South Korea Daily Briefs | Page 12 of 133

Aug 09

Daily Brief South Korea: POSCO Holdings, SK Innovation, Korea Zinc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry

By Sanghyun Park

Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.

SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On

By Douglas Kim

SK Innovation is considering on using its treasury shares to inject capital into its EV battery making subsidiary SK On.
The appraisal rights exercise price is 111,943 won per share (15% higher than current price). Many minority shareholders are likely to exercise their appraisal rights in SK Innovation.
We remain Bearish on SK Innovation. We continue to be negative on the SK Innovation and SK E&S merger. Plus, we are concerned about the continued weakness at SK On.

Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

By Douglas Kim

On 7 August, Korea Zinc (010130 KS) announced several impressive capital return plan that should help to increase shareholder value.
The separation of Korea Zinc between the Choi and Jang families has been in progress in the past several years. The exact timing of when this occurs remains uncertain.
Our NAV Analysis of Young Poong is NAV per share of 470,065 won, representing a 52% upside from current levels.

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Aug 08

Daily Brief South Korea: KT Corp, Celltrion Inc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Initial Thoughts on the K Bank IPO
Celltrion (068270 KS): 2Q24 Result- Biosimilar Sales Roar; Operating Profit Recovers Sequentially

Initial Thoughts on the K Bank IPO

By Douglas Kim

In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea.
A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank.
K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.

Celltrion (068270 KS): 2Q24 Result- Biosimilar Sales Roar; Operating Profit Recovers Sequentially

By Tina Banerjee

Celltrion Inc (068270 KS) posted revenue of KRW875B in 2Q24, driven by balanced growth in both the existing core and new biosimilar products.
Operating profit ‘temporarily’ declined 60% YoY due to the ongoing impact of the merger. However, operating profit improved by a massive 371% sequentially.
Celltrion maintains its 2024 revenue target of KRW3.5T (+60% YoY). The improvement in sales and operating profit in the second half of the year is expected to become increasingly evident.

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Aug 07

Daily Brief South Korea: Doosan Bobcat Inc, SK Innovation, SK Telecom and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Doosan Group Revises Merger Report and Increasing Probability of Merger Getting Cancelled
The Unusual Flow Trading Development Caused by SK Innovation’s Appraisal Rights Premium
SK Telecom: A Blue-Chip Defensive Stock That Could Outperform KOSPI Amid Market Turmoil

Doosan Group Revises Merger Report and Increasing Probability of Merger Getting Cancelled

By Douglas Kim

On 6 August, the Doosan Group announced a revised merger report. Despite some changes in the merger report, there was no change the merger ratios.
Many minority shareholders of Doosan Enerbility and Doosan Bobcat are likely to oppose this merger. The net result is an increasing probability that this merger gets cancelled, in our view.
Doosan Enerbility has set aside about 600 billion won for exercise of appraisal rights and if it exceeds this amount, the merger may be cancelled.

The Unusual Flow Trading Development Caused by SK Innovation’s Appraisal Rights Premium

By Sanghyun Park

Exceeding the ceiling doesn’t cancel the merger; SK Innovation can still proceed. With their decision confirmed, focus should shift to appraisal rights flows rather than cancellation risk.
We should focus on flow trading given the notable exercise size and potential for unprecedented market activity if institutions, including the NPS, exercise their rights due to the juicy premium.
The large exercise size and SK Innovation’s KOSPI large-cap status may create unique flow trading opportunities, with potential repurchases after new shares list.

SK Telecom: A Blue-Chip Defensive Stock That Could Outperform KOSPI Amid Market Turmoil

By Douglas Kim

Amid recent market turmoil, we believe that SK Telecom could be a solid blue-chip, defensive Korean stock that could outperform the market in the next 6-12 months.
SK Telecom reported better than expected profits in 2Q 2024. The company’s sales were 0.5% higher than the consensus and its operating profit was 3.9% higher than the consensus estimates.
SK Telecom’s shareholder return policy is to return at least 50% of adjusted profit for the year on a consolidated basis.

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Aug 06

Daily Brief South Korea: Youlchon Chemical and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Potential Additions and Deletions to KOSPI 200 in December 2024 Amid Market Downturn

Potential Additions and Deletions to KOSPI 200 in December 2024 Amid Market Downturn

By Douglas Kim

We discuss the potential additions and deletions to KOSPI 200 in December 2024 amid big declines in share prices of many stocks in KOSPI in the past week.
The eight potential additions are up on average 8.5% from end of 2023. The eight potential deletion candidates are down on average 39.1% YTD.
The average market cap of the seven potential additions is 1.9 trillion won. The average market cap of the seven potential deletion candidates is 0.6 trillion won.

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Aug 05

Daily Brief South Korea: Samsung Electronics Pref Shares, KT&G Corporation and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing
KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears

Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing

By Sanghyun Park

Local traders see interest rate cuts and value-up disclosures as key for timing Samsung Electronics 1P discount narrowing.
Samsung’s only realistic value-up goal beyond 50% FCF return is improving ROE, likely through a pref-skewed buyback or cancellation program.
If Samsung announces a value-up plan during the Bank of Korea’s rate cuts, local traders expect the 1P discount to reverse, targeting October-November for position entry.

KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears

By Douglas Kim

In this insight, we provide an update of KT&G Corporation (033780 KS) which is a strong candidate for outperformance amid increased signs of market fears.
We continue to believe that there is an increasing probability of cigarette price hikes in Korea in 2H24. Last time that KT&G hiked its cigarette prices was in January 2015.
The company’s shareholder return policy is to provide cash dividends of 1.8 trillion won and share buyback/cancellations worth 1 trillion won from 2024 to 2026.

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Aug 03

Daily Brief South Korea: KB Financial, KT Corp, Hana Financial and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System
Asian Dividend Gems: KT Corp
South Korean Banks; Hana Financial (086790 KS) And Woori (316140 KS) Are Our Positive Picks

Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System

By Douglas Kim

One of the key takeaways of the Corporate Value Up disclosures on the KIND system is that it could potentially lead to alpha generating investing opportunities.
Since the last week of May, there have been 7 companies that provided specific Corporate Value up programs; (4 major financials) have outperformed KOSPI.
Companies such as KB Financial and Shinhan Financial that provide more meaningful Corporate Value Up action plans are likely to have greater impact on their share prices.

Asian Dividend Gems: KT Corp

By Douglas Kim

We have a Positive view of KT Corp (030200 KS) due to three main reasons.
First, KT has started to implement aggressive capital return policy (returning 50% of net income through dividends and share buybacks/cancellations). Two other reasons include Corporate Value Up and higher Smartscore.
KT Corp has been the best performing stock among the three major Korean telcos in the past one year. KT Corp’s shares are up 27.9% in the past one year.

South Korean Banks; Hana Financial (086790 KS) And Woori (316140 KS) Are Our Positive Picks

By Victor Galliano

Delinquency ratios continued to worsen into 2Q24, with a couple of the South Korean banks seeing accelerating growth in NPL ratios; despite this, there are buy opportunities
Our bigger cap pick is Hana Financial for its very attractive valuations, PEG and equity risk premia, as well as its solid core capital ratio and strong credit quality credentials
Among the smaller caps, Woori stands out in terms of valuation, PEG ratio, credit quality and it has registered improving post-provision returns

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Aug 02

Daily Brief South Korea: Hanwha Aerospace and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Quiddity Leaderboard KOSPI 200 Dec 24: Up to 5 ADDs & 6 DELs Possible

Quiddity Leaderboard KOSPI 200 Dec 24: Up to 5 ADDs & 6 DELs 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 December 2024.
We expect up to five ADDs and six DELs in the KOSPI 200 index during the December 2024 index rebal event based on the latest available data.

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Aug 01

Daily Brief South Korea: SK Biopharmaceuticals , APR, Hankook Tire & Technology, E Mart Inc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

KRX’s September Major Rebalancing Events: Why We Should Focus on KRX BBIG
End of Mandatory Lock-Up Periods for 41 Companies in Korea in August 2024
Latest Update on Hanon Systems Stake Sale: Consider Long Short Setup on Hankook Tire & Hanon
TMON and WeMakePrice File for Court Receivership – Impact on the Korean E-Commerce and PG Sectors

KRX’s September Major Rebalancing Events: Why We Should Focus on KRX BBIG

By Sanghyun Park

The KRX BBIG’s concentrated weight and top three replacements still attract significant flow trading interest despite a decline in AUM.
In the Battery Sector, Posco Future M will replace Ecopro BM, while in the Bio Sector, Alteogen will replace SK Biopharmaceuticals.
A significant single-day passive flow is expected, especially for SK Biopharm. Additionally, a day trading setup with Posco Future M and Ecopro BM will likely attract substantial interest.

End of Mandatory Lock-Up Periods for 41 Companies in Korea in August 2024

By Douglas Kim

We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in August 2024, among which 2 are in KOSPI and 39 are in KOSDAQ.
These 41 stocks on average could be subject to further selling pressures in August and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in August include APR, Fadu, and Kuk Il Paper.

Latest Update on Hanon Systems Stake Sale: Consider Long Short Setup on Hankook Tire & Hanon

By Sanghyun Park

Today’s news indicates Hankook Tire found contingent liabilities in Hanon Systems’ finances, meeting conditions to break the May agreement and putting the deal on indefinite hold.
Hankook Tire plans to adjust the new share price first, then the existing share price, while Hahn & Co, unable to delay its exit, will likely accept it.
With Hahn & Co likely to accept Hankook Tire’s price adjustment request, consider a long-short setup: Hankook Tire may benefit from positive momentum, while Hanon Systems faces negative dilution.

TMON and WeMakePrice File for Court Receivership – Impact on the Korean E-Commerce and PG Sectors

By Douglas Kim

One of the biggest stories in the Korean e-commerce sector this week has been TMON and WeMakePrice filing for court receivership due to liquidity crisis.
Singapore’s Qoo10 is the controlling shareholder of TMON and WeMakePrice. Young-Bae Ku is the largest shareholder of Qoo10 with a 42.77% stake, followed by KKR with a 25.65% stake.
Competitors such as E-Mart and Coupang are most to benefit. PG companies such as KG Inicis and NHP KCP are negatively impacted.

