Category

South Korea

Oct 19
0

Daily Brief South Korea: K Bank, Korea Zinc, Doosan Bobcat Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • K-Bank’s IPO Cancellation: What Led to This Move and Plan for a Comeback
  • Need a Game Plan to Tackle Korea Zinc’s Buyback Tender with a 20% Proration Risk
  • Align Partners Goes Activist on Doosan Bobcat

K-Bank’s IPO Cancellation: What Led to This Move and Plan for a Comeback

By Sanghyun Park

  • The institutional demand forecasts were much worse than expected, leading to the company’s blunt admission in the latest filing that the book-building flopped, prompting them to cancel the IPO.
  • Bankers NH and KB suggested an offering price below 8,500 KRW, but pre-IPO backers like Bain Capital and MBK strongly opposed, unhappy with shrinking proceeds, pushing for cancellation.
  • K-Bank plans to regroup and adjust the heavy 50% secondary share portion to retry the IPO in six months before their prelim review window expires.

Need a Game Plan to Tackle Korea Zinc’s Buyback Tender with a 20% Proration Risk

By Sanghyun Park

  • NPS is now viewing their voting rights on Korea Zinc purely from a returns angle, shifting from earlier expectations of siding with Choi due to political pressure.
  • We need a tendering strategy for a 20% proration risk, focusing on when MBK will buy that extra 3.7% stake to cut losses on untendered shares.
  • MBK will aim to buy leftover shares cheaply. Their approach depends on the progress of Choi and Trafigura’s talks

Align Partners Goes Activist on Doosan Bobcat

By Douglas Kim

  • On 18 October, a local activist fund Align Partners Asset Management started its “corporate activism” on Doosan Bobcat Inc (241560 KS).
  • Align Partners sent a shareholder proposal letter requesting a significant increase in the shareholder return rate, including dividends and selling off non-core assets. 
  • We believe that Align Partners’ corporate activism on Doosan Bobcat is likely to have a positive impact on Doosan Bobcat’s share price.

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Oct 18
0

Daily Brief South Korea: K Bank, Kum Yang , Korea Zinc, CK Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • K Bank IPO Bookbuilding: To Price Lower than Low IPO Price Range or Even Potential Cancellation
  • Connecting the Dots Between Kum Yang’s Rights Offer & Global Index November Review
  • Korea Zinc’s 2.4% Treasury Shares – Devil Is In the Legal Loophole
  • CK Solution IPO Preview

K Bank IPO Bookbuilding: To Price Lower than Low IPO Price Range or Even Potential Cancellation

By Douglas Kim

  • Chosun Business Daily mentioned that K Bank IPO book building results among institutional investors have been very poor so far. 
  • As a result, the bankers and K Bank are currently considering on potentially reducing the IPO price to about 8,500 won or even cancelling the IPO altogether. 
  • Our base case valuation of K Bank is target price of 9,151 won per share. Even if the IPO is priced at 8,500 won, we would pass on this IPO.

Connecting the Dots Between Kum Yang’s Rights Offer & Global Index November Review

By Sanghyun Park

  • Personally, the key trading angle is Kum Yang’s exit, which could slash entry costs for the capital raise, with the review announcement dropping as stock rights trading starts.
  • Along with the usual hit to the pricing from index trackers unloading for rebalancing, there’s a strong chance their sell orders might also include stock rights.
  • From an entry cost perspective, this November review could trigger a sharp, short-term drop in costs due to stock rights dumping, similar to what we saw with CJ CGV.

Korea Zinc’s 2.4% Treasury Shares – Devil Is In the Legal Loophole

By Douglas Kim

  • Devil is in the legal loophole. Issuing treasury shares to employees as bonuses is an exception that is not bound by the condition of ‘6 months after treasury shares acquisition.
  • It would be nearly impossible for Korea Zinc to sell 2.4% of its treasury stock to an external friendly force and transform it into a friendly stake by February 2025.
  • Although MBK/Young Poong Alliance has the advantage right now in this M&A battle for Korea Zinc, it is by no means over.

CK Solution IPO Preview

By Douglas Kim

  • CK Solution is getting ready to complete its IPO in KOSPI in November. Its IPO price range is from 15,700 won to 18,000 won. 
  • The IPO offering amount ranges from 49.4 billion won to 56.6 billion won. The book building for the institutional investors lasts from 4 to 8 November. 
  • CK Solution specializes in dry room system for the rechargeable batteries manufacturing process. Rechargeable battery sector accounted for 92.9% of total sales in 1H 2024 followed by semiconductor (3.1%).

