Category

South Korea

Jul 10
0

Daily Brief South Korea: Korea Stock Exchange Kospi Index, LS Marine Solution, Hyundai Motor India , Posco Future M, Sanil Electric, Shift Up and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Details of Block Deal Pre-Disclosure Rule Disclosed: Cancellation Risk from 30% Price Correction
  • Insiders Buying and Selling Prior To Mandatory Block Deal Pre-Announcement Requirement in Korea
  • India Car Sales Slow: Can Hyundai Keep Its No. 2 Spot Amidst Fierce Competition?
  • KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It
  • Sanil Electric IPO – Stars Aligned with High Growth and Strong Sentiment
  • Shift Up IPO Trading – Strong Demand for Quality Asset but It Has Slipped Out of the Top Games

Details of Block Deal Pre-Disclosure Rule Disclosed: Cancellation Risk from 30% Price Correction

By Sanghyun Park

  • Today’s press release unveils details on new flow trading events in Korea’s local market from the second half of this year, highlighting two key points.
  • Firstly, the disclosure rule starts with block deals from August 23rd. Secondly, a 30% or greater stock price correction on disclosure day may cancel the transaction plan.
  • This highlights the need to consider cancellation risks in pre-disclosure positions and design setups with consideration for the potential for reverse flows as stock prices approach 30% corrections.

Insiders Buying and Selling Prior To Mandatory Block Deal Pre-Announcement Requirement in Korea

By Douglas Kim

  • In this insight, we discuss recent, active insiders buying and selling their shares prior to the mandatory block deal pre-announcement requirement starting 24 July in Korea.
  • The three companies that announced insiders selling (July) are down on average 3% YTD. However, the three companies that announced insiders buying (July) are up on average 74% YTD. 
  • LS Cable has been consistently increasing its ownership of LS Marine Solution, up from 46% stake as of 27 May 2024 to 56.14% as of 8 July 2024.

India Car Sales Slow: Can Hyundai Keep Its No. 2 Spot Amidst Fierce Competition?

By Devi Subhakesan

  • Hyundai Motor India (HMIL) saw a market share loss in India Passenger Vehicles sales reported for June 2024 and 1QFY2025, impacted by intensified competition in the SUV segment.
  • Mahindra & Mahindra, and Toyota Kirloskar India gained market share in 1QFY2025 led by upgraded model launches in the SUV segment, traditionally a strong category for HMIL.
  • HMIL’s declining market share, if not reversed soon, could challenge optimistic growth projections and valuation multiples for its upcoming IPO.

KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It

By Brian Freitas

Sanil Electric IPO – Stars Aligned with High Growth and Strong Sentiment

By Ethan Aw

  • Sanil Electric (062040 KS) is looking to raise up to US$165m in its Korean IPO.
  • Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
  • In our previous notes, we talked about the company’s historical performance. In this note, we undertake a quick peer comparison and share our thoughts on valuation.

Shift Up IPO Trading – Strong Demand for Quality Asset but It Has Slipped Out of the Top Games

By Sumeet Singh

  • Shift Up (462870 KS) raised around US$320m in its South Korean IPO, after pricing at the top.
  • Shift Up is a South Korean games developer, which as released three games so far for the global markets.
  • We have looked at the company’s performance and valuation in our earlier notes. In this note, we talk about the trading dynamics.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 08
0

Daily Brief South Korea: Clio Cosmetics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSDAQ150 Index Rebalance Preview: For Now, A Dozen Changes in December

KOSDAQ150 Index Rebalance Preview: For Now, A Dozen Changes in December

By Brian Freitas

  • With just over a third of the review period complete, there could be 12 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
  • Even with 12 potential changes, there is sector balance with over half the changes in the Information Technology sector. Passive trading impact varies from 0.04-4.1x ADV.
  • The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the year with a big move higher since mid-May.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 07
0

Daily Brief South Korea: Shift Up and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Shift Up IPO: Final Allocation Results, Lockup Release Schedule, & Index Float Rates