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Jul 31

Daily Brief South Korea: SK Hynix, Woori Financial Group , Alteogen Inc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Asia Ex-Japan: Extreme Stocks
Block Deal Sale Of 2.3% Stake in Woori Financial and Highlights of Its Corporate Value Up Program
KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today

Asia Ex-Japan: Extreme Stocks

By Steven Holden

We screen for stocks at the extreme ends of their positioning or momentum ranges among active Asia Ex-Japan equity funds.
High Positioning, Negative Momentum: AIA Group Limited, Shenzhen Inovance Technology
Low Positioning, Positive Momentum: New Oriental Education & Technology Group, Shinhan Financial Group

Block Deal Sale Of 2.3% Stake in Woori Financial and Highlights of Its Corporate Value Up Program

By Douglas Kim

On 30 July, it was reported that IMM Private Equity (PE) sold a 2.3% stake (16.78 million shares) of Woori Financial Group (WFG), which was worth 264 billion won.
Block deal sale price was 15,737 won (0.4% higher than current price). Today’s block deal sale represents a second block deal sale of Woori Financial by IMM PE in 2024.
Under the mid-to-long term Value Up program, Woori Financial Group aims to achieve a sustainable ROE of 10% and total shareholder returns of 50%.

KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today

By Brian Freitas

The review period for the September rebalance ends today, the changes will be announced in the first week of September and implemented at the close of trading on 12 September.
There is at least one change expected for each of the Secondary Battery, Bio, Internet, Game and BBIG indices.
The largest flows will be in Posco Future M, Ecopro BM, SK Biopharmaceuticals, Alteogen, Celltrion, SKC Co, Kakao Corp, Douzone Bizon, Krafton and Samsung Biologics.

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Jul 30

Daily Brief South Korea: KB Financial, Korea Stock Exchange Kospi Index, Hyundai Motor, Shinhan Financial, SK Hynix and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures
Why Is Proportionate Shareholder Protection Key to Korea’s Value-Up, and What Is Its Status?
Potential Big Changes at the Korean Chaebols – The Age Factor of Chairman/Honorary Chairman
Shinhan Financial: Shareholder Return Ratio of 50% to Boost Corporate Value
SK Hynix (000660-KR): Positive Technical Analysis Signals

Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures

By Sanghyun Park

Value-Up plan announcements had a significant immediate price impact, especially for Woori Financial and Shinhan Financial, amplified by recent dividend tax reductions.
We should target companies likely to announce value-up disclosures soon, focusing on those with prior notices. Notably, KB Financial and DB HiTek have issued prior notices.
Both companies hold many treasury shares. KB Financial is a dividend stock, with value-up disclosures likely during their Q3 and Q4 earnings announcements.

Why Is Proportionate Shareholder Protection Key to Korea’s Value-Up, and What Is Its Status?

By Sanghyun Park

A new tax support framework for Korea’s value-up policy was introduced, but local markets argue that proportionate protection for minority shareholders is crucial for a significant market value increase.
Korean political leaders are united in supporting this amendment to the Commercial Act, with recent events increasing the likelihood of bipartisan support for this crucial change.
Given the administration’s commitment to the value-up and recent negative sentiment towards recent restructurings at Doosan and SK, there’s growing potential for minority shareholder protection to take root in Korea.

Potential Big Changes at the Korean Chaebols – The Age Factor of Chairman/Honorary Chairman

By Douglas Kim

One of the important factors of big changes at the Korean chaebols is the age factor of the chairman/honorary chairman of each of these conglomerates.
In this insight, we provide the shareholding ownerships and ages of the top 10 Korean conglomerates where age could become a major factor in impacting big changes that could occur.
Among the 10 conglomerates listed below, Hyundai Motor Group, Celltrion Group, and SK Group have shown greater willingness to improve their shareholder return policies.

Shinhan Financial: Shareholder Return Ratio of 50% to Boost Corporate Value

By Douglas Kim

Shinhan Financial announced that it plans to increase shareholder return ratio to 50%, improve ROE to 10%, and reduce outstanding shares by 50 million+ by 2027.
Shinhan Financial Group’s new, outstanding shareholder return policy has been one of the most impressive since the roll-out of the Corporate Value Up program in Korea a few weeks ago.
The improved corporate governance policy is likely to lead to Shinhan Financial Group outperforming other financial stocks in Korea and KOSPI overall in the next 6-12 months.

SK Hynix (000660-KR): Positive Technical Analysis Signals

By Wium Malan, CFA

Despite a negative share price reaction, following its 2Q2024 earnings report, SK Hynix (000660 KS) remains firmly amid an earnings upgrade cycle.
With SK Hynix entering oversold territory, near-term momentum indicators are displaying bullish signals.
SK Hynix trades at nearly one standard deviation below its 5-year historic average EV/EBITDA ratio and a discount to global peers.

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