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Oct 17
0

Daily Brief South Korea: Hyundai Rotem Company and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea: Stocks with Potential Passive Flows in November

Korea: Stocks with Potential Passive Flows in November

By Brian Freitas

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Oct 16
0

Daily Brief South Korea: Young Poong Precision, Korea Zinc, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Let’s Get Real About the Odds of MBK Launching a New Tender for YPP
  • Scenario Analysis of Korea Zinc’s Share Buyback, Cancellation, and Tender Offer + NPS’s Five Options
  • EQD | KOSPI 200 May Pullback Soon…

Let’s Get Real About the Odds of MBK Launching a New Tender for YPP

By Sanghyun Park

  • Since MBK’s tender started, institutional trading has been light, leaving local retail investors in control. Choi’s 35% ceiling poses real proration risk for traders eyeing the action.
  • MBK might not have wanted YPP; they could just be using it as bait to not only drain Choi’s cash but also to put them in a tight financial spot.
  • MBK is set to focus on snapping up Korea Zinc shares in the open market to increase their stake and thwart any buyback tender offers.

Scenario Analysis of Korea Zinc’s Share Buyback, Cancellation, and Tender Offer + NPS’s Five Options

By Douglas Kim

  • We discuss the next steps in the fight for the control of Korea Zinc, after the completion of the tender offer by the MBK Partners and Young Poong alliance. 
  • After the tender offer, MBK and Young Poong’s stake in Korea Zinc increased from 33.13% to 38.47%, coming close to more than half of the voting rights.
  • We continue to believe that at current stage, MBK/Young Poong alliance has the advantage in the fight for the control of Korea Zinc.

EQD | KOSPI 200 May Pullback Soon…

By Nico Rosti

  • While the short-selling ban for the KOSPI 200 INDEX will remain in place until the first months of 2025, that does not prevent the index from pulling back.
  • Pullbacks, in this context, are an opportunity to buy, in the hope the index will rise higher from its current position.
  • Our models right now are showing a short-term WEEKLY OVERBOUGHT scenario coming in the next 2 weeks. Keep reading for more details.

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Oct 15
0

Daily Brief South Korea: Korea Zinc, Hanjin KAL Corp, KT&G Corporation, Hyundai Motor India and more

By | Daily Briefs, South Korea

In today’s briefing:

  • MBK’s Korea Zinc & Young Poong Precision Tender Results Officially Out
  • Korea Value-Up ETFs: Latest Market Info on Initial AUM Setup & Resulting Passive Impacts
  • FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won
  • Hyundai Motor India IPO: The Good, The Bad and The Valuation. Not for Quick Gain Seekers

MBK’s Korea Zinc & Young Poong Precision Tender Results Officially Out

By Sanghyun Park

  • MBK officially disclosed that they scooped up 5.34% of the Korea Zinc (010130 KS) shares in the tender that wrapped up today.
  • MBK scored a partial win by securing more voting rights than Choi, with unexpected backing from foreign and local institutions, likely due to proration risk over legal issues.
  • Still, securing just 5.34% puts MBK in a tough position, requiring them to navigate minority shareholder votes while pushing hard on the legal front to block the buyback.

Korea Value-Up ETFs: Latest Market Info on Initial AUM Setup & Resulting Passive Impacts

By Sanghyun Park

  • KRX will launch 12 ETFs tracking the Korea Value-Up Index on November 4—9 passive and 3 active—aiming for an initial AUM exceeding 1 trillion KRW.
  • KRX is pressuring ETF operators to reveal initial capital by November 4, with expectations to exceed 1 trillion KRW due to government pressure.
  • Early signs of position buildup are emerging, so it’s essential to monitor stocks with significant passive impact closely moving forward.

FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won

By Douglas Kim

  • On 14 October, FCP Capital sent a proposal to KT&G to purchase Korea Ginseng Corp for 1.9 trillion won. 
  • Although KT&G stated that it has no intentions to sell Korea Ginseng Corp, this proposal highlights the ongoing pressure by FCP Capital to improve further value in KT&G.
  • The 1.9 trillion won in proposed purchase price is higher than the 1.2 trillion won to 1.3 trillion won that KT&G revealed as the intrinsic value of Korea Ginseng Corp.

