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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

HD Hyundai Heavy Industries  / Event-Driven

<p>The Korea Exchange (KRX) will announce the results of the December 2021 review of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> later this month and the constituent changes will be effective after the close of trading on 9 December.</p><p>With the review period now complete, we see 7 potential inclusions (5 regular + 2 Fast Entry) and 8 potential deletions from the index. There is one extra deletion to keep the number of index constituents at 200 following the inclusion of SK Square in the index post its spin-off from <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a>.</p><p>The potential regular inclusions are <a href="https://www.smartkarma.com/entities/f-f-co-ltd-new" target="_blank" data-smartkarma-citation="entities:33479:1" rel="noopener">F&amp;F (383220 KS)</a>, <a href="https://www.smartkarma.com/entities/skckolonpi-inc" target="_blank" data-smartkarma-citation="entities:9196:1" rel="noopener">Skckolonpi Inc (178920 KS)</a>, <a href="https://www.smartkarma.com/entities/meritz-financial-group-inc" target="_blank" data-smartkarma-citation="entities:11776:1" rel="noopener">Meritz Financial Group (138040 KS)</a>, <a href="https://www.smartkarma.com/entities/sl-corp" target="_blank" data-smartkarma-citation="entities:20694:1" rel="noopener">SL Corp (005850 KS)</a> and <a href="https://www.smartkarma.com/entities/myoung-shin-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:29698:1" rel="noopener">Myoung Shin Industrial Co.,Ltd (009900 KS)</a> while the potential Fast Entry inclusions are <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (377300 KS)</a>.</p><p>The potential deletions are <a href="https://www.smartkarma.com/entities/samyang-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:9100:1" rel="noopener">Samyang Foods (003230 KS)</a>, <a href="https://www.smartkarma.com/entities/ilyang-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:2789:1" rel="noopener">Ilyang Pharmaceutical Co., (007570 KS)</a>, <a href="https://www.smartkarma.com/entities/lx-holdings" target="_blank" data-smartkarma-citation="entities:33384:1" rel="noopener">LX Holdings (383800 KS)</a>, <a href="https://www.smartkarma.com/entities/lotte-himart-co-ltd" target="_blank" data-smartkarma-citation="entities:12895:1" rel="noopener">Lotte Himart (071840 KS)</a>, <a href="https://www.smartkarma.com/entities/f-f-co-ltd" target="_blank" data-smartkarma-citation="entities:15983:1" rel="noopener">F&amp;F Co Ltd (007700 KS)</a>, <a href="https://www.smartkarma.com/entities/dongwon-f-b-co-ltd" target="_blank" data-smartkarma-citation="entities:3274:1" rel="noopener">Dongwon F&amp;B (049770 KS)</a>, <a href="https://www.smartkarma.com/entities/lx-hausys-ltd" target="_blank" data-smartkarma-citation="entities:11613:1" rel="noopener">LX Hausys Ltd (108670 KS)</a> and <a href="https://www.smartkarma.com/entities/nexen-tire-corp" target="_blank" data-smartkarma-citation="entities:14206:1" rel="noopener">Nexen Tire Corp (002350 KS)</a>.</p><p>There are quite a few stocks that are close adds but just miss out on making the 85% cumulative market cap cut or the 90% of current stocks from the sector in the index cut.</p><p>The potential inclusions have outperformed the potential deletions since August. After giving up some gains and then consolidating, the potential inclusion have started to outperform the potential deletions again over the last week.</p>

The Korea Exchange (KRX) will announce the results of the December 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) later this month and the constituent changes will be effective after the close of trading on 9 December.With the review period now complete, we see 7 potential inclusions (5 regular + 2 Fast Entry) and 8 potential deletions from the index. There is one extra deletion to keep the number of index constituents at 200 following the inclusion of SK Square in the index post its spin-off from SK Telecom (017670 KS).The potential regular inclusions are F&amp;F (383220 KS), Skckolonpi Inc (178920 KS), Meritz Financial Group (138040 KS), SL Corp (005850 KS) and Myoung Shin Industrial Co.,Ltd (009900 KS) while the potential Fast Entry inclusions are Hyundai Heavy Industries (329180 KS) and Kakao Pay (377300 KS).The potential deletions are Samyang Foods (003230 KS), Ilyang Pharmaceutical Co., (007570 KS), LX Holdings (383800 KS), Lotte Himart (071840 KS), F&amp;F Co Ltd (007700 KS), Dongwon F&amp;B (049770 KS), LX Hausys Ltd (108670 KS) and Nexen Tire Corp (002350 KS).There are quite a few stocks that are close adds but just miss out on making the 85% cumulative market cap cut or the 90% of current stocks from the sector in the index cut.The potential inclusions have outperformed the potential deletions since August. After giving up some gains and then consolidating, the potential inclusion have started to outperform the potential deletions again over the last week.

KOSPI200 Index Rebalance Preview:  Review Period Complete & Trades Performing Well

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.

<p>Post-split valuation will be an essential factor in determining whether to invest after SK Telecom's relisting. From a short-term point of view, event trading will have the most significant impact on the share price, but whether the spin-off will unlock valuation soon after relisting is bound to emerge as the most crucial factor.</p><hr><p>So, let's take a look at each valuation of SK Telecom and SK Square. As shown below, each post-split company takes the following subsidiaries.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Telecom"}'>SK Telecom</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Investment"}'>SK Square</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Broadband"}'><strong>SK Broadband</strong></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Hynix"}'>SK Hynix</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Telink"}'><strong>SK Telink</strong></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":" ADT Caps"}'>ADT Caps</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"PS&amp;Marketing"}'>PS&amp;Marketing</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"F&amp;S Credit Info"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>F&amp;S Credit Info</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"T Map Mobility"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>T Map Mobility</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Servie Top"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Service Top</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"One Store"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>One Store</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Service Ace"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Service Ace</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":" Contents Wavve"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Contents Wavve</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK O&amp;S"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>SK O&amp;S</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Dream Us Company"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Dream Us Company</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":3,"2":"0.00000%"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Planet"}'>SK Planet</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"FSK L&amp;S"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>FSK L&amp;S</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Incross"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Incross</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"NanoNtech"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Nano N Tech</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Spark Plus"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Spark Plus</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Telecom CST1"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><div>SK Telecom CST1</div></td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"SK Telecom TMT Investment"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><div>SK Telecom TMT Investment</div></td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"ID Quantique"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>ID Quantique</td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Techmaker"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Techmaker</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: SED"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Source: SK Telecom</td></tr>
</tbody>
</table><p>Assuming the company's equity-based split ratio (60.74% for SK Telecom and 39.26% for SK Square) reflects the fair value of both companies, post-split SK Telecom currently has a valuation of ₩13.61T and SK Square is valued at ₩8.80T.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Valuation"}'>Valuation</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SK Telecom"}'>SK Telecom</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SK Telecom, post-split"}'>SK Telecom, post-split</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SK Square, post-split"}'>SK Square, post-split</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Split ratio"}'>Split ratio</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>100.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6074}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Valuation!R[43]C[-1]">60.74%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3926}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Valuation!R[43]C[-1]">39.26%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current market cap"}'><strong>Current market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":22.410704473}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}' data-sheets-formula='=googlefinance("017670", "price")*googlefinance("017670", "shares")/1000000000000'><strong>₩22.41T</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13.6122618969002}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}' data-sheets-formula="=R[0]C[-1]*R[-1]C[0]"><strong>₩13.61T</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8.7984425760998}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}' data-sheets-formula="=R[0]C[-2]*R[-1]C[0]"><strong>₩8.80T</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: SK Telecom &amp; KRX"}'>Source: SK Telecom &amp; KRX</td></tr>
</tbody>
</table><hr><p>Then, let's examine whether these valuations properly reflect the intrinsic value of both companies. </p><div class="content-highlight"><p><strong>Yes, as you can imagine, SK Square is relatively much easier to value, given that it is essentially a holding company. Then, the key thing should be how we value the traditional telecom business (network operation + media) that will remain in SK Telecom.</strong></p></div>

Post-split valuation will be an essential factor in determining whether to invest after SK Telecom's relisting. From a short-term point of view, event trading will have the most significant impact on the share price, but whether the spin-off will unlock valuation soon after relisting is bound to emerge as the most crucial factor.So, let's take a look at each valuation of SK Telecom and SK Square. As shown below, each post-split company takes the following subsidiaries.






