Category

South Korea

Jan 15
0

Daily Brief South Korea: Posco DX and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI200 Index Rebalance Preview: Four Potential Changes in June

KOSPI200 Index Rebalance Preview: Four Potential Changes in June

By Brian Freitas

  • Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
  • The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
  • There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.

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Jan 14
0

Daily Brief South Korea: Hanmi Science, Korean Air Lines, Samsung Electronics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • OCI Holdings Plans to Acquire a 27% In Hanmi Science – To Spark a Family Feud?
  • Korean Air: European Approval for Asiana Merger Reportedly Imminent
  • ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
  • Last Week in Event SPACE: Furuya Metal, Visional, Wilmar, Samsung Electronics, ViinFast/Vingroup

OCI Holdings Plans to Acquire a 27% In Hanmi Science – To Spark a Family Feud?

By Douglas Kim

  • After the market close on 12 January, OCI Holdings (010060 KS) announced that it plans to acquire a 27.03% stake in Hanmi Science (008930 KS) for 770 billion won. 
  • Through this investment and integration between OCI Holdings and Hanmi Science, the OCI Group and Hanmi Pharmaceutical Group plans to establish a joint management system.
  • This deal between OCI Holdings and Hanmi Science is not over and it could lead to an M&A fight for the control of Hanmi Science by its family members. 

Korean Air: European Approval for Asiana Merger Reportedly Imminent

By Neil Glynn

  • Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana’s cargo business.
  • The EC had set a preliminary decision deadline of 14 February.
  • US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.

ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, a number of large filings over the holidays is somewhat positive for 2024 prospects.
  • On the placement front, 2024 picked up where 2023 left off, with Samsung Electronics (005930 KS) leading the way.

Last Week in Event SPACE: Furuya Metal, Visional, Wilmar, Samsung Electronics, ViinFast/Vingroup

By David Blennerhassett

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Jan 12
0

Daily Brief South Korea: KB Financial, GigaVis, Samsung Electronics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024
  • An Early Look at the Potential KOSDAQ150 Rebalance Candidates in June 2024
  • Aequitas Korea IPOs + Placements Broker Performance 2023

An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024

By Douglas Kim

  • The local media have started to provide some concrete figures of the amount of losses related to HSCEI related ELS products sold by major Korean banks and securities firms.
  • If HSCEI continues to remain at about 5,450 to the end of March 2024, the total losses could rise to nearly 1.6 trillion won, impacting more than 45,000 investors. 
  • Concerns about HSCEI index related ELS losses have negatively impacted both the major Korean banks and securities companies in Korea in the past 1-2 months. 

An Early Look at the Potential KOSDAQ150 Rebalance Candidates in June 2024

By Douglas Kim

  • In this insight, we discuss the potential KOSDAQ150 rebalance candidates in June 2024.
  • The following companies are likely candidates to be included in KOSDAQ150 rebalance in June 2024, including LS Materials, Gigavis, and Cafe24 Corp. 
  • We also provide a list of 10 companies that are potential exclusion candidates from KOSDAQ150 rebalance in June 2024.

Aequitas Korea IPOs + Placements Broker Performance 2023

By Ethan Aw

  • In this note, we will take a look at broker performance for Korea IPOs and placements in 2023.
  • The following dataset includes all Korean IPOs and placements above US$100m, which amounted to a total of seven deals. Given the small number of deals, we’ll keep the note short.
  • The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

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Jan 11
0

Daily Brief South Korea: Samsung Electronics, Korea Stock Exchange KOSPI 200, Korean Air Lines, LG Energy Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better
  • A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea
  • Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set
  • LG Energy Solution: A Big Earnings Miss in 4Q 2023

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better

By Sumeet Singh

  • KEB Hana Bank, on behalf of the Lee family, is looking to raise up to US$1.6bn via selling 0.5% of Samsung Electronics (005930 KS) 
  • The deal appears to be somewhat well flagged, however, the timing could have been much better.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

By Sanghyun Park

  • The effective date, required by law to start six months post-promulgation, suggests implementation around July this year.
  • Enforcement decrees and regulations, under the Financial Services Commission’s purview, must be confirmed before the effective date (within six months post-promulgation). The announcement is likely in early to mid-March.
  • Expecting the amendment, there may be a pre-July surge in block deals as major shareholders expedite plans, creating assertive market activity in the first half with potential trading opportunities.

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

By Neil Glynn

  • We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).
  • Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.
  • Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.

LG Energy Solution: A Big Earnings Miss in 4Q 2023

By Douglas Kim

  • LG Energy Solution reported disappointing preliminary earnings in 4Q 2023. The company reported operating profit of 338.2 billion won (43.5% lower than consensus).
  • Post a major earnings miss for LGES in 4Q 2023, the consensus is likely to reduce earnings estimates of the company in 2024 and 2025.
  • Major EV players such as Tesla were reducing prices in the past year causing higher pressures on EV battery makers such as LGES to reduce their prices as well. 