Hyundai Motor India IPO: The Good, The Bad and The Valuation. Not for Quick Gain Seekers

By Devi Subhakesan

  • Hyundai Motor India (HMIL) ‘s USD 3 billion+ IPO opens today, 15th October, at 10:00 am IST. The bidding will remain open until 4:30 pm IST on 17th October.
  • Near-Term Outlook: Limited Short-Term Gain Potential. While Hyundai is likely to outperform Maruti Suzuki given the valuation discount, it may underperform the broader sector in the near term.
  • Long-Term Opportunity: For investors with a longer-term horizon, Hyundai presents a relatively low-risk opportunity. Its established brand and world-class manufacturing facilities offer the potential for steady, long-term growth.

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Oct 13
0

Daily Brief South Korea: Korea Zinc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea Zinc: Latest Stockholder Record for Proration Risk

Korea Zinc: Latest Stockholder Record for Proration Risk

By Sanghyun Park

  • If NPS and passive funds each tender half, it could hit 24%, pushing investors to consider both sides. The market’s eyeing a ratio of about MBK 3 to Choi 7.
  • This tight vote could drag out the event longer than expected, and MBK might scoop up more shares if they miss their minimum target.
  • MBK will likely go for open market buys against Korea Zinc’s buyback. Consider tendering to MBK Monday and spread trading futures, or push Korea Zinc to raise their buyback offer.

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Oct 12
0

Daily Brief South Korea: Korea Zinc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Another Play to Consider: Spread Trading Korea Zinc Single-Stock Futures
  • Korea Zinc Raises Share Buyback and Tender Offer Price to 890,000 Won

Another Play to Consider: Spread Trading Korea Zinc Single-Stock Futures

By Sanghyun Park

  • Another play is spread trading Korea Zinc single-stock futures: go long on the front-month and short on the farther-out contract to profit from price convergence.
  • The key is when longer-dated futures’ volume will rise and if the basis difference with front-month futures will create arbitrage opportunities. November’s volume seems more for hedging than arbitrage.
  • MBK is likely to launch a second tender offer, potentially extending the spread trading timeline and giving us more chances to hit sweet spots.

Korea Zinc Raises Share Buyback and Tender Offer Price to 890,000 Won

By Douglas Kim

  • Korea Zinc raised the share buyback and tender offer price from 830,000 won to 890,000 won. Korea Zinc’s share price closed up by only 0.6% today to 794,000 won. 
  • As a result, the amount of capital involved in this share buyback and tender offer would increase from 2.7 trillion won to 3.2 trillion won.
  • Despite higher share buyback/tender offer of Korea Zinc by Choi family, we believe that this fight for the control of Korea Zinc is increasingly in favor of MBK/Jang family.

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Oct 11
0

Daily Brief South Korea: Hyundai Motor India , T’Way Air, Sung Woo and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyundai Motor India IPO – RHP Updates, Valuation Getting Tricky
  • Digging into Today’s Potential T’way Air Tender Offer Saga
  • T’Way Air: Increasing Possibility of an M&A Fight Between Yearimdang and Daemyung Sono Group
  • Sung Woo IPO Valuation Analysis

Hyundai Motor India IPO – RHP Updates, Valuation Getting Tricky

By Sumeet Singh

  • Hyundai Motor (005387 KS) is looking to raise around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
  • HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
  • In our previous notes, we looked at the company’s past performance. In this note, we will talk about its RHP updates and valuations.

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

By Sanghyun Park

  • 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.

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

By Douglas Kim

  • 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 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. 

Sung Woo IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Sung Woo is target price of 27,981 won per share, which is within the IPO price range of 25,000 won to 29,000 won per share.
  • Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO. 
  • Our base case valuation of 27,981 won per share is based on a P/E of 16.9x based on net profit of 24.9 billion won in FY23.

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Oct 10
0

Daily Brief South Korea: Korea Zinc, Fadu , Doosan Enerbility, Hyundai Motor India and more

By | Daily Briefs, South Korea

In today’s briefing:

  • MBK Rules Out Further Tender Price Hike for Korea Zinc, Game Plans Shift
  • KOSDAQ150 Index Rebalance Preview: 10 Changes in December
  • Concerns About Transferring Doosan Bobcat Shares Held by Doosan Enerbility to Doosan Robotics
  • Hyundai Motor India IPO: Analysis of Latest Financials Signal Challenging Year Ahead

MBK Rules Out Further Tender Price Hike for Korea Zinc, Game Plans Shift

By Sanghyun Park

  • MBK’s strategy is clear: they believe they have the upper hand with the current price level and are optimistic about a favorable ruling on the second injunction.
  • All eyes are on Choi to raise the price by this Friday, the 11th, before the deadline, especially with the FSS’s scrutiny looming.
  • If that happens, MBK will likely go all-in on the second injunction whose hearing is on the 18th. Choi raising the price this Friday won’t significantly boost Korea Zinc’s stock.

