Category

South Korea

Jul 24
0

Daily Brief South Korea: LG Energy Solution, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
  • EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback

LG Energy Solution (373220 KS) – Potential Float Increase Coming Up

By Brian Freitas

  • Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
  • The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
  • Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.

EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback

By Nico Rosti

  • The KOSPI 200 (KOSPI2 INDEX EQUITY) last week closed the week down (CC=-1) after a strong rise the previous week. Could be getting ready to rise higher.
  • The index last week tested supports in the Market Reversal Matrix’s Q2/Median support area (around 335).
  • Valid support levels for the coming week (if CC=-2) are between 333 (Q2) and 324 (Q3).

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Jul 22
0

Daily Brief South Korea: HMM Co., Ltd. and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Privatization of HMM: Enormous Shares Dilution Risk

Privatization of HMM: Enormous Shares Dilution Risk

By Douglas Kim

  • The Korean government has initiated the M&A privatization of HMM, the largest container shipping company in Korea. 
  • We are Negative on the shares of HMM Co., Ltd. (011200 KS) in the next 6-12 months. We expect additional 20% to 30%+ downside risk on HMM in this period.
  • Although HMM has a strong balance sheet, more investors are likely to emphasize on the negatives including excessive share dilution risk and worsening environment for the global shipping industry.

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Jul 21
0

Daily Brief South Korea: Samsung Sds, SK Biopharmaceuticals Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Important Rule Changes in Block Deals Pre-Disclosure in Korea: Analyzing Trading Dynamics
  • SK Biopharmaceuticals (326030 KS): Starts 2023 on Strong Note; Unveils New Mid to Long-Term Strategy

Important Rule Changes in Block Deals Pre-Disclosure in Korea: Analyzing Trading Dynamics

By Sanghyun Park

  • Insiders holding more than 10% of SO must disclose block deals 30 days in advance if they plan to sell more than 1% of SO or an amount exceeding ₩5B.
  • The trading window and pricing range for short positions, based on the assumption of deal-taking, will likely vary significantly as the timing of price reflection will see a drastic change.
  • There is an increasing likelihood that major shareholders will accelerate their planned block deals and bring them to the market in abundance before October.

SK Biopharmaceuticals (326030 KS): Starts 2023 on Strong Note; Unveils New Mid to Long-Term Strategy

By Tina Banerjee

  • In 1Q23, SK Biopharmaceuticals Co Ltd (326030 KS) recorded Xcopri U.S. revenue of KRW53.9B, up 70% YoY and 8% QoQ. Xcopri growth is expected to accelerate in US in H2.
  • The company’s operating loss narrowed to KRW23B in 1Q23, recording the lowest level excluding the one-off sales, compared with operating loss of KRW45B in 4Q22 and KRW37B in 1Q22.
  • The company is looking for Xcopri revenue of KRW300B in 2023. With stable cash generation and expansion into three new modalities, SKBP aims to become a $15B company by 2026.

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Jul 20
0

Daily Brief South Korea: Ecopro Co Ltd, L&F Co Ltd, GS Engineering & Construction and more

By | Daily Briefs, South Korea

In today’s briefing:

  • What We Know Until Now About L&F & Ecopro BM’s Kospi Transfer Listing
  • L&F Considering On Switching Listing from KOSDAQ to KOSPI
  • GS E&Cㅣ Underground Parking Lot Collapse Incidentㅣ Full-Scale Reconstruction and Rising Risks

What We Know Until Now About L&F & Ecopro BM’s Kospi Transfer Listing

By Sanghyun Park

  • Yonhap News reported on the exclusive coverage of Ecopro BM and L&F’s KOSPI transfer listing.
  • L&F announced through the disclosure that they are considering the KOSPI transfer listing. Ecopro BM told another local news outlet that they are not currently reviewing the KOSPI transfer listing.
  • It seems that L&F’s KOSPI transfer listing is almost a confirmed fact. However, the Ecopro company in question may be Ecopro Co, not Ecopro BM.

