Category

South Korea

Jun 18
0

Daily Brief South Korea: Almac, Lutronic Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Almac IPO Bookbuilding Results Analysis
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Lutronic, Hailan, Mason, Tesserent, Kenedix

Almac IPO Bookbuilding Results Analysis

By Douglas Kim

  • Almac announced its IPO price of 50,000 won, which is 11% higher than the high end of the IPO price range. Demand ratio was very high at 1,697 to 1.
  • A 98.7% of the IPO shares applied thought that the company’s value is more than 45,000 won
  • Given the exceptional demand for IPO shares, it is likely that the IPO share price is likely to trade at higher end of the IPO range in our sensitivity analysis.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Lutronic, Hailan, Mason, Tesserent, Kenedix

By David Blennerhassett

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Jun 17
0

Daily Brief South Korea: DL E&C Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Gap Trades of Small Cap Korean Pref Vs Common Shares

Gap Trades of Small Cap Korean Pref Vs Common Shares

By Douglas Kim

  • In this insight, we provide gap trade opportunities among 30 small cap Korean preferred stocks with market cap of less than 100 billion won and more than 20 billion won.
  • Among these 30 companies, there are some in interesting gap trade opportunities, especially among those with relatively high dividend yields (more than 5%).
  • We have ranked these 30 stocks in terms of three criteria including market cap, pref/common share price ratio, and dividend yields. 

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Jun 16
0

Daily Brief South Korea: Cosmochemical, Hanmi Science, Hanmi Pharm and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Market Talk on the Five Stocks Hitting the Lower Limit Yesterday
  • A Pair Trade Between Hanmi Science and Hanmi Pharm
  • ESG Report: Hanmi Pharmaceutical Co. (128940 KS) And Hanmi Science (008930 KS)

Market Talk on the Five Stocks Hitting the Lower Limit Yesterday

By Sanghyun Park

  • The trigger for yesterday’s sell-off was the sudden collective decision of the brokerages that had been allowing credit trading for these stocks to halt credit trading simultaneously.
  • There is a possibility that the identities of the stocks under investigation were leaked, and these brokerages took preemptive actions.
  • There have also been observations of large-cap stocks that may become the next targets. Some notable examples include Cosmo Chemical, Kum Yang, Posco International, and Ecopro Co.

A Pair Trade Between Hanmi Science and Hanmi Pharm

By Douglas Kim

  • There has been a big divergence in the share prices of Hanmi Science and Hanmi Pharm in the past two months. 
  • This divergence in share price appears to be a bit too excessive and we believe this gap is likely to narrow in the coming weeks.  
  • We like a pair trade between going long Hanmi Science and going short on Hanmi Pharm. 

ESG Report: Hanmi Pharmaceutical Co. (128940 KS) And Hanmi Science (008930 KS)

By Heejeong (Hollie) Park

  • Hanmi Pharmaceutical and Hanmi Science have demonstrated consistent financial performance through aggressive R&D investments, with significant achievements based on internally developed products in 2022.
  • The new leadership structure of the company has the potential to improve corporate governance transparency, but there is a need for further shareholder-friendly changes, such as expanding dividend policies.
  • Overall, the company’s current status, valuation, and ESG performance trends indicate positive prospects, including transparent management practices, sustained investment in R&D, and plans to enhance dividend policies.

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Jun 15
0

Daily Brief South Korea: Pang Rim Co Ltd, S.M.Entertainment Co and more

By | Daily Briefs, South Korea

In today’s briefing:

  • 5 Stocks in Korea Drop Limit Down – Caused by CFD Derivatives Related Margin Call Again?
  • SM Entertainment: EXO’s Contract Controversy and Repeated Working Condition Issues

5 Stocks in Korea Drop Limit Down – Caused by CFD Derivatives Related Margin Call Again?

By Douglas Kim

  • There were five stocks in Korea that dropped limit down (30%) today. They included Pang Rim, Dongil Industries, Manho Rope & Wire, Taihan Textile, and Dongil Metal.
  • The share price decline of these five stocks are similar to the crash in eight stocks in Korea in April which were related to CFD derivatives related margin call selling. 
  • Domestic securities firms in Korea have been trying to significantly reduce their exposure to CFD related trading and in this process, these sharp drops could be caused by this selling.

SM Entertainment: EXO’s Contract Controversy and Repeated Working Condition Issues

By Jungmin(Charlotte) Hong

  • EXO’s Chen, Baekhyun, and Xiumin filed a complaint to the Fair Trade Commission (FTC) on June 4 against SM Entertainment for “abuse of superior bargaining position.”
  • SM Entertainment repeatedly faced sanctions by the FTC for disputes, including controversy and conflicts with another boy band ‘Dong Bang Shin Ki’ (TVXQ) 
  • The risk to their working conditions continues to increase, with SM Entertainment’s corporate risk currently standing at 4.2, reaching an extreme level.