Shift Up IPO: Final Allocation Results, Lockup Release Schedule, & Index Float Rates

By Sanghyun Park

  • Notably, local hedge funds receive significant allocation, nearly 10%, unusual for KOSPI IPOs this size, differing from HD Hyundai Marine Solution.
  • KOSPI 200’s initial float rate is 14%, rising to 58% in six months. MSCI starts at 8%, reaching 12% in six months and 25% in a year.
  • Differences from HD Hyundai Marine Solution include high short-term strategies among institutions. Unlike before, local pension funds receive substantial allocation, potentially affecting stock price post-listing.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 06
0

Daily Brief South Korea: Hanwha Corporation, Korea Stock Exchange Kospi Index and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment
  • Impact of Kim Byung-Hwan’s Appointment as Korea FSC Chairman on Value-Up Policy
  • Hanwha Energy Launches Tender Offer of 180 Billion Won Worth of Hanwha Corp

Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment

By Sanghyun Park

  • Hanwha Energy, wholly owned by the Hanwha Group’s owning family, announced a tender offer for an 8% stake in Hanwha Corp at ₩30,000. The tender period is until July 24.
  • Hanwha Energy will buy all shares if tendered less than planned, otherwise pro-rata. Payment in cash eliminates cancellation risk but poses allocation risk.
  • Approximately 10-15% of shares are likely to be the potential ceiling for tendering, minimizing allocation risk for the 8% target. A widening spread of 2-3% could offer arbitrage opportunities.

Impact of Kim Byung-Hwan’s Appointment as Korea FSC Chairman on Value-Up Policy

By Sanghyun Park

  • Kim Byung-hwan addressed criticism of weak incentives in tax support for the value-up policy, emphasizing boosting dividends. His background suggests effective advocacy for tax reforms in his new role.
  • He prioritized abolishing the FIIT in the National Assembly, citing its hindrance to capital market liquidity and investment promotion, indicating a robust approach to the value-up policy.
  • Kim’s appointment as FSC Chairman signals the government’s commitment to advancing the value-up policy. He emphasizes boosting dividends and aligning tax policies accordingly, shaping trading strategies toward dividend-expanding companies.

Hanwha Energy Launches Tender Offer of 180 Billion Won Worth of Hanwha Corp

By Douglas Kim

  • On 5 July, Hanwha Energy announced a tender offer of 8% stake in Hanwha Corporation (000880 KS) worth 180 billion won.
  • The tender offer price is 30,000 won. Hanwha Energy will launch a tender offer for up to 6 million shares of Hanwha Corp, representing 8% of outstanding shares. 
  • Hanwha Corp’s 34% stake in Hanwha Aerospace which is worth 4.2 trillion won. (191% of Hanwha Corp’s market cap). 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 05
0

Daily Brief South Korea: Korea Stock Exchange KOSPI 200, Sanil Electric, Hanwha Aerospace and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Practical Guide to Create A Workable Electronic File for KOSPI 200 Rebalancing Simulation
  • Sanil Electric IPO: Valuation Insights
  • What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?

A Practical Guide to Create A Workable Electronic File for KOSPI 200 Rebalancing Simulation

By Sanghyun Park

  • Predicting KOSPI 200 rebalancing is straightforward, focusing on quantitative screening rather than qualitative factors, unlike other indices.
  • Accurate simulation of KOSPI 200 requires daily data on shares, volume, and prices for six months, typically sourced from KOSCOM due to limitations in free data access.
  • I plan to share a practical KOSPI 200 simulation file with Smartkarma readers, leveraging freely available data from Google Finance.

Sanil Electric IPO: Valuation Insights

By Arun George

What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?