SK Telecom
SK Square


SK Broadband
SK Hynix


SK Telink
ADT Caps


PS&amp;Marketing
11st Street


F&amp;S Credit Info
T Map Mobility


Service Top
One Store


Service Ace
Contents Wavve


SK O&amp;S
Dream Us Company



SK Planet



FSK L&amp;S



Incross



Nano N Tech



Spark Plus



SK Telecom CST1



SK Telecom TMT Investment



ID Quantique



Techmaker

Source: SK Telecom

Assuming the company's equity-based split ratio (60.74% for SK Telecom and 39.26% for SK Square) reflects the fair value of both companies, post-split SK Telecom currently has a valuation of ₩13.61T and SK Square is valued at ₩8.80T.








Valuation
SK Telecom
SK Telecom, post-split
SK Square, post-split


Split ratio
100.00%
60.74%
39.26%


Current market cap
₩22.41T
₩13.61T
₩8.80T

Source: SK Telecom &amp; KRX

Then, let's examine whether these valuations properly reflect the intrinsic value of both companies. Yes, as you can imagine, SK Square is relatively much easier to value, given that it is essentially a holding company. Then, the key thing should be how we value the traditional telecom business (network operation + media) that will remain in SK Telecom.

<p>As expected, both SKT and SK Square will remain on the KOSPI 200 after the split.</p><div><p>Then, here are the KRX corporate action schedule for both companies:</p></div><div><div class="content-highlight"><ol>
<li><strong>The market cap on the last trading day before the suspension will be applied in the index calculation during the trading suspension and the re-listing day.</strong></li>
<li><strong>The market cap on the re-listing day will be used in the index calculation on the next trading day.</strong></li>
<li><strong>That is, the actual price and market cap of each company will be reflected on the next trading day of the re-listing.</strong></li>
</ol></div></div><section class="figure"><p style="text-align: center;">[The KRX public disclosure concerning the SKT spin-off corporate actions]</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/254/original/1.png?1634692082" class="editor-image img-responsive" data-smartkarma-image-id="236254"></figure></section><section class="figure"><p style="text-align: center;">[The KRX Corporate Actions &amp; Events Methodology]</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/269/original/2.png?1634693952" class="editor-image img-responsive" data-smartkarma-image-id="236269"></figure></section><p>So, the daily flow of KOSPI 200 rebalancing trading due to this split is as follows.</p><ul>
<li><strong>We should expect an outflow of ₩248.0B (1.87x ADTV) at the close on October 25, assuming that the KOSPI 200-tracking ETFs/index funds actively engaged in portfolio rebalancing trading in line with the index corporate action is conservatively estimated at ₩20T (out of the total ₩80T, including pension funds and variable insurance index funds).</strong></li>
<li><strong>Based on the current share price, SKT's passive inflow is expected to be ₩149.6B at the close on November 29, and SK Square will likely reach ₩99.7B.</strong></li>
</ul><table class="table table-striped">
<colgroup>
<col width="150">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"SK Telecom trading timeline"}'>KOSPI 200-initiated portfolio rebalancing trading flow</td></tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Outflow"}'><strong>Outflow</strong></td>
<td colspan="2" style="text-align: center;" data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>Date</strong></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Inflow"}'><strong>Inflow</strong></td>
</tr>
<tr>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"₩248.0B"}'>
<p><strong>₩248.0B</strong></p>
<p><strong>(1.87x ADTV)</strong></p>
</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":44494}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 25</strong></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Last trading day before trade suspension"}'><strong>Last trading day before trade suspension</strong></td>
<td style="text-align: center;">-</td>
</tr>
<tr>
<td style="text-align: center;">-</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":44495}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 10. 26</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Trade suspension begins"}'>Trade suspension begins</td>
<td style="text-align: center;">-</td>
</tr>
<tr>
<td style="text-align: center;">-</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":44526}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 11. 26</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Trade suspension ends"}'>Trade suspension ends</td>
<td style="text-align: center;">-</td>
</tr>
<tr>
<td style="text-align: center;">-</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":44529}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 11. 29</strong></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Re-listing"}'><strong>Relisting</strong></td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"₩149.6B for SKT &amp; ₩99.7B for SK Square"}'>
<p><strong>SKT: ₩149.6B</strong><br><strong>SK Square: ₩99.7B</strong></p>
<p><strong>(about the same as 1.87x ADTV)</strong></p>
</td>
</tr>
<tr>
<td style="text-align: center;">-</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":44530}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 11. 30</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"The following day after re-listing"}'>The following day after relisting</td>
<td style="text-align: center;">-</td>
</tr>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"Source: KRX &amp; Clepsydra Capital"}'>Source: KRX &amp; Clepsydra Capital</td></tr>
</tbody>
</table><div class="content-highlight"><p><strong>Assuming that the stock price volatility risk during the trading suspension period is neutral, we definitely need to consider a strategy to pursue investment opportunities resulting from the KOSPI 200-initiated portfolio rebalancing trading, which purchases SKT stocks at the close on October 25 and sells them at the close on November 29.</strong></p></div>

