business

Equity Bottom-Up

<ul>
<li>KT Corp (030200 KS) is expected to have a solid, near 6% dividend yield in 2022.</li>
<li>KT's partnership with Shinhan Bank is a strategy to accelerate KT's transformation in the digital business.</li>
<li>KT is currently trading at 0.5x P/B, which is at a steep discount to its liquidation value.</li>
</ul>


KT Corp (030200 KS) is expected to have a solid, near 6% dividend yield in 2022.
KT's partnership with Shinhan Bank is a strategy to accelerate KT's transformation in the digital business.
KT is currently trading at 0.5x P/B, which is at a steep discount to its liquidation value.


KT Corp: Near 6% Dividend Yield, Stock Swap with Shinhan Bank, IPO of K-Bank, & Shift to Value

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.

<ul>
<li>Until mid-January each year, local brokerages sell blue-chip stocks as they most aggressively engage in yearend dividend arb plays. They are repeatedly busy closing the arb positions until mid-January.</li>
<li>Local pensions' selling SKT can be interpreted as a preemptive portfolio cleaning to include LG Energy. Compared to other local institutions, pensions often become the first to do cleaning trading.</li>
<li>As we are past mid-January, the position closing for the yearend arb play should have been over. So entering SKT now doesn't seem like a bad idea.</li>
</ul>


Until mid-January each year, local brokerages sell blue-chip stocks as they most aggressively engage in yearend dividend arb plays. They are repeatedly busy closing the arb positions until mid-January.
Local pensions' selling SKT can be interpreted as a preemptive portfolio cleaning to include LG Energy. Compared to other local institutions, pensions often become the first to do cleaning trading.
As we are past mid-January, the position closing for the yearend arb play should have been over. So entering SKT now doesn't seem like a bad idea.


SK Telecom at a 6+% Dividend Yield: Entry Timing Analysis

<ul>
<li>After the market close today, SK Square announced a block deal worth 400 billion won involving 6.078 million shares. The block deal sale accounts for 4.3% of outstanding shares.</li>
<li>The block deal price is expected to be completed between 62,100 won and 66,000 won (discount of 5.9% to 0.0%).</li>
<li>We would take the deal and we continue to have a positive view of SK Square. Our valuation suggests an implied price of 86,388 won. </li>
</ul>


After the market close today, SK Square announced a block deal worth 400 billion won involving 6.078 million shares. The block deal sale accounts for 4.3% of outstanding shares.
The block deal price is expected to be completed between 62,100 won and 66,000 won (discount of 5.9% to 0.0%).
We would take the deal and we continue to have a positive view of SK Square. Our valuation suggests an implied price of 86,388 won. 


SK Square - Announces a Block Deal Sale of About 400 Billion Won

<ul>
<li>It seems like a good bet on the possibility of providing downside rigidity to SK Telecom's current share price until the end of the year ex-dividend.</li>
<li>The basis for judging that this 60% for SK Square is rather harsh is that it has several subsidiaries scheduled to be listed in the not-too-distant future.</li>
<li>In conclusion, both stocks are unlikely to rise dramatically, but at least they are highly likely to bottom out at the current share price and gradually move upward.</li>
</ul>


It seems like a good bet on the possibility of providing downside rigidity to SK Telecom's current share price until the end of the year ex-dividend.
The basis for judging that this 60% for SK Square is rather harsh is that it has several subsidiaries scheduled to be listed in the not-too-distant future.
In conclusion, both stocks are unlikely to rise dramatically, but at least they are highly likely to bottom out at the current share price and gradually move upward.


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 (SKM US)

KT Corp: Announces a Spin-Off of the Cloud and IDC Business

KT announced that it will spin off the cloud and IDC business which is likely to aid on the continued outperformance of KT shares in the coming...

Douglas Kim

KT Corp: Near 6% Dividend Yield, Stock Swap with Shinhan Bank, IPO of K-Bank, & Shift to Value

We discuss major catalysts/investment highlights of KT including near 6% dividend yield, recent stock swap with Shinhan Bank, shift to value,...

Douglas Kim

SK Telecom at a 6+% Dividend Yield: Entry Timing Analysis

SK Telecom is now at a 6+% dividend yield, which is, of course, astounding for a leading telco in a developed market. This post examines what drove...

Sanghyun Park

SK Square - Announces a Block Deal Sale of About 400 Billion Won

After the market close today, SK Square announced a block deal worth 400 billion won involving 6.078 million shares. The block deal sale accounts...

Douglas Kim

SK Telecom & SK Square Valuations

This post discusses the current valuations of both SK Telecom and SK Square after re-listing and where they should be heading in the short term.

Sanghyun Park

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