By Douglas Kim

  • On 4 July, NPS disclosed the details of the ownership changes for 112 listed companies in Korea, of which 87 were listed in KOSPI and 25 in KOSDAQ. 
  • In 2Q 2024, the NPS reduced its investments in defense and military stocks and increased investments in cosmetics, shipbuilding, and food companies in Korea.
  • NPS reduced its capital allocation to the military & defense sector. NPS reduced its stake in LIG Nex1 (-2.32%), Poongsan Corp (-2.24%), and Hanwha Aerospace (-1.02%). 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 04
0

Daily Brief South Korea: Paradise Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Paradise: Expansion into High End Hotel Likely to Destroy Shareholder Value

Paradise: Expansion into High End Hotel Likely to Destroy Shareholder Value

By Douglas Kim

  • On 2 July, Paradise Co Ltd (034230 KS) announced that it will construct a new high end luxury hotel in Seoul spending about 500 billion won to 550 billion won. 
  • We believe that this construction of the new luxury hotel will have a negative impact on shares of Paradise. 
  • Rather than investing a large sum of money to build a new hotel, many investors would rather have preferred Paradise to increase share buybacks and dividends. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 03
0

Daily Brief South Korea: Celltrion Inc, ABLBio, Samsung Biologics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (May and June 2024)
  • ABL Bio Capital Raise of 140 Billion Won
  • Samsung Biologics (207940 KS): Gaining Momentum on New Approval and Contract Wins; Hold Shares

Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (May and June 2024)

By Douglas Kim

  • In this insight, we discuss the alpha generation through companies that have been buying back their shares in the Korean stock market in May and June 2024.
  • On average, the share buyback announcements for the 13 companies that announced share buybacks in Korea represented 1.7% of outstanding shares.
  • Major companies that have announced share buybacks in Korea in the past two months include Celltrion Inc (068270 KS), SK IE Technology (361610 KS), and NCSOFT Corp (036570 KS).

ABL Bio Capital Raise of 140 Billion Won

By Douglas Kim

  • On 2 July, ABL Bio (298380 KS) announced a capital raise worth 140 billion won. 
  • The capital raise involves 5.77 million new shares (10.7% of outstanding shares post capital raise) at 24,229 won per share (current price is 24,150 won).
  • The proceeds from the capital raise will be used to develop next-generation ADCs (Antibody Drug Conjugates), including bispecific antibody ADCs.

Samsung Biologics (207940 KS): Gaining Momentum on New Approval and Contract Wins; Hold Shares

By Tina Banerjee

  • Samsung Biologics (207940 KS) has signed the largest ever single CMO contract worth KRW1.46T ($1.1B) with an undisclosed U.S.-based pharmaceutical company. The contract value represents ~40% of 2023 standalone revenue.
  • Within the first half of the year, Samsung Biologics has secured order worth of KRW2.6T, compared with order win of KRW3.5T in full-year 2023.
  • Samsung Bioepis has received FDA approval for Stelara biosimilar Pyzchiva, which is expected to marketed in early 2025. So far, the FDA has approved two other biosimilars of Stelara.  

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 02
0

Daily Brief South Korea: Shift Up, Hyundai Mobis, Hyundai Motor , Sanil Electric and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Shift Up IPO Book Building Results Analysis
  • Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024
  • Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2024
  • Shift Up IPO: Details, Bookbuilding & Index Inclusion
  • Sanil Electric IPO: The Bear Case

Shift Up IPO Book Building Results Analysis

By Douglas Kim

  • Shift Up reported solid IPO book building results. Shift Up’s IPO price has been determined at 60,000 won won, which is at the high end of the IPO price range.
  • According to Hankyung Business Daily, the demand ratio was 223 to 1. Shift Up will start trading on 11 July.
  • Our base case valuation of Shift Up is market cap of 5.7 trillion won or target price of 95,510 won (59% higher than the IPO price of 60,000 won).

Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024

By Douglas Kim

  • In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2024.
  • Of the 38 pair trades, 21 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.
  • These pairs could generate trading opportunities in terms of their pricing gaps closing reversal (Doosan Corp vs. Doosan Enerbility; Hyundai Mobis vs Hyundai Motor).

Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2024

By Douglas Kim

  • In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2024.
  • The recent push for Korea Value Up program has helped to push up prices of numerous Korean preferred stocks including Hyundai Motor (005385 KS). 
  • On a longer timeframe (3-4 years), we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains.

Shift Up IPO: Details, Bookbuilding & Index Inclusion

By Brian Freitas

  • Shift Up (462870 KS) will raise KRW 435bn (US$315m) in its IPO, valuing the company at KRW 3,482bn (US$2.52bn). Listing is expected later this month.
  • Competition for the shares has been fierce with institutional investors indicating demand for 226x the number of shares on offer at prices higher than the top end of the range.
  • Inclusion in the KOSPI 200 looks likely in June 2025, while inclusion in global indices is likely in December. But there could be some passive inflows in September.

Sanil Electric IPO: The Bear Case

By Arun George

  • Sanil Electric (062040 KS), a Korean industrial transformer manufacturer, is seeking to raise up to US$165 million.
  • In Sanil Electric IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on rapidly slowing growth, high customer concentration, mid-tier revenue growth and mid-tier FCF margin compared to peers.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 01
0

Daily Brief South Korea: Hyundai Glovis and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Potential Recurrence of Local Flow Trade Patterns in Hyundai Glovis’s Stock Dividend Event

Potential Recurrence of Local Flow Trade Patterns in Hyundai Glovis’s Stock Dividend Event

By Sanghyun Park

  • Finding a trading entry point during a stock dividend event is tough, but locally, stock prices often rise post-ex-rights date and stabilize after listing, over 70% of the time.
  • There’s speculation that local flow trading, mainly driven by local prop traders, might target this pattern in Glovis’s stock dividend as well.
  • While I wouldn’t recommend banking on this probabilistic trading setup, it’s important to be aware that this could significantly impact stock movements from the ex-rights date to the listing date.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jun 30
0

Daily Brief South Korea: Lunit , Sanil Electric, SK Bioscience and more

By | Daily Briefs, South Korea

In today’s briefing:

  • End of Mandatory Lock-Up Periods for 55 Companies in Korea in July 2024
  • Sanil Electric IPO: The Bull Case
  • SK Bioscience (302440 KS): Acquiring Majority Stake in IDT Biologika- A Step Toward ‘Globalization’

End of Mandatory Lock-Up Periods for 55 Companies in Korea in July 2024

By Douglas Kim

  • We discuss the end of the mandatory lock-up periods for 55 stocks in Korea in July 2024, among which 6 are in KOSPI and 49 are in KOSDAQ.
  • These 55 stocks on average could be subject to further selling pressures in July 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 July include Lunit, Mezzion Pharma, and DS Dansuk.

Sanil Electric IPO: The Bull Case

By Arun George

  • Sanil Electric (062040 KS), a Korean industrial transformer manufacturer, is seeking to raise up to US$165 million.    
  • The IPO is a pure primary raise of 7.6 million shares at an IPO price range of KRW24,000-30,000. Book building will run from 9 to 15 July.
  • The bull case rests on US-led rapid revenue growth, high barriers to entry, good revenue visibility, improving margins, top-quartile margin performance and modest leverage.

SK Bioscience (302440 KS): Acquiring Majority Stake in IDT Biologika- A Step Toward ‘Globalization’

By Tina Banerjee

  • SK Bioscience (302440 KS) secures 60% stake in IDT Biologika, a global CDMO company with state-of-the-art manufacturing facilities in Germany, for KRW339B ($244M). The valuation seems reasonable.
  • The transaction paves the way for SK bioscience to strengthen its global presence, notably in Europe and the U.S., and to diversify its business by expanding into bulk drug substances.
  • Based on the existing CDMO contracts, IDT Biologika’s outlook remains positive. SK bioscience aims to more than double its revenue and stabilize operating profit margins at 20%+.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free