L&F Considering On Switching Listing from KOSDAQ to KOSPI

By Douglas Kim

  • On 19 July, there were local media accounts that L&F Co Ltd (066970 KS) is considering on switching its listing from KOSDAQ to KOSPI. 
  • L&F’s main business involves making cathode active materials for rechargeable batteries.
  • Despite this positive move, we believe the valuations of L&F have become too high. Its operating margins also worsened from 9.6% in 1Q 2022 to 3.0% in 1Q 2023. 

GS E&Cㅣ Underground Parking Lot Collapse Incidentㅣ Full-Scale Reconstruction and Rising Risks

By Heejeong (Hollie) Park

  • The Ministry of Land, Infrastructure and Transport’s investigation revealed that the collapse of GS E&C’s underground parking lot was due to deficiencies in design, construction, and supervision.
  • As a response, GS E&C will undergo a comprehensive reconstruction of the entire apartment complex, costing approximately KRW 300 billion, which is equivalent to approximately USD 264 million.
  • ESG risks have risen due to consumer relations regarding occupational health and safety and risk oversight, with GS E&C’s company risk rating at a ‘very high’ level of 3.1.

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Jul 19
0

Daily Brief South Korea: SK Ecoplant, HMM Co., Ltd. and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Initial Thoughts on the SK Ecoplant IPO – Impact on SK Inc
  • Investigating HMM’s Latest Bond Conversion Situation for a Shorting Setup

Initial Thoughts on the SK Ecoplant IPO – Impact on SK Inc

By Douglas Kim

  • SK Ecoplant is getting ready to complete its IPO sometime in late 2023/1H 2024.
  • Local media have mentioned that SK Ecoplant’s market cap could range from 5 trillion won to 10 trillion won.
  • At the end of 2022, SK Inc’s 44.5% stake in SK Ecoplant had a book value of 545 billion won, which is much less the market value of SK Ecoplant.

Investigating HMM’s Latest Bond Conversion Situation for a Shorting Setup

By Sanghyun Park

  • Those that the local market is particularly interested in are the 192nd convertible bonds (CB) held by KDB, along with the 193rd bonds with warrants (BW) owned by KOBC.
  • These two bonds’ call option exercise date is September 25th. Upon conversion of these bonds, 200M new shares will be issued (41% of SO and a 30% dilution).
  • The key is the trade-off between not disrupting the selling process and avoiding any breach of trust. The prevailing local sentiment suggests that KDB and KOBC will choose stock conversion.

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Jul 18
0

Daily Brief South Korea: Krafton Inc, Samsung Electronics Pref Shares, Nexteel and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors
  • Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023
  • Nexteel IPO Valuation Analysis

Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors

By Sanghyun Park

  • One noteworthy aspect is SK Square’s strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.
  • Given SK’s aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.
  • We may consider positioning to capitalize on SK Square’s potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.

Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023

By Douglas Kim

  • In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023. 
  • The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
  • We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares. 

Nexteel IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Nexteel is target price of 18,671 won per share, which represents 49% higher than the high end of the IPO price range of 12,500 won. 
  • We estimate Nexteel to generate sales of 883.6 billion won (up 32.2% YoY) and operating profit of 257.4 billion won (up 42% YoY) in 2023.
  • Nexteel’s main products include pipes used to extract oil and gas from oil wells. It also makes steel pipes for transporting oil & steam, construction, shipbuilding, and machinery industries.

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Jul 17
0

Daily Brief South Korea: SK Telecom, Lutronic Corp, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • SK Telecom (017670 KS): Foreign Room Increase Has Implications
  • Lutronic Tender Offer by Hahn & Company: 2nd Round
  • EQD | KOSPI 200 Index WEEKLY Rising: How Far Can It Go?

