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

<p>I talked to the SKT IR team this morning, and they confirmed that they would keep the same dividend amount as last year's ₩715.1B, meaning that we should expect a substantial increase in DPS from last year's ₩10,000.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Dividends"}'>Dividends</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44166}' data-sheets-numberformat='{"1":5,"2":"yyyy/m","3":1}'>2020 yearend</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total dividends"}'><strong>Total dividends</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":715.081}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩715.1B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dividend payout"}'>Dividend payout</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.4753}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>47.53%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"DPS"}'>DPS</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩10,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dividend yield"}'>Dividend yield</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.042}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>4.20%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KSD Seibro"}'>Source: KSD Seibro</td></tr>
</tbody>
</table><p><strong>How would this translate into SKT's post-spinoff combined valuation?</strong></p><p>Post-spinoff SKT (the surviving company) will retain 43,766,629 shares.</p><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":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Pre-spinoff"}'>Pre-spinoff</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SK Telecom"}'>Post-spinoff SK Telecom</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Split ratio"}'>Split ratio</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6073625}' data-sheets-formula="=R[-20]C[-1]">0.6073625</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SO"}'>SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":72060143}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula='=googlefinance(R[-25]C[0], "shares")'>72,060,143</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":43766628.6028375}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[0]C[-1]*R[-1]C[0]"><strong>43,766,629</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>₩715.1B over 43,766,629 shares gives us a DPS of ₩16,338, a whopping 63.38% increase. An expected yearly dividend yield of 4.00%, the 4-yr median, produces a market cap of ₩17.88T for post-spinoff SK Telecom (the surviving company). By the way, a 4.50% expected dividend yield lowers it to ₩15.89T.</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":"Expected dividend yield"}'>Expected dividend yield</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.04}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>4.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0425}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>4.25%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.045}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>4.50%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total dividends"}'>Total dividends</td>
<td colspan="3" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":715.081}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R20C2">₩715.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"DPS"}'><strong>DPS</strong></td>
<td colspan="3" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":16338.498596477213}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[-1]C[0]*1000000000/R[1]C[0]"><strong>₩16,338</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SO"}'>SO</td>
<td colspan="3" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":43766628.6028375}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R28C3">43,766,629</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Share price based on the expected dividend yield"}'>Share price based on the expected dividend yield</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":408462.4649119303}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[-2]C[0]/R[-4]C[0]">₩408,462</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":384435.26109358144}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R33C2/R[-4]C[0]">₩384,435</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":363077.7465883825}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R33C2/R[-4]C[0]">₩363,078</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'><strong>Implied market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":17877.025}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]/1000000000"><strong>₩17,877.0B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":16825.435294117644}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-1]C[0]*R34C2/1000000000"><strong>₩16,825.4B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15890.688888888888}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-1]C[0]*R34C2/1000000000"><strong>₩15,890.7B</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX &amp; DART"}'>Source: KRX &amp; DART</td></tr>
</tbody>
</table><p>A ₩17.88T valuation for post-spinoff SKT pushes up the combined valuation to ₩30.44T, assuming SKT Investment's value at ₩12.56T based on the NAV at a 50% discount.</p><p><strong>This combined valuation suggests a 25.90% upside potential from the current price.</strong></p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 332.287px;" data-sheets-value='{"1":2,"2":"Valuation"}'>Combined valuation</td>
<td style="text-align: right; width: 372.727px;" data-sheets-value='{"1":2,"2":"Total dividends at ₩715.1B"}'>Total dividends at ₩715.1B</td>
</tr>
<tr>
<td style="width: 332.287px;" data-sheets-value='{"1":2,"2":"SK Telecom"}'><strong>Post-spinoff SK Telecom</strong></td>
<td style="text-align: right; width: 372.727px;" data-sheets-value='{"1":3,"3":17877.025}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-20]C[0]"><strong>₩17,877.0B</strong></td>
</tr>
<tr>
<td style="width: 332.287px;" data-sheets-value='{"1":2,"2":"SK Investment"}'><strong>SKT Investment based on the NAV at a 50% discount</strong></td>
<td style="text-align: right; width: 372.727px;" data-sheets-value='{"1":3,"3":12560.864587413918}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R52C4"><strong>₩12,560.9B</strong></td>
</tr>
<tr>
<td style="width: 332.287px;" data-sheets-value='{"1":2,"2":"Total"}'>Total</td>
<td style="text-align: right; width: 372.727px;" data-sheets-value='{"1":3,"3":30437.88958741392}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=sum(R[-2]C[0]:R[-1]C[0])">₩30,437.9B</td>
</tr>
<tr>
<td style="width: 332.287px;" data-sheets-value='{"1":2,"2":"Upside/downside from the current market cap"}'><strong>Upside/downside from the current market cap</strong></td>
<td style="text-align: right; width: 372.727px;" data-sheets-value='{"1":3,"3":0.2590033717074924}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[-1]C[0]-R59C5)/R59C5"><strong>25.90%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: KRX &amp; DART"}'>Source: KRX &amp; DART</td></tr>
</tbody>
</table><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"SKT Investment NAV"}'>SKT Investment NAV</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Hynix Inc"}' data-sheets-formula='=googlefinance(R[0]C[6], "name")'>SK Hynix Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18876.373322085}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[5], "shares")*googlefinance(R[0]C[5], "price")/1000000000*R[0]C[6]'>₩18,876.4B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NanoenTek Inc"}' data-sheets-formula='=googlefinance(R[0]C[6], "name")'>NanoenTek Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60.42464553192}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[5], "shares")*googlefinance(R[0]C[5], "price")/1000000000*R[0]C[6]'>₩60.4B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dream Us Co"}' data-sheets-formula='=googlefinance(R[0]C[6], "name")'>Dream Us Co</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":147.83332780612}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[5], "shares")*googlefinance(R[0]C[5], "price")/1000000000*R[0]C[6]'>₩147.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Incross Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[6], "name")'>Incross Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":151.6478794048}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[5], "shares")*googlefinance(R[0]C[5], "price")/1000000000*R[0]C[6]'>₩151.6B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2208.25}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[4]*R[0]C[6]">₩2,208.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"T-Map Mobility"}'>T-Map Mobility</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":928.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[4]*R[0]C[6]">₩928.2B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ADT Caps"}'>ADT Caps</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":813.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[4]*R[0]C[6]">₩813.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Contents Wavve"}'>Contents Wavve</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":436.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[4]*R[0]C[6]">₩436.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"One Store"}'>One Store</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":427.5}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[4]*R[0]C[6]">₩427.5B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Others, including SK Planet"}'>Others, including SK Planet</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":683.1}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=60.3+100.5+94.1+5.6+17.8+404.8">₩683.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net cash"}'>Net cash</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":387.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'>₩387.8B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total"}'><strong>Total</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":25121.729174827837}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=sum(R[-11]C[0]:R[-1]C[0])"><strong>₩25,121.7B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - At a 50% discount to NAV"}'><strong>- At a 50% discount to NAV</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":12560.864587413918}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-1]C[0]*0.5"><strong>₩12,560.9B</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: SK Telecom &amp; KRX"}'>Source: SK Telecom &amp; KRX</td></tr>
</tbody>
</table>

I talked to the SKT IR team this morning, and they confirmed that they would keep the same dividend amount as last year's ₩715.1B, meaning that we should expect a substantial increase in DPS from last year's ₩10,000.






Dividends
2020 yearend


Total dividends
₩715.1B


Dividend payout
47.53%


DPS
₩10,000


Dividend yield
4.20%

Source: KSD Seibro

How would this translate into SKT's post-spinoff combined valuation?Post-spinoff SKT (the surviving company) will retain 43,766,629 shares.







Shares outstanding
Pre-spinoff
Post-spinoff SK Telecom


Split ratio
-
0.6073625


SO
72,060,143
43,766,629

Source: DART

₩715.1B over 43,766,629 shares gives us a DPS of ₩16,338, a whopping 63.38% increase. An expected yearly dividend yield of 4.00%, the 4-yr median, produces a market cap of ₩17.88T for post-spinoff SK Telecom (the surviving company). By the way, a 4.50% expected dividend yield lowers it to ₩15.89T.








Expected dividend yield
4.00%
4.25%
4.50%


Total dividends
₩715.1B


DPS
₩16,338


SO
43,766,629


Share price based on the expected dividend yield
₩408,462
₩384,435
₩363,078


Implied market cap
₩17,877.0B
₩16,825.4B
₩15,890.7B

Source: KRX &amp; DART

A ₩17.88T valuation for post-spinoff SKT pushes up the combined valuation to ₩30.44T, assuming SKT Investment's value at ₩12.56T based on the NAV at a 50% discount.This combined valuation suggests a 25.90% upside potential from the current price.






Combined valuation
Total dividends at ₩715.1B


Post-spinoff SK Telecom
₩17,877.0B


SKT Investment based on the NAV at a 50% discount
₩12,560.9B


Total
₩30,437.9B


Upside/downside from the current market cap
25.90%

Source: KRX &amp; DART







SKT Investment NAV

SK Hynix Inc
₩18,876.4B


NanoenTek Inc
₩60.4B


Dream Us Co
₩147.8B


Incross Co Ltd
₩151.6B


11st Street
₩2,208.3B


T-Map Mobility
₩928.2B


ADT Caps
₩813.8B


Contents Wavve
₩436.8B


One Store
₩427.5B


Others, including SK Planet
₩683.1B


Net cash
₩387.8B


Total
₩25,121.7B


- At a 50% discount to NAV
₩12,560.9B

Source: SK Telecom &amp; KRX



SKT IR Confirmation of Post-Spinoff Dividend Policy & Capability of Doing It Based on FCF

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<div class="content-highlight"><p>According to the KRX, it plans to launch new indices which would include the top 10 stocks in KOSPI including <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>. The name of this index is expected to be called <strong>KOSPI 200 Top 10.</strong> There will also be 2x levered indices based off the KOSPI 200 Top 10 index. These indices will be catered for those investors that are interested in the highest market cap companies within KOSPI 200.</p></div><p>Currently, the top 10 constitutents of the KOSPI 200 Top 10 Index will be expected to be composed of the following:</p><ol>
<li>
<a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> </li>
<li>
<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> </li>
<li>
<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> </li>
<li>
<a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/kia-motors-corp" target="_blank" data-smartkarma-citation="entities:156:1" rel="noopener">Kia Motors Corp (000270 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-mobis-co-ltd" target="_blank" data-smartkarma-citation="entities:6089:1" rel="noopener">Hyundai Mobis (012330 KS)</a> </li>
</ol>

According to the KRX, it plans to launch new indices which would include the top 10 stocks in KOSPI including Samsung Electronics (005930 KS). The name of this index is expected to be called KOSPI 200 Top 10. There will also be 2x levered indices based off the KOSPI 200 Top 10 index. These indices will be catered for those investors that are interested in the highest market cap companies within KOSPI 200.Currently, the top 10 constitutents of the KOSPI 200 Top 10 Index will be expected to be composed of the following:

Samsung Electronics (005930 KS) 

SK Hynix (000660 KS) 

LG Chem Ltd (051910 KS) 

Naver Corp (035420 KS) 

Hyundai Motor Co (005380 KS) 

Samsung SDI (006400 KS) 

Celltrion Inc (068270 KS) 

Kakao Corp (035720 KS) 

Kia Motors Corp (000270 KS) 

Hyundai Mobis (012330 KS) 


KRX Plans to Launch a New Index Called 'KOSPI 200 Top 10'

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Toshiba, MMC Corp, Japan Post, China Logistics, Pershing Square, Hang Lung

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Thematic (Sector/Industry)

<p>Does holding company ("holdco") discount in Korea apply to the likes of <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> , <a href="https://www.smartkarma.com/entities/sk-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:393:1" rel="noopener">SK Holdings (034730 KS)</a> (now Inc), <a href="https://www.smartkarma.com/entities/osstem-implant-co-ltd" target="_blank" data-smartkarma-citation="entities:1450:1" rel="noopener">Osstem Implant (048260 KS)</a> , <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> , <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> , <a href="https://www.smartkarma.com/entities/fila-holdings-corp" target="_blank" data-smartkarma-citation="entities:10699:1" rel="noopener">Fila Holdings (081660 KS)</a> and others? To answer that question I think we need to know the history of the holdco in Korea.</p>

Does holding company ("holdco") discount in Korea apply to the likes of SK Telecom (017670 KS) , SK Holdings (034730 KS) (now Inc), Osstem Implant (048260 KS) , LG Chem Ltd (051910 KS) , Kakao Corp (035720 KS) , Fila Holdings (081660 KS) and others? To answer that question I think we need to know the history of the holdco in Korea.

The Holding Company Dilemma in Korea -  What's the Right Discount?

<p>We now have the spinoff details, meaning that we can now reasonably estimate each spinoff company's valuation.</p><p>SK Investment is relatively easy to estimate as it is a pure holding company without any meaningful operating operation. At the usual 50% local holding company discount to NAV, SK Investment's valuation should be slightly higher than ₩12T.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"SK Investment NAV"}'>SK Investment NAV</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"Stake %"}'>Stake %</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":2,"2":"Value"}'>Value</td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Note"}'>Note</td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"SK Hynix Inc"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>SK Hynix Inc</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"000660"}' data-sheets-formula='="000660"'>000660</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.201}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.10%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":18510.552133672503}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩18,510.6B</strong></td>
<td rowspan="4" style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Market value"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><div><strong>Market value at the current share price</strong></div></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"NanoenTek Inc"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>NanoenTek Inc</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"039860"}' data-sheets-formula='="039860"'>039860</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.284}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>28.40%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":60.1202392572}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩60.1B</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Dream Us Co"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Dream Us Co</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"060570"}' data-sheets-formula='="060570"'>060570</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.418}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>41.80%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":143.31751875738001}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩143.3B</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Incross Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Incross Co Ltd</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"216050"}' data-sheets-formula='="216050"'>216050</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.346}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>34.60%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":152.2054083732}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩152.2B</strong></td>
</tr>
<tr><td colspan="5" style="width: 726.008px;"><div></div></td></tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.803}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>80.30%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":2208.25}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩2,208.3B</strong></td>
<td rowspan="5" style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Based on the most recent private placement"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><div><strong>Based on the most recent private placement</strong></div></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"T-Map Mobility"}'>T-Map Mobility</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.663}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>66.30%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":928.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩928.2B</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"ADT Caps"}'>ADT Caps</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.626}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>62.60%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":813.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩813.8B</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Contents Wavve"}'>Contents Wavve</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.364}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>36.40%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":436.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩436.8B</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"One Store"}'>One Store</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.475}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>47.50%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":427.5}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩427.5B</strong></td>
</tr>
<tr><td colspan="5" style="width: 726.008px;"><div></div></td></tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Others, including SK Planet"}'>Others, including SK Planet</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":683.1}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=60.3+100.5+94.1+5.6+17.8+404.8"><strong>₩683.1B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Book value"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>Book value</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Net cash"}'><strong>Net cash</strong></td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":387.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩387.8B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Total"}'>Total</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":24751.64530006028}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=sum(R[-11]C[0]:R[-1]C[0])"><strong>₩24,751.6B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":" - At a 50% discount to NAV"}'><strong>- At a 50% discount to NAV</strong></td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":12375.82265003014}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-1]C[0]*0.5"><strong>₩12,375.8B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
</tr>
<tr><td colspan="5" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: SK Telecom &amp; KRX"}'>Source: SK Telecom &amp; KRX</td></tr>
</tbody>
</table>

We now have the spinoff details, meaning that we can now reasonably estimate each spinoff company's valuation.SK Investment is relatively easy to estimate as it is a pure holding company without any meaningful operating operation. At the usual 50% local holding company discount to NAV, SK Investment's valuation should be slightly higher than ₩12T.









SK Investment NAV
Type
Stake %
Value
Note


SK Hynix Inc
000660
20.10%
₩18,510.6B
Market value at the current share price


NanoenTek Inc
039860
28.40%
₩60.1B


Dream Us Co
060570
41.80%
₩143.3B


Incross Co Ltd
216050
34.60%
₩152.2B



11st Street
Unlisted
80.30%
₩2,208.3B
Based on the most recent private placement


T-Map Mobility
Unlisted
66.30%
₩928.2B


ADT Caps
Unlisted
62.60%
₩813.8B


Contents Wavve
Unlisted
36.40%
₩436.8B


One Store
Unlisted
47.50%
₩427.5B



Others, including SK Planet
Unlisted
-
₩683.1B
Book value


Net cash
-
-
₩387.8B
-


Total
-
-
₩24,751.6B
-


- At a 50% discount to NAV
-
-
₩12,375.8B
-

Source: SK Telecom &amp; KRX



SK Telecom: Two Interpretations of Post-Spinoff Dividend Policy Creates a Huge Disparity

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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