Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>In the past several days, there have been an increased speculation in the local media about a potential M&amp;A fight for T'Way Air between Yearimdang Publishing and Daemyung Sono Group. </li>
<li>The difference in ownership of T'Way Air by Daemyung Sono Group and Yearimdang Group is only 3.2%, which could lead to an intensified management rights dispute. </li>
<li>According to local sources, Daemyung Sono Group has recently contacted several law firms to review plans to potentially conduct a tender offer on T'Way Air. </li>
</ul>


In the past several days, there have been an increased speculation in the local media about a potential M&amp;A fight for T'Way Air between Yearimdang Publishing and Daemyung Sono Group. 
The difference in ownership of T'Way Air by Daemyung Sono Group and Yearimdang Group is only 3.2%, which could lead to an intensified management rights dispute. 
According to local sources, Daemyung Sono Group has recently contacted several law firms to review plans to potentially conduct a tender offer on T'Way Air. 


T'Way Air: Increasing Possibility of an M&A Fight Between Yearimdang and Daemyung Sono Group

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>It’s unclear if this will turn into a tender offer battle like Korea Zinc, and we need to assess both sides’ financial strength carefully.</li>
<li>Today’s reports suggest Sono has more financial flexibility than T'way Holdings, but we should be cautious. T'way Air might also consider buying back shares with borrowed funds.</li>
<li>T'way Air has fewer institutional investors and more available float than Korea Zinc, suggesting significant price swings and an attractive trading setup, as seen in today’s volume spike.</li>
</ul>


It’s unclear if this will turn into a tender offer battle like Korea Zinc, and we need to assess both sides’ financial strength carefully.
Today’s reports suggest Sono has more financial flexibility than T'way Holdings, but we should be cautious. T'way Air might also consider buying back shares with borrowed funds.
T'way Air has fewer institutional investors and more available float than Korea Zinc, suggesting significant price swings and an attractive trading setup, as seen in today’s volume spike.


Digging into Today’s Potential T'way Air Tender Offer Saga

Equity Bottom-Up

<ul>
<li>Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears that this merger could finally occur.</li>
<li>There is now a higher probability of Korean Air and Asiana Airlines receiving the final merger approval from the United States Department of Justice. </li>
<li>Combined with attractive valuations, better balance sheet, and improved profitability from the merged entity, we believe that Korean Air shares could continue to outperform KOSPI in the next 12 months. </li>
</ul>


Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears that this merger could finally occur.
There is now a higher probability of Korean Air and Asiana Airlines receiving the final merger approval from the United States Department of Justice. 
Combined with attractive valuations, better balance sheet, and improved profitability from the merged entity, we believe that Korean Air shares could continue to outperform KOSPI in the next 12 months. 


Korean Air Spearheading the Korean Airline Industry Consolidation

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Haitong Securities Co Ltd (H) / Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd-5dfaf2c5-76d3-4f34-a77d-118787fd7091" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Junan Securities (2611 HK)</a>/<a href="https://www.smartkarma.com/entities/haitong-securities-co-ltd-h" target="_blank" data-smartkarma-citation="entities:5665:1" rel="noopener">Haitong Securities Co Ltd (H) (6837 HK)</a> merger is a done deal.  The key risk, as with<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">TCM (570 HK)</a>'s Offer, is one of timing.</li>
<li>IF you are an arbitrageur,  Buy <a href="https://www.smartkarma.com/entities/shin-kong-financial-holding" target="_blank" data-smartkarma-citation="entities:15351:1" rel="noopener">Shin Kong Financial Holding (2888 TT)</a> vs A Basket of FHC Peers (not including Taishin).</li>
<li>
<a href="https://www.smartkarma.com/entities/first-pacific-co-ltd" target="_blank" data-smartkarma-citation="entities:173:1" rel="noopener">First Pacific Co (142 HK)</a>'s 46.2% share of <a href="https://www.smartkarma.com/entities/metro-pacific-investments-co" target="_blank" data-smartkarma-citation="entities:1054:1" rel="noopener">Metro Pacific Investments Co (MPI PM)</a>at delisting last year was worth ~US$1.25bn. It is now potentially worth ~US$3.21bn. </li>
</ul>


The Guotai Junan Securities (2611 HK)/Haitong Securities Co Ltd (H) (6837 HK) merger is a done deal.  The key risk, as withTCM (570 HK)'s Offer, is one of timing.
IF you are an arbitrageur,  Buy Shin Kong Financial Holding (2888 TT) vs A Basket of FHC Peers (not including Taishin).

First Pacific Co (142 HK)'s 46.2% share of Metro Pacific Investments Co (MPI PM)at delisting last year was worth ~US$1.25bn. It is now potentially worth ~US$3.21bn. 


Last Week in Event SPACE: Guotai/Haitong, Shin Kong, China Conch Ventures, First Pac, Zhejiang E'way

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>There are 5 migrations from MidCap to LargeCap, 4 LargeCap to MidCap, 3 new additions to MidCap, 9 SmallCap to MidCap, 11 MidCap to SmallCap, 3 new additions to SmallCap.</li>
<li>The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.</li>
<li>Given the huge outperformance and looking at how the migrations have performed historically, we'd expect the stocks migrating to MidCap to underperform post implementation of the changes.</li>
</ul>


There are 5 migrations from MidCap to LargeCap, 4 LargeCap to MidCap, 3 new additions to MidCap, 9 SmallCap to MidCap, 11 MidCap to SmallCap, 3 new additions to SmallCap.
The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.
Given the huge outperformance and looking at how the migrations have performed historically, we'd expect the stocks migrating to MidCap to underperform post implementation of the changes.


KOSPI Size Indices - Changes in March & Implications

South Korea

Tway Air Co., Ltd operates as an airline company. The Company offers flight, hotel, car booking services. Tway Air also provides reissuance of ticket, baggage, airport, and in-flight services. Tway Air serves customers worldwide.

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T'Way Air (091810 KS)

T'Way Air: Increasing Possibility of an M&A Fight Between Yearimdang and Daemyung Sono Group

In the past several days, there have been an increased speculation in the local media about a potential M&A fight for T'Way Air between Yearimdang...

Douglas Kim

Digging into Today’s Potential T'way Air Tender Offer Saga

This post dives into today’s potential T'way Air tender offer saga, unpacking the local media reports that circulated in the market throughout the...

Sanghyun Park

Korean Air Spearheading the Korean Airline Industry Consolidation

Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears...

Douglas Kim

Last Week in Event SPACE: Guotai/Haitong, Shin Kong, China Conch Ventures, First Pac, Zhejiang E'way

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

KOSPI Size Indices - Changes in March & Implications

The changes to the KOSPI Size Indices were announced on Friday. Stocks migrating from SmallCap to MidCap have bigly outperformed and going by...

Brian Freitas

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