SK Telecom (017670 KS): Foreign Room Increase Has Implications

By Brian Freitas

Lutronic Tender Offer by Hahn & Company: 2nd Round

By Douglas Kim

  • According to local media (Seoul Economic Daily), Hahn & Company plans to make a second round of tender offer for Lutronic Corp, in order to meet the delisting requirements.  
  • The tender offer price is 36,700 won, the same as the first tender offer price.
  • We believe that Hahn & Co is likely to successfully complete this second round of tender offer of Lutronic and it is likely to be delisted in the coming months.

EQD | KOSPI 200 Index WEEKLY Rising: How Far Can It Go?

By Nico Rosti

  • A previously published insight correctly highlighted an high-probability opportunity to go LONG and join the KOSPI 200‘s current multi-month Bull run.
  • The index closed the week strongly up, now we want to evaluate how far this new leg up could go: a total of +3/+4 weeks up, price targets =359-385.
  • Holders of KOSPI 200 LONG positions: Covered Calls can be written at Strikes between 346 and 360, expiry August 10th (4 weeks). A pullback is highly probable from 360.

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Jul 16
0

Daily Brief South Korea: Celltrion Inc, LG Energy Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Last Week in Event SPACE: Celltrion, Fast Retailing, Canon, Costa, Chindata
  • ECM Weekly (16th July 2023) – LG Energy, Socionext, Plus Alpha, Syngenta, Cinema XXI, Genda, Fadu

Last Week in Event SPACE: Celltrion, Fast Retailing, Canon, Costa, Chindata

By David Blennerhassett

  • According to Invest Chosun, Celltrion Inc (068270 KS) plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
  • Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
  • Canon (7751 JP)‘s most recent buyback should be done now-ish. They have been ~15-20% of volume over the past month. The Trade would be short Canon vs Ricoh (7752 JP).

ECM Weekly (16th July 2023) – LG Energy, Socionext, Plus Alpha, Syngenta, Cinema XXI, Genda, Fadu

By Sumeet Singh

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Jul 15
0

Daily Brief South Korea: Kum Yang, ALT Semicon, Samsung C&T and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX’s Revised CFD Oversight Guidelines & Ongoing Suspicious Incidents
  • ALT Co IPO Bookbuilding Results Analysis
  • Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023

KRX’s Revised CFD Oversight Guidelines & Ongoing Suspicious Incidents

By Sanghyun Park

  • The important point is that the regulations also incorporate a provision mandating the disclosure of the actual end traders’ identities when brokerages engage in CFD transactions disguised as proprietary trading.
  • Recent suspicious incidents raise concerns because they are carried out through brokerages’ proprietary trading practices, making them relatively more difficult for local regulatory authorities to detect and monitor.
  • We need to closely monitor the market’s abnormal volatility following the strengthened new rules on CFDs and carefully consider the setup for responding to these changes.

ALT Co IPO Bookbuilding Results Analysis

By Douglas Kim

  • ALT’s IPO price has been determined a 25,000 won, which is 22% higher than the high end of the IPO price range.
  • A total of 1,937 institutional investors participated in the IPO offering with a competition demand ratio of 1,836 to 1.
  • Our base case valuation of ALT is market cap of 299 billion won or 33,365 won per share, which represents 33% higher than the IPO price range of 25,000 won.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023

By Douglas Kim

  • In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.
  • Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.
  • We highlight 38 pair trades that involve Korean holdcos and opcos.

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Jul 14
0

Daily Brief South Korea: Hana Financial and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Will Hana Financial Acquire KDB Life Insurance?

Will Hana Financial Acquire KDB Life Insurance?

By Douglas Kim

  • On 13 July, it was reported in the local media that the Korea Development Bank selected Hana Financial as the preferred bidder for the sale of KDB Life Insurance. 
  • The potential overpaying for KDB Life and the rising delinquency rates of loans by all the major banks in Korea are likely to result in continued underperformance of Hana Financial. 
  • If Hana Financial is able to acquire KDB Life Insurance, this would boost Hana Financial as the 8th largest life insurance company in Korea in terms of asset size.

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