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Jun 14
0

Daily Brief South Korea: Samsung Heavy Industries Pref, LOTTE Corporation, HFR Inc, SD Biosensor, POSCO Holdings, SK Bioscience and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Potential Delisting of 5 Preferred Stocks in Korea at End of June
  • Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names
  • KOSDAQ150 Ad Hoc Index Rebalance: HFR (230240) To Replace BH (090460)
  • SD Biosensor: Rights Offering Worth Nearly 310 Billion Won (Will Bionote Fund Most of This?)
  • ESG Risks: Conflict Arises over POSCO Holdings’ Hydrogen Reduction Steel Project
  • SK Bioscience (302440 KS): Core Vaccines Gaining Traction; COVID Vaccine Gets International Approval

Potential Delisting of 5 Preferred Stocks in Korea at End of June

By Douglas Kim

  • In this insight, we discuss the increasing likelihood of delisting of five preferred stocks in Korea at end of June.
  • These five preferred stocks are as follows: Samsung Heavy Industries Pref, SK Networks Pref, DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B. 
  • Because the combined market cap of these five preferred shares is 37 billion won, it will have only a minor, positive impact on their common counterparts.

Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names

By Sanghyun Park

  • The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week’s seminar served as a proactive way to inform the market about it.
  • The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies’ treasury stock holdings.
  • Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.

KOSDAQ150 Ad Hoc Index Rebalance: HFR (230240) To Replace BH (090460)

By Brian Freitas

  • Following Bh Co Ltd (090460 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with HFR Inc (230240 KS).
  • The change will be implemented at the close on 19 June and passive trackers will need to trade over 1x ADV on both stocks.
  • We had HFR Inc (230240 KS) as a potential replacement candidate and there could be pre-positions built up on the stock.

SD Biosensor: Rights Offering Worth Nearly 310 Billion Won (Will Bionote Fund Most of This?)

By Douglas Kim

  • SD Biosensor announced a rights offering of nearly 20 million shares (representing 19.1% of outstanding shares) at the expected rights offering price of 15,520 won. 
  • Bionote has announced its intentions to purchase up to 260 billion won worth of rights offering of SD Biosensor, representing 84% of rights offering amount of nearly 310 billion won. 
  • This is likely to be viewed negatively by both SD Biosensor and Bionote shareholders, but more so by the latter due to the lack of rights offering discount price. 

ESG Risks: Conflict Arises over POSCO Holdings’ Hydrogen Reduction Steel Project

By Heejeong (Hollie) Park

  • As the development of POSCO Holdings’ hydrogen reduction steel project progresses, so do conflicts with the local community.
  • Opinions clash over hydrogen reduction steel plant construction for carbon neutrality by 2050 and concerns about ecological threats from ocean reclamation.
  • This incident falls under the category of community relations risks, and currently, POSCO Holdings’ company risk is rated at an extreme level of 4.8.

SK Bioscience (302440 KS): Core Vaccines Gaining Traction; COVID Vaccine Gets International Approval

By Tina Banerjee

  • SK Bioscience (302440 KS) recorded 5% YoY growth in core vaccine revenue to KRW17B in 1Q23, mainly driven by shingles vaccine, SKY Zoster due to its continued market leadership.
  • In May 2023, SK Bioscience received marketing authorization of its COVID-19 vaccine, SKYCovion from the UK MHRA. SKYCovion became the eighth COVID-19 vaccine approved in the UK.
  • SK Bioscience targets revenue of KRW220 billion by 2024 mainly through global expansion of existing in-house vaccines and expanding its contract manufacturing business.

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Jun 13
0

Daily Brief South Korea: Lutronic Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Lutronic (085370 KS): Hahn & Co Tender Offer

Lutronic (085370 KS): Hahn & Co Tender Offer

By David Blennerhassett

  • On 9 June, skin and cosmetic treatment play Lutronic Corp (085370 KS) announced a Tender Offer from Korean PE outfit Hahn & Company.
  • After acquiring 19.41% from Lutronic’s CEO at ₩ 36,700, Hahn will launch an Offer for all remaining shares at the same price. 
  • This Offer Price is a lifetime high. There is no minimum tendering condition. 

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Jun 11
0

Daily Brief South Korea: Korea Se Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Early Preview of KOSDAQ 150 Ad-Hoc Change in July: Hydro Lithium Will Replace NICE IS

Early Preview of KOSDAQ 150 Ad-Hoc Change in July: Hydro Lithium Will Replace NICE IS

By Sanghyun Park

  • Hydro Lithium (formerly Korea Se Corp) is the top reserved issue in INDUSTRIALS and will get to replace NICE IS as a result of the KOSPI transfer listing.  
  • The most significant price movements occur when the index corporate action announcement is made. However, some investors hunt for this pattern, as observed in the case of Youlchon Chemical.
  • Hence, it’s worth considering an earlier entry timing. To minimize uncertainty, it’s vital to keep an eye on the preemptive price increase of Hydro Lithium before KRX’s approval.

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Jun 10
0

Daily Brief South Korea: Lutronic Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Trading Plays for the Unexