Category

South Korea

Dec 20
0

Daily Brief South Korea: SAMSUNG KODEX KOREA Value-Up ETF, LG CNS, Samyang Foods and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea FSC’s Stabilization Fund: Breaking Down the Buzz and Flow Impact
  • LG CNS Pre-IPO – Thoughts on Valuation – Retail Demand Appears Hot, Digestible Val at Bottom End
  • LS Electric, Then Hyundai Rotem, Now Samyang Foods and Hyundai Mipo: Same Proactive Flow?

Korea FSC’s Stabilization Fund: Breaking Down the Buzz and Flow Impact

By Sanghyun Park

  • With the Fed shock pushing the won past 1,450 and the KOSPI down, it’s time to dig into the stabilization fund—its size, timing, and which stocks will catch the flow.
  • With ₩10T in play, even spread over 10 stages, it could drive significant price impact. NPS’s ₩1.5T injection in December shows how even smaller flows move the market.
  • The FSC plans to focus on KOSPI 200 and broad market ETFs, with new ETFs like the Value-Up Index likely getting more flow—target stocks in both for bigger impact.

LG CNS Pre-IPO – Thoughts on Valuation – Retail Demand Appears Hot, Digestible Val at Bottom End

By Clarence Chu

  • LG CNS (LGCNSZ KS) is looking to raise around US$850m in its upcoming Korea IPO.
  • LG CNS is a South Korean information technology company. The firm primarily provides comprehensive digital transformation services and solutions backed AI, big data, and cloud.
  • In our previous notes, we looked at the firm’s past performance and undertook a peer comparison. In this note, we discuss our thoughts on valuation.

LS Electric, Then Hyundai Rotem, Now Samyang Foods and Hyundai Mipo: Same Proactive Flow?

By Sanghyun Park

  • Local hedge funds, mainly prop traders and PEs, drove the price action in LS Electric and Hyundai Rotem, and are now leading net buying in Samyang Foods and Hyundai Mipo.
  • Given the setup, it’s likely Samyang Foods and HD Hyundai Mipo will follow a similar move until mid-January when screening starts, so we should stay aware of this backdrop.
  • This gives us a chance to capture upside. Plus, since Samyang Foods and Hyundai Mipo may pull back 30-40% post-screening, there’s also a solid opportunity during that dip.

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Dec 19
0

Daily Brief South Korea: Samsung Sds and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Comparison of KOSPI 200 and S&P 500 Companies Performances in 2024

A Comparison of KOSPI 200 and S&P 500 Companies Performances in 2024

By Douglas Kim

  • S&P500 is up 27.7% YTD, outperforming KOSPI which is down 6.9% YTD. Global fund flow continues to pour into top quality US stocks such as Palantir, Tesla, and NVIDIA.
  • The top 20 best performing stocks in KOSPI 200 are up on average 106.8% YTD. However, the remaining 180 stocks in KOSPI 200 are down on average 9.2% YTD. 
  • There is no large Palantir-like company that deals with AI/data analytics in Korea. However, large cap IT services and telcos in Korea are increasingly expanding their AI/data analytics related business.

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Dec 18
0

Daily Brief South Korea: Posco DX, Lotte Shopping Co, Dongwon Industries, LG CNS and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again
  • Lotte Shopping and Potentially Others Are Shaping up as Fresh Picks for Dividend Arbitrage Plays
  • [Quiddity Index] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible
  • LG CNS IPO Industry Analysis
  • LG CNS Pre-IPO – Peer Comp – Doesn’t Really Stand Out in Growth, Although OPM Were at the Higher End

A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again

By Sanghyun Park

  • This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.
  • We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.
  • Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.

Lotte Shopping and Potentially Others Are Shaping up as Fresh Picks for Dividend Arbitrage Plays

By Sanghyun Park

  • At today’s close, Lotte Shopping (023530 KS) shows solid contango for a basis trade, with LS Corp (006260 KS) next; the rest are too tight or dry.
  • Lotte Shopping surprised the market today, changing its dividend record date to a board-set day, wiping out the backwardation that matched its dividend yield until yesterday.
  • Lotte Shopping’s move could signal other stocks changing dividend dates, causing similar dislocations. With a 7% yield and solid SSF volume, it’s prime for aggressive dividend arbitrage.

[Quiddity Index] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible

By Travis Lundy

  • KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
  • In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2025.
  • We expect up to six ADDs and six DELs in the KOSPI 200 index during the June 2025 index rebal event based on the latest available data.

LG CNS IPO Industry Analysis

By Douglas Kim

  • The IT service market in Korea is estimated to be 51.5 trillion won in 2023 and it is expected to growth at a CAGR of 9.4% from 2023 to 2028.
  • The Cloud & AI market is expected to grow at an annual rate of 10.5% from 32.7 trillion won in 2023 to 53.8 trillion won in 2028.
  • LG CNS had about 8.9% share in the IT services market in Korea in 2023.

LG CNS Pre-IPO – Peer Comp – Doesn’t Really Stand Out in Growth, Although OPM Were at the Higher End

By Clarence Chu

  • LG CNS (LGCNSZ KS) is looking to raise around US$850m in its upcoming Korea IPO.
  • LG CNS is a South Korean information technology company. The firm primarily provides comprehensive digital transformation services and solutions backed AI, big data, and cloud.
  • In a previous note, we looked at the firm’s past performance. In this note, we undertake a peer comparison.

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Dec 17
0

Daily Brief South Korea: Hyundai Mobis, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX Value-Up Index Rebalance Results and Estimated Passive Impact
  • EQD | Kospi Index Options Weekly – December 09 – 13

KRX Value-Up Index Rebalance Results and Estimated Passive Impact

By Sanghyun Park

  • KRX updated the Value-Up Index with five new names: KB Financial, Hana Financial, KT Corp, SK Telecom, and Hyundai Mobis, with Mobis replacing JB Financial, surprising the market.
  • This is the first rebalancing, packed into one day, so expect notable price action. Reverse moves could also follow Thursday as pre-positioned trades unwind, so monitor price action closely.
  • Even after Thursday’s rebalancing, half of the funds, especially from the National Pension Service, will flow into high-yield stocks, likely driving significant price moves through early next year.

EQD | Kospi Index Options Weekly – December 09 – 13

By John Ley

  • Risk reward for owning implied vol has shifted to the long side here given spot/vol dynamics and limited vol upside since market peaked 17% higher.
  • Strong price action after a soggy start to the week sees a significant portion of open interest cleared out.
  • Largest open interest is at the 300 strike with ~ 42k Put contracts outstanding.

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Dec 16
0

Daily Brief South Korea: Samsung C&T, LG CNS and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade
  • LG CNS IPO: The Bull Case

Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade

By Sanghyun Park

  • The Dems are serious about the Commercial Act amendment, with Lee Jae-myung personally attending the policy forum to pitch the change directly to key business players.
  • Key takeaways: expanding directors’ fiduciary duties to all shareholders and mandatory cumulative voting, which could empower minority shareholders and reignite value-up policies in Korean companies.
  • The Dems plan to fast-track the Commercial Act amendment by year-end, with implementation likely by Q2 next year, boosting market moves and reigniting the value-up trade ahead of May’s election.

LG CNS IPO: The Bull Case

By Arun George

  • LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.   
  • In 2020, Macquarie Asset Management bought a 35% stake from LG Corp for KRW950 billion, beating KKR & Co (KKR US), the other shortlisted bidder.
  • The bull case rests on an attractive market, improving visibility, strong AI-led growth, below-peer average dependence on related parties, and top-tier profitability. 

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Dec 15
0

Daily Brief South Korea: Korea Stock Exchange Kospi Index, KB Financial and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact
  • A Review of Major Equity Indices in Korea in 2024

Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact

By Sanghyun Park

  • The impeachment motion against President Yoon passed in the South Korean National Assembly, clearing the two-thirds supermajority, and is now official.
  • For the impeachment to fail, four justices must oppose it—highly unlikely given the current setup. The odds are heavily in favor of the impeachment being upheld.
  • Corporate law reforms, driven by a likely Democratic Party takeover, could fuel value-up momentum and drive the local market, potentially sparking an unexpected rally through the May election.

A Review of Major Equity Indices in Korea in 2024

By Douglas Kim

  • In this insight, we review the major equity indices in Korea in 2024 including KOSPI 200 and Korea Value Up Index. 
  • Some alpha generating performances continue in terms of adding stocks to be included in the KOSPI 200 and reducing stocks that could be excluded.
  • Korea Value Up Index has been heavily promoted by the Korean Exchange this year. Korea Exchange plans to make special changes to the Korea Value-Up Index constituents on 20 December. 

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Dec 14
0

Daily Brief South Korea: Celltrion Inc, SGX Rubber Future TSR20 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Celltrion: Meaningful Increase in Cash and Stock Dividends
  • ELTs Undertake An Impressive ‘Sustainable March’ In The US

Celltrion: Meaningful Increase in Cash and Stock Dividends

By Douglas Kim

  • Celltrion Inc (068270 KS) announced meaningful increase in dividends (including both cash and stock dividends).
  • Celltrion will pay out stock dividend of 0.05 for shareholders as of record in 2024, this will be 150% higher than the average stock dividend in the past three years.
  • Celltrion will also pay out cash DPS of 750 won for shareholders as of record in 2024, which is more than double the average DPS in the past three years. 

