Category

South Korea

Nov 15
0

Daily Brief South Korea: DGB Financial Group, Lunit and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea
  • KOSDAQ150 Rebalance in December 2023 Highlighted by Locals

Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea

By Sanghyun Park

  • We can check this on KIND, KRX’s disclosure site. As an example, SK Inc. disclosed this information on July 26, two weeks before the dividend record date, August 10.
  • We can capture this information in English without the need for Korean. The disclosure title we must hunt is “Decision on Closure of Shareholder’s Registry (including Record Date) for Dividends.”
  • The critical aspect here is that we need to identify disclosures from companies that still use the year’s last trading day as the dividend base date.

KOSDAQ150 Rebalance in December 2023 Highlighted by Locals

By Douglas Kim

  • This article discusses the potential inclusions and exclusions of KOSDAQ150 rebalance in December 2023 (especially those that are highlighted by the locals).
  • The potential inclusion candidates include Lunit, Shinsung Delta Tech, and JNTC. The eight potential inclusion candidates are up on average 122% YTD, sharply outperforming KOSDAQ in the same period. 
  • Stocks that are expected to be excluded in the KOSDAQ150 index include Aju IB Investment, HFR, Danal, and Sangsangin.

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Nov 14
0

Daily Brief South Korea: Hyundai Home Shopping Network, KT&G Corporation and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI200 Rebalance in December 2023 Highlighted by Locals
  • KT&G: A New Shareholder Return Policy Worth 2.8 Trillion Won Over Next 3 Years

KOSPI200 Rebalance in December 2023 Highlighted by Locals

By Douglas Kim

  • This article discusses the potential inclusions and exclusions of KOSPI200 rebalance inDecember 2023 (especially those that are highlighted by the locals).
  • Stocks that are expected to be added to the KOSPI200 index include Posco DX, HD Hyundai Electric, Sam-A Aluminum, TCC Steel, and Dentium. 
  • Stocks that are expected to be excluded in the KOSPI200 index Include Zinus, Handsome, Cuckoo Homesys, Taekwang Industrial, and Hyundai Home Shopping.

KT&G: A New Shareholder Return Policy Worth 2.8 Trillion Won Over Next 3 Years

By Douglas Kim

  • KT&G announced a new shareholder return policy worth 2.8 trillion won (including dividend payout of 1.8 trillion won and treasury shares purchase/cancellation of 1.0 trillion won) over next three years.
  • In addition, the company plans to cancel about 7.5% of the company’s existing treasury shares which represents about 142 billion won (1.2% of outstanding shares). 
  • Although this 2.8 trillion won in shareholder return policy is large, the company could have announced even larger shareholder return policy, including cancellation of its entire treasury shares. 

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Nov 13
0

Daily Brief South Korea: Hyundai Electric & Energy, Eoflow , NCSOFT Corp, SK Biopharmaceuticals and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact
  • Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC
  • NCsoft: Launch of Highly Anticipated Throne and Liberty MMORPG Game
  • SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed

KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact

By Sanghyun Park

  • Although not explicitly outlined, it appears practical to interpret that we should filter out stocks that have entered a trading suspension among those receiving a WARNING designation.
  • The dynamics of KOSPI 200 flow trading have become notably tumultuous due to the abrupt short selling ban and additional liquidity halts imposed on market makers in the futures market.
  • The manifestation of price impact due to passive flows may be significantly delayed. So, we should prepare for this week’s announcement day setup targeting the delayed impact of passive flows.

Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC

By Arun George

NCsoft: Launch of Highly Anticipated Throne and Liberty MMORPG Game

By Douglas Kim

  • NCsoft plans to launch the highly anticipated new MMORPG game called Throne and Liberty in Korea on 7 December 2023.
  • NCsoft reported operating profit of 16.5 billion won (down 89% YoY) and  revenue of 423.1 billion won (down 30% YoY) in 3Q 2023. 
  • Throne and Liberty has a solid chance to become successful globally through Amazon Game platform, which is likely to drive a strong turnaround of NCsoft’s sales and profits.

SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed

By Tina Banerjee

  • In 3Q23, SK Biopharmaceuticals (326030 KS) reported Xcopri U.S. revenue of KRW75.7 billion, up 60% YoY and 19% QoQ, driven by accelerating new patients being treated with the drug.
  • In 3Q23, operating loss narrowed sequentially to KRW10.7 billion. However, operating loss widened compared to year-ago period, mainly due to higher operating costs of the company’s U.S. subsidiary.
  • The company is on track to report a profitable Q4. With continued momentum, Xcopri is expected to hit blockbuster status by generating revenue of $1B in the U.S. in 2029.