As expected, both SKT and SK Square will remain on the KOSPI 200 after the split.Then, here are the KRX corporate action schedule for both companies:
The market cap on the last trading day before the suspension will be applied in the index calculation during the trading suspension and the re-listing day.
The market cap on the re-listing day will be used in the index calculation on the next trading day.
That is, the actual price and market cap of each company will be reflected on the next trading day of the re-listing.
[The KRX public disclosure concerning the SKT spin-off corporate actions]
[The KRX Corporate Actions &amp; Events Methodology]
So, the daily flow of KOSPI 200 rebalancing trading due to this split is as follows.
We should expect an outflow of ₩248.0B (1.87x ADTV) at the close on October 25, assuming that the KOSPI 200-tracking ETFs/index funds actively engaged in portfolio rebalancing trading in line with the index corporate action is conservatively estimated at ₩20T (out of the total ₩80T, including pension funds and variable insurance index funds).
Based on the current share price, SKT's passive inflow is expected to be ₩149.6B at the close on November 29, and SK Square will likely reach ₩99.7B.








KOSPI 200-initiated portfolio rebalancing trading flow

Outflow
Date
Inflow



₩248.0B
(1.87x ADTV)

2021. 10. 25
Last trading day before trade suspension
-


-
2021. 10. 26
Trade suspension begins
-


-
2021. 11. 26
Trade suspension ends
-


-
2021. 11. 29
Relisting

SKT: ₩149.6B SK Square: ₩99.7B
(about the same as 1.87x ADTV)



-
2021. 11. 30
The following day after relisting
-

Source: KRX &amp; Clepsydra Capital

Assuming that the stock price volatility risk during the trading suspension period is neutral, we definitely need to consider a strategy to pursue investment opportunities resulting from the KOSPI 200-initiated portfolio rebalancing trading, which purchases SKT stocks at the close on October 25 and sells them at the close on November 29.

SKT Split: Daily Trading Flow Before/After Trading Suspension

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<p>There were four new<a href="http://www.koreaherald.com/view.php?ud=20211013001007" target="_blank" rel="noopener"> metaverse related ETFs</a> were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:</p><p><strong>1) Tiger Fn Metaverse</strong> (managed by Mirae Asset Global Investment)</p><p><strong>2) KBSTAR iSelect Metaverse</strong> (managed by KB Asset Management)</p><p><strong>3) Hanaro Fn K-Metaverse MZ</strong> (managed by NH Amundi Asset Management)</p><p><strong>4) KODEX K-Metaverse Active</strong>  (managed by Samsung Asset Management)</p><p>The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. </p>

There were four new metaverse related ETFs were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:1) Tiger Fn Metaverse (managed by Mirae Asset Global Investment)2) KBSTAR iSelect Metaverse (managed by KB Asset Management)3) Hanaro Fn K-Metaverse MZ (managed by NH Amundi Asset Management)4) KODEX K-Metaverse Active  (managed by Samsung Asset Management)The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. 