ELTs Undertake An Impressive ‘Sustainable March’ In The US

By Vinod Nedumudy

  • 79% of ELTs consumed by end-use markets, up 10.5%
  • Tire-derived fuel tops ELT use, followed by ground rubber
  • Sumitomo Rubber USA announces closing of Buffalo plant

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Dec 13
0

Daily Brief South Korea: Hyundai Motor Securities, LG CNS, Coupang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • FSS Puts a Break on Hyundai Motor Securities Rights Offering
  • LG CNS Pre-IPO – Post-COVID Beneficiary
  • Coupang Inc.: Its Efforts Towards International Expansion & Market Penetration & Other Major Drivers

FSS Puts a Break on Hyundai Motor Securities Rights Offering

By Douglas Kim

  • After the market close on 12 December, the Financial Supervisory Service (FSS) put a break on Hyundai Motor Securities’ rights offering worth 200 billion won.
  • The proposed rights offering included issuing 30.1 million new shares, representing 95% of its current outstanding shares (31.7 million).
  • We would try to capitalize on the short term bullish upside on its shares of Hyundai Motor Securities and sell into strength.  

LG CNS Pre-IPO – Post-COVID Beneficiary

By Clarence Chu

  • LG CNS (LGCNSZ KS) is looking to raise around US$850m in its upcoming Korea IPO. 
  • LG CNS is a South Korean information technology company. The firm primarily provides comprehensive digital transformation services and solutions backed AI, big data, and cloud.
  • In this note, we look at the firm’s past performance.

Coupang Inc.: Its Efforts Towards International Expansion & Market Penetration & Other Major Drivers

By Baptista Research

  • Chevron Corporation’s third-quarter 2024 financial results demonstrated a mixture of positive operational achievements and financial headwinds.
  • The company reported earnings of $4.5 billion or $2.48 per share, with adjusted earnings similarly at $4.5 billion or $2.51 per share.
  • Despite these substantial earnings, this marked a decrease from the prior year largely due to lower liquids realizations and increased depreciation, depletion, and amortization (DD&A), particularly at the Tengizchevroil (TCO) project in Kazakhstan.

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Dec 12
0

Daily Brief South Korea: Rebellions, Korea Zinc, Isupetasys and more

By | Daily Briefs, South Korea

In today’s briefing:

  • 2025 (“Year of the Snake”) Major IPOs Pipeline in Korea
  • A Review of Rights Offerings/Capital Raise Announcements in Korea in 2024
  • ISU Petasys Ignores FSS: A Likely Short-Term Dip Sets up an Opportunity to Target 15% Discount

2025 (“Year of the Snake”) Major IPOs Pipeline in Korea

By Douglas Kim

  • This is our 10th “Annual Edition of the Major Korean IPOs Pipeline Preview” at Smartkarma.
  • This insight will feature 50 of the biggest potential IPOs in Korea in 2025.
  • These 50 IPOs in Korea are likely to represent more than 80% of all capital raised through IPOs in Korea next year.

A Review of Rights Offerings/Capital Raise Announcements in Korea in 2024

By Douglas Kim

  • In this insight, we review the major rights offerings/capital raises that were announced in Korea in 2024.
  • In general, the major rights offerings/capital raises tend to result in lower share prices one month, three months, and over a longer time frame. 
  • There are some exceptions. Peptron and ABL Bio experienced higher share prices even after their capital raise announcements, especially after a longer time frame (3 months or more).

ISU Petasys Ignores FSS: A Likely Short-Term Dip Sets up an Opportunity to Target 15% Discount

By Sanghyun Park

  • ISU Petasys is betting the FSS chief, tied to the current administration, won’t have much market power due to the impeachment drama—and that gamble looks likely to pay off.
  • ISU Petasys’ rights offering still offers solid trade potential, with 97% stockholder allocation and only 21% from the major shareholder, increasing the chance of significant unclaimed shares hitting the market.
  • Our plan is to grab stock rights cheap, ride the 15% discount, and capitalize on stock pullbacks, though lack of futures limits short hedging. Still, an unhedged setup looks promising.

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Dec 11
0

Daily Brief South Korea: LG CNS, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • LG CNS IPO Valuation Analysis
  • EQD | Kospi 200 (KOSPI2) – Identifying Option Opportunities Amid Political Turmoil

LG CNS IPO Valuation Analysis

By Douglas Kim

  • According to our valuation analysis, it suggests a base case implied market cap of 7.9 trillion won for LG CNS, representing target price of 81,095 won per share.
  • Therefore, our base case valuation target price of 81,095 won is 31% higher than the high end of the IPO price range.
  • We estimate LG CNS to generate sales of 5.99 trillion won (up 6.8% YoY) and net profit of 356.1 billion won (up 7.1% YoY) in 2024.

EQD | Kospi 200 (KOSPI2) – Identifying Option Opportunities Amid Political Turmoil

By Gaudenz Schneider

  • The impact of South Korea’s political turmoil on the KOSPI 200 and implied volatility has been limited. Implied volatility has risen, and the skew steepened but not to extreme levels.
  • The shape of the skew, in combination with the interplay between index and skew change, open up an opportunity for opportunistic option trades, in particular short otm calls and/or puts.
  • KOSPI 200 (KOSPI2 INDEX) risk is probably skewed to the downside favoring short calls. Choice of strike and expiry is guided by quantitative analysis, option liquidity, and risk-return potential.

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