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Nov 12
0

Daily Brief South Korea: Celltrion Inc, Eoflow , Enchem and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Celltrion (068270 KS): Record High Revenue and Operating Profit in 3Q23 Solidify Merger Stance
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: CMIC, IRC, Allkem, Benesse, Southern Cross, EOFlow, Shidax
  • TIGER Battery Material ETF Rebal in December: Notable Changes in Constituent Screening

Celltrion (068270 KS): Record High Revenue and Operating Profit in 3Q23 Solidify Merger Stance

By Tina Banerjee

  • In 3Q23, Celltrion Inc (068270 KS) reported revenue and operating profit of KRW672B (+4% YoY) and KRW268B (+25% YoY), respectively, driven by broad-based growth across biosimilar portfolio and CMO revenue.
  • Operating profit margin is approaching 40% level, highest level in last two years, driven primarily by sales growth around high margin products. Net profit jumped 33% YoY to KRW221B.
  • In Oct’23, Celltrion received FDA approval for Zympentra, which is Celltrion’s first product approved as a new drug in the U.S., and is expected to receive patent protection until 2040.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: CMIC, IRC, Allkem, Benesse, Southern Cross, EOFlow, Shidax

By David Blennerhassett

TIGER Battery Material ETF Rebal in December: Notable Changes in Constituent Screening

By Sanghyun Park

  • Based on the latest closing prices, the potential INs/OUTs are as follows. INs: Soulbrain & Enchem / OUTs: Chunbo & Solus Advanced Materials
  • While the overall market liquidity constraints due to the short-selling ban could exacerbate the price impact on the rebalancing day, it may reduce the flexibility of our Long-Short setup strategies.
  • While Chunbo carries single-stock futures, its liquidity may not be sufficient. So, a more creative Long-Short approach is required, taking into account these factors.

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Nov 11
0

Daily Brief South Korea: HD Hyundai and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Asian Dividend Gems: HD Hyundai

Asian Dividend Gems: HD Hyundai

By Douglas Kim

  • On 10 November, it was announced that Ki-Sun Chung was promoted to Vice Chairman which could signal more positive news flow on HD Hyundai in the coming months.
  • The consensus expects DPS of 4,200 won for HD Hyundai in 2023, which suggests a dividend yield of 7.1%. HD Hyundai has one of the highest dividend yields in KOSPI200.
  • According to our NAV analysis, it suggests a base case valuation of 71,970 won per share for HD Hyundai, representing a 22% upside from current levels.

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Nov 10
0

Daily Brief South Korea: iShares MSCI South Korea ETF, Ecoeye and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Spotlight on Trading Prospects Arising from ETFs as Short Selling Workarounds in Korea
  • Ecoeye IPO Book Building Results Analysis

Spotlight on Trading Prospects Arising from ETFs as Short Selling Workarounds in Korea

By Sanghyun Park

  • During the previous period of short-selling restrictions, a pattern was observed in which ETFs were utilized as a workaround for short-selling.
  • We should anticipate more substantial price impacts this time. Of particular significance is the possibility of utilizing not only the MSCI Korea ETF but also sector ETFs for similar purposes.
  • This calls for our attention to the possibility that this short-selling workaround could generate a significantly wider range of trading opportunities in the spot market compared to three years ago.

Ecoeye IPO Book Building Results Analysis

By Douglas Kim

  • Ecoeye announced that the IPO price has been determined at 34,700 won, which is at the high end of the IPO price range. The demand ratio was 75 to 1.
  • An 81.1% of the IPO shares applied thought that the company’s value is more than 34,700 won per share. The IPO offering amount is 72 billion won.
  • Our base case valuation of Ecoeye IPO is 45,421 won per share (31% higher than the IPO price). Given the solid upside, we have a positive view of Ecoeye IPO. 

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Nov 09
0

Daily Brief South Korea: KOSDAQ 150 Index, WYSIWYG Studios and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?
  • Momentum Trading Opportunities Among Top 50 Stocks in KOSDAQ With Highest Short Interest Ratios

Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

By Brian Freitas

  • Following the short sell ban announced on the weekend, the KOSPI 200 and KOSDAQ 150 opened higher on Monday and rallied through the day.
  • A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.
  • Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.

Momentum Trading Opportunities Among Top 50 Stocks in KOSDAQ With Highest Short Interest Ratios

By Douglas Kim

  • In this insight, we discuss near-term momentum trading opportunities among the top 50 stocks in KOSDAQ with highest short interest ratios.
  • We have identified 10 companies in KOSDAQ that have high short interest ratios, among the worst performing stocks YTD, but with strongest share price performance in the past three days.
  • These 10 stocks are up on average 10% in the past three trading days, outperforming KOSDAQ which is up 3.7% in the same period.

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Nov 08
0

Daily Brief South Korea: Posco ADR, Doosan Fuel Cell , EcoPro Materials and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban
  • Momentum Trading Opportunities Among Top 50 Stocks in KOSPI With Highest Short Interest Ratios
  • Trading Strategy of Ecopro Materials IPO Post Book Building Results and Short Selling Ban

Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban

By Sanghyun Park

  • Given Korea’s blanket ban on short-selling, we should concentrate on the likelihood of these ADRs being significantly discounted compared to their underlying shares.
  • It should persist for an extended period, highlighting the importance of continuously monitoring ADR spreads over the next 2-3 months to seize the opportune entry timing.
  • Since all these carry single-stock futures, a flexible setup targeting this spread can be designed, ideally incorporating currency hedges.

Momentum Trading Opportunities Among Top 50 Stocks in KOSPI With Highest Short Interest Ratios

By Douglas Kim

  • In this insight, we discuss near-term momentum trading opportunities among the top 50 stocks in KOSPI with highest short interest ratios.
  • Given the recent temporary ban on stock short selling in Korea, there is likely to be increased volatility in the stock market. 
  • We have identified 10 companies in particular that have high short interest ratios, among the worst performing stocks YTD, but with strongest share price performance in the past two days.

Trading Strategy of Ecopro Materials IPO Post Book Building Results and Short Selling Ban

By Douglas Kim

  • Ecopro Materials reported disappointing IPO book building results. IPO price has been finalized at 36,200 won, which is at the low end of the IPO price range.
  • The demand ratio was 17.2 to 1 which was low. Total IPO offering amount was 419 billion won. Ecopro Materials will start trading on 17 November. 
  • Our base case valuation of Ecopro Materials is target price of 37,436 won per share, which is 3.4% higher than the IPO price. We remain negative on this IPO.

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Nov 07
0

Daily Brief South Korea: HYBE and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Block Deal Sale of HYBE by Netmarble
  • Hybe Placement- Another Block Incoming

Block Deal Sale of HYBE by Netmarble

By Douglas Kim

  • After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE which represents 569 billion won in amount at current price. 
  • The actual block deal amount is likely to be less than 569 billion won as there will likely be a  block deal discount rate. 
  • We would avoid this deal, mainly because we think HYBE is overvalued relative to its peers. 

Hybe Placement- Another Block Incoming

By Ethan Aw

  • HYBE (352820 KS)‘s second-largest shareholder, Netmarble, seeks to raise approximately US$408m through a secondary block deal, selling approximately 2.5m shares (6% of TSO). 
  • The deal is a slightly large one to digest at 10.9 days of three month ADV and 5.5% of current mcap.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

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Nov 06
0

Daily Brief South Korea: Korea Stock Exchange KOSPI 200, Korea Stock Exchange Kospi Index, Samsung Electronics, Samsung Sds and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications
  • Full Transcript of Korea FSC Briefing on Sudden Short-Selling Ban, Including Key Trading Insights
  • Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
  • EQD | KOSPI 200 SHORT-SELLING BAN: Upward Push and Pullbacks
  • Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions

Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

By Brian Freitas

  • Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
  • News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
  • There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.

Full Transcript of Korea FSC Briefing on Sudden Short-Selling Ban, Including Key Trading Insights

By Sanghyun Park

  • There seems to be no immediate requirement to close existing contracts. However, even the chairman of the Financial Services Commission was unable to offer a definitive answer.
  • The comprehensive investigation and prohibition of the customary naked short selling could lead to a rapid decline in overall market liquidity.
  • The first is the short-term view, focusing on futures backwardation, and the second is the medium to long-term perspective, examining how the overall market liquidity decline will affect market flows.

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes

By Douglas Kim

  • Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes. 
  • This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance. 
  • This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares. 

EQD | KOSPI 200 SHORT-SELLING BAN: Upward Push and Pullbacks

By Nico Rosti

  • Banning short-selling for stocks will provide some propulsion to the KOSPI 200 INDEX but inevitably there will be pullbacks when strong resistance areas are reached.
  • The index is joining a wide global equities bounce, it is not recommended to go SHORT soon. There is a chance it may pullback briefly this week (buy the dip?)
  • Our models say the index can rise from 2 to 4 weeks, before reversing: resistance will be met at 320, 328 and (hard to reach) 349.

Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions

By Sanghyun Park

  • Considering year-end dividends, it appears likely that the trading timing might extend beyond this year. In the previous case, the trade execution timing was one month before the contract expired.
  • Short selling is prohibited. However, all four companies offer single-stock futures, which provide instruments for proactive positioning. Nevertheless, aspects to consider are likely to increase regarding trading convenience and liquidity.
  • The potential for inadequate liquidity might increase the discounts for these deals, potentially offering us fresh trading opportunities. We should proactively prepare trading setups that consider these contextual conditions.

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