Listing of 4 New Metaverse Related ETFs in Korea

<h2>October 12 EGM results</h2><p>SK Telecom's demerger and stock split got shareholder approval yesterday.</p><div class="content-highlight"><p><strong>Based on the number of attending votes, the approval rate for the demerger reached 99.95%, and the approval rate for the stock split was 99.96%, receiving overwhelming support from individual shareholders as well as institutions, including the National Pension Service.</strong></p></div><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/760/original/3.png?1634066969" class="editor-image img-responsive" data-smartkarma-image-id="234760"></figure></section><p>As a result of this, SK Telecom and SK Square will be officially launched on November 1, the record date of the demerger. The current SK Telecom will be listed and re-listed as SK Telecom and SK Square, respectively, on November 29 after a period of stock trading suspension from October 26 to November 26.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension begins"}'>Trade suspension begins</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44495}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 10. 26</td>
</tr>
<tr>
<td><strong>Record date of demerger</strong></td>
<td style="text-align: right;"><strong>2021. 11. 01</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension ends"}'>Trade suspension ends</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44526}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 11. 26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Re-listing"}'><strong>Re-listing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44529}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 11. 29</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></section><p>SK Telecom plans to transform itself into a telecom service, artificial intelligence, and digital infrastructure service company and increase its annual sales from ₩15T in 2020 to ₩22T in 2025.</p><div class="content-highlight"><ul>
<li>As for the Telecom service business, it plans to solidify 5G leadership and continue the growth of media services. In the case of AI-based services, it will evolve the subscription service (T Universe) into an online and offline subscription commerce platform. Lastly, the company plans to fully expand its high-growth data center, cloud, and industrial Internet of Things (IoT) businesses by utilizing 5G MEC (mobile edge computing) for the digital infrastructure service business.</li>
<li>SK Square will be launched as a semiconductor/ICT investment company. Based on the successful DNA accumulated through investments in the semiconductor and ICT platform business so far, the company has set a vision to increase its net asset value from the current ₩26T to ₩75T by 2025.</li>
</ul></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Vision 2025"}'>Vision 2025</td>
<td data-sheets-value='{"1":2,"2":"SK Telecom"}'>SK Telecom</td>
<td data-sheets-value='{"1":2,"2":"SK Square"}'>SK Square</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Core business areas"}'>Core business areas</td>
<td data-sheets-value='{"1":2,"2":"Telecom service, AI-based service, &amp; digital infrastructure"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'>Telecom service, AI-based service, &amp; digital infrastructure</td>
<td data-sheets-value='{"1":2,"2":"Semiconductor &amp; ICT investment"}'><div><div>Semiconductor &amp; ICT investment</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current value"}'>Current value</td>
<td data-sheets-value='{"1":2,"2":"FY2020 annual sales of ₩15T"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'>FY2020 annual sales of ₩15T</td>
<td data-sheets-value='{"1":2,"2":"FY2021 net asset value of ₩26T"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'>FY2021 net asset value of ₩26T</td>
</tr>
<tr><td colspan="3"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target by FY2025"}'><strong>Target by FY2025</strong></td>
<td data-sheets-value='{"1":2,"2":"Annual sales of ₩22T"}'><strong>Yearly sales of ₩22T</strong></td>
<td data-sheets-value='{"1":2,"2":"Net asset value of ₩75T"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'><strong>Net asset value of ₩75T</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: SK Telecom"}'>Source: SK Telecom</td></tr>
</tbody>
</table><p>After the demerger, SK Telecom will have SK Broadband, SK Telink, PS&amp;Marketing, F&amp;U Credit Information, Service Top, Service Ace, and SK O&amp;S as subsidiaries. On the other hand, 16 companies will be placed under SK Square: SK Hynix, ADT Caps, 11st Street, T Map Mobility, One Store, Contents Wavve, Dream Us Company, and SK Planet.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telecom"}'>SK Telecom</td>
<td data-sheets-value='{"1":2,"2":"SK Investment"}'>SK Square</td>
</tr>
<tr>
<td><strong>: 7 in total</strong></td>
<td><strong>: 16 in total</strong></td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Broadband"}'>SK Broadband</td>
<td data-sheets-value='{"1":2,"2":"SK Hynix"}'>SK Hynix</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telink"}'>SK Telink</td>
<td data-sheets-value='{"1":2,"2":" ADT Caps"}'>ADT Caps</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PS&amp;Marketing"}'>PS&amp;Marketing</td>
<td data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"F&amp;S Credit Info"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>F&amp;S Credit Info</td>
<td data-sheets-value='{"1":2,"2":"T Map Mobility"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>T Map Mobility</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Servie Top"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Service Top</td>
<td data-sheets-value='{"1":2,"2":"One Store"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>One Store</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Service Ace"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Service Ace</td>
<td data-sheets-value='{"1":2,"2":" Contents Wavve"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Contents Wavve</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK O&amp;S"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>SK O&amp;S</td>
<td data-sheets-value='{"1":2,"2":"Dream Us Company"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Dream Us Company</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":3,"2":"0.00000%"}'></td>
<td data-sheets-value='{"1":2,"2":"SK Planet"}'>SK Planet</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"FSK L&amp;S"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>FSK L&amp;S</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"Incross"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Incross</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"NanoNtech"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Nano N Tech</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"Spark Plus"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Spark Plus</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"SK Telecom CST1"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><div>SK Telecom CST1</div></td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"SK Telecom TMT Investment"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><div>SK Telecom TMT Investment</div></td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"ID Quantique"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>ID Quantique</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"Techmaker"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Techmaker</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: SED"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Source: SK Telecom</td></tr>
</tbody>
</table><hr><div class="content-highlight">
<p><strong>In a separate regulatory filing,</strong></p>
<p>SKT said that it would transfer 520,000 treasury shares to its employees. In other words, SKT is giving 100 shares of treasury stock to each employee. Based on the closing price of ₩304,500 on October 8, this is equivalent to ₩158.3B.</p>
<p>It represents 0.72% of the total issued shares and about 60% of its current treasury shares. After this transaction, SKT's treasury shares will fall to 379,500, 0.53% of the shares outstanding.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/761/original/4.png?1634069235" class="editor-image img-responsive" data-smartkarma-image-id="234761"></figure></section>