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Jan 10
0

Daily Brief South Korea: Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • EQD | KOSPI 200 Readying for LONG Reversal

EQD | KOSPI 200 Readying for LONG Reversal

By Nico Rosti

  • The KOSPI 200 INDEX is correcting after a long multi-week rally. Currently down for 2 weeks (to be confirmed this Friday at close), it’s becoming OVERSOLD.
  • There is a risk of a large slide during this week, so LONG trades should be taken with a careful, hedged approach, but the LONG reversal is pending…
  • The price area between 345 and 334 is where the index could stop its pullback and reverse.

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Jan 09
0

Daily Brief South Korea: L&F Co Ltd, Doosan Robotics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns
  • An Early Look at the Potential KOSPI200 Rebalance Candidates in June 2024

Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns

By Sanghyun Park

  • In the past year, four KOSPI transfer listings showed similar patterns, with pre-listing price increases and substantial corrections in the first five trading days post-listing.
  • ChatGPTAmid a sideways market and a 54.2% YoY growth in the local ETF market last year, the impact of passive flow imbalances may have been more significant than before.
  • A key factor is the short-selling ban. Posco DX’s SSFs showed significant backwardation pre-KOSPI listing, concentrating proactive short positions, requiring caution in adjusting pre-listing short position costs.

An Early Look at the Potential KOSPI200 Rebalance Candidates in June 2024

By Douglas Kim

  • We discuss the potential KOSPI200 rebalance candidates in June 2024. In the past several years, there have been a lot of alpha generating stocks arising from the KOSPI200 rebalances.
  • The following companies are likely candidates which could be included in KOSPI200 rebalance in June 2024, including Posco DX, Doosan Robotics, Hyosung Heavy Industries Corp, and DS Dansuk. 
  • For the potential exclusion candidates, we included 10 stocks that are in the bottom 5% market caps in KOSPI200.

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Jan 08
0

Daily Brief South Korea: Caregen Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Caregen (214370 KS): ProGsterol May Rebound in 2024; Ophthalmic and COVID-19 Pipeline To Watch

Caregen (214370 KS): ProGsterol May Rebound in 2024; Ophthalmic and COVID-19 Pipeline To Watch

By Tina Banerjee

  • Riding on multiple export contracts, Caregen Co Ltd (214370 KS) was confident of achieving KRW60–100B revenue from ProGsterol in 2023. However, during 9M23, ProGsterol clocked revenue of KRW8.5B.
  • ProGsterol should rebound in this year, with the resumption of registration process in each country. Direct entry in the U.S. should be the strong catalyst for ProGsterol revenue this year.
  • Caregen is developing an eye drop for wet macular degeneration. This is in phase 1 trial. The compay is preparing for phase 2 trial for COVID-19 nasal spray in Israel.

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Jan 07
0

Daily Brief South Korea: Celltrion Pharm and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Last Week in Event SPACE: HS Holdings, Celltrion Pharm, NISA, PICC/PICC P&C

Last Week in Event SPACE: HS Holdings, Celltrion Pharm, NISA, PICC/PICC P&C

By David Blennerhassett

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Jan 06
0

Daily Brief South Korea: Hyundai Hyms , Hanmi Science and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyundai Hyms IPO Valuation Analysis
  • StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows

Hyundai Hyms IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Hyundai Hyms is implied target price of 8,025 won per share, which is 27% higher than the high end of the IPO price range. 
  • We believe Hyundai Hyms’ valuation premium to the comps is appropriate due to much stronger operating profit growth and its strong relationships with HD Hyundai Heavy Industries.
  • Hyundai Hyms’s main business includes shipbuilding equipment and related services. The company manufactures a wide variety of items necessary for ship construction, such as ship unit blocks and piping manufacturing.

StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows

By David Blennerhassett

  • A double dose of stubs this week as Hanmi Science (008930 KS) comes up “cheap” on my monitor.
  • Preceding my comments on Hanmi are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

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Jan 05
0

Daily Brief South Korea: Korea Stock Exchange Kospi Index, GS Engineering & Construction, Alteogen Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
  • Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices
  • Alteogen (196170 KS): First Proprietary Product Approval in Korea To Improve Revenue Visibility

Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch

By Sanghyun Park

  • Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
  • Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
  • Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices

By Douglas Kim

  • We argue that the top 20 listed construction companies in Korea are likely to underperform KOSPI in 2024 mainly due to the excessive risks in the housing/commercial real estate sectors.
  • We expect the share prices of these 20 domestic construction companies to fall by at least 15%-20%+ on average in the next 6-12 months. 
  • On 2 January 2024, Financial Supervisory Service (FSS) announced that there will be new reporting requirements for PF loans of Korean construction companies starting 2023 annual reports.

Alteogen (196170 KS): First Proprietary Product Approval in Korea To Improve Revenue Visibility

By Tina Banerjee

  • Alteogen Inc (196170 KS)‘s first proprietary recombinant human hyaluronidase liquid product, Tergase (ALT-BB4) is currently under approval process in Korea and is expected to receive approval in early 2024.  
  • Tergase is a stand-alone hyaluronidase product that can be used for the treatment of various medical conditions, such as pain relief, edema treatment, and hyaluronic acid filler removal.
  • Compared to commercially available animal-derived hyaluronidase products in the market, Tergase is a highly purified product of high-quality with very few impurities and an excellent side effect profile.

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