KOSDAQ150 Index Rebalance Preview: 10 Changes in December

By Brian Freitas

  • With over 85% of the review period complete, there could be 10 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
  • Even with 10 potential changes, there is sector balance with half the changes in the Information Technology sector. Passive trading impact varies from 0.2-7.7x ADV.
  • The potential adds have outperformed the potential deletes and the KOSDAQ150 Index since the start of the review period, though there has been a gentle drift lower since July.

Concerns About Transferring Doosan Bobcat Shares Held by Doosan Enerbility to Doosan Robotics

By Douglas Kim

  • In the process of transferring Doosan Bobcat shares held by Doosan Enerbility to Doosan Robotics, there are increasing concerns about negatively impacting minority shareholders of Doosan Enerbility. 
  • This current restructuring structure could potentially benefit the Park family/relatives which is the largest shareholder group of Doosan Corp but could negatively impact minority shareholders of Doosan Enerbility. 
  • On 25 September, Doosan Enerbility announced that 10 October will be the shareholder confirmation date (shareholder register closing date) for the spin-off NEWCO merger agreement with Doosan Robotics.

Hyundai Motor India IPO: Analysis of Latest Financials Signal Challenging Year Ahead

By Devi Subhakesan

  • After 3 years of strong revenue and profits growth, Hyundai Motor India is likely to face a challenging year ahead based on the analysis of 1QFY2025 financials provided in RHP.
  • Hyundai Motor India (1342Z IN)‘s  strong exports growth in FY2025 will not offset the weakness in domestic sales. This could result in low single-digit revenue growth for the year.
  • Increased royalty costs starting in FY2025, coupled with impact of lower cash reserves after special dividend paid out to parent will likely compress profit margins compared to the previous year.

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Oct 09
0

Daily Brief South Korea: Dongwon Industries, SK Hynix, Hyundai Motor India , Orum Therapeutics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Quiddity Leaderboard KOSPI 200 Dec 24: Up to 5 ADDs & 6 DELs Possible
  • SAMSUNG: Less About Preliminary Results, More About the Tech Missteps. Samsung Pain Is HYNIX’s Gain
  • Hyundai Motor India IPO: Upsized Valuation Driven by Strong Investor Interest
  • Orum Therapeutics IPO Preview

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 for the KOSPI 200 Index during this rebal event based on the latest available data. Small increase vs two weeks ago.

SAMSUNG: Less About Preliminary Results, More About the Tech Missteps. Samsung Pain Is HYNIX’s Gain

By Neil Campling

  • Samsung Electronics (SMSN LI) Q3 preliminary Operating Profit results is 12% below consensus. Company issues rare apology, effectively admitting technology competitiveness falls short.
  • SK Hynix (000660 KS) is powering ahead in HBM memory in our view, securing Nvidia 2025 allocations, and industry leading efficiencies.
  • A range of factors have created a great opportunity for SK Hynix investment given misunderstood industry dynamics and position at NVIDIA Corp (NVDA US).

Hyundai Motor India IPO: Upsized Valuation Driven by Strong Investor Interest

By Devi Subhakesan

  • Hyundai Motor India (1342Z IN) ’s IPO, launching next week, is expected to be priced between Rs1,865 and Rs1,960, valuing the company at USD 18-19 billion.
  • At this valuation, Hyundai’s India unit will account for over 40% of its parent company’s market cap, potentially unlocking significant value for Hyundai Motor (005380 KS).
  • Despite a weak growth in India’s passenger vehicle sales ytd, investor interest in the IPO is reportedly strong thanks to India’s booming equity market and robust fund inflows.

Orum Therapeutics IPO Preview

By Douglas Kim

  • Orum Therapeutics is getting ready to complete its IPO in KOSDAQ in November 2024. The IPO price range is from 30,000 won to 36,000 won. 
  • The expected market cap after IPO is from 648 billion won to 778 billion won. The book building for the institutional investors starts on 24 October. 
  • Orum Therapeutics’ main pipelines include ‘ORM-6151’, a new drug candidate for acute myeloid leukemia, ‘ORM-5029’, a HER2-targeting breast cancer treatment candidate, and ‘ORM-1023’, a small cell carcinoma tumor candidate. 

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