October 12 EGM resultsSK Telecom's demerger and stock split got shareholder approval yesterday.Based on the number of attending votes, the approval rate for the demerger reached 99.95%, and the approval rate for the stock split was 99.96%, receiving overwhelming support from individual shareholders as well as institutions, including the National Pension Service.As a result of this, SK Telecom and SK Square will be officially launched on November 1, the record date of the demerger. The current SK Telecom will be listed and re-listed as SK Telecom and SK Square, respectively, on November 29 after a period of stock trading suspension from October 26 to November 26.






Schedule

Trade suspension begins
2021. 10. 26


Record date of demerger
2021. 11. 01


Trade suspension ends
2021. 11. 26


Re-listing
2021. 11. 29

Source: DART

SK Telecom plans to transform itself into a telecom service, artificial intelligence, and digital infrastructure service company and increase its annual sales from ₩15T in 2020 to ₩22T in 2025.
As for the Telecom service business, it plans to solidify 5G leadership and continue the growth of media services. In the case of AI-based services, it will evolve the subscription service (T Universe) into an online and offline subscription commerce platform. Lastly, the company plans to fully expand its high-growth data center, cloud, and industrial Internet of Things (IoT) businesses by utilizing 5G MEC (mobile edge computing) for the digital infrastructure service business.
SK Square will be launched as a semiconductor/ICT investment company. Based on the successful DNA accumulated through investments in the semiconductor and ICT platform business so far, the company has set a vision to increase its net asset value from the current ₩26T to ₩75T by 2025.








Vision 2025
SK Telecom
SK Square


Core business areas
Telecom service, AI-based service, &amp; digital infrastructure
Semiconductor &amp; ICT investment


Current value
FY2020 annual sales of ₩15T
FY2021 net asset value of ₩26T



Target by FY2025
Yearly sales of ₩22T
Net asset value of ₩75T

Source: SK Telecom

After the demerger, SK Telecom will have SK Broadband, SK Telink, PS&amp;Marketing, F&amp;U Credit Information, Service Top, Service Ace, and SK O&amp;S as subsidiaries. On the other hand, 16 companies will be placed under SK Square: SK Hynix, ADT Caps, 11st Street, T Map Mobility, One Store, Contents Wavve, Dream Us Company, and SK Planet.






SK Telecom
SK Square


: 7 in total
: 16 in total



SK Broadband
SK Hynix


SK Telink
ADT Caps


PS&amp;Marketing
11st Street


F&amp;S Credit Info
T Map Mobility


Service Top
One Store


Service Ace
Contents Wavve


SK O&amp;S
Dream Us Company



SK Planet



FSK L&amp;S



Incross



Nano N Tech



Spark Plus



SK Telecom CST1



SK Telecom TMT Investment



ID Quantique



Techmaker

Source: SK Telecom


In a separate regulatory filing,
SKT said that it would transfer 520,000 treasury shares to its employees. In other words, SKT is giving 100 shares of treasury stock to each employee. Based on the closing price of ₩304,500 on October 8, this is equivalent to ₩158.3B.
It represents 0.72% of the total issued shares and about 60% of its current treasury shares. After this transaction, SKT's treasury shares will fall to 379,500, 0.53% of the shares outstanding.


SKT Demerger Got Shareholder Approval & SK Square NAV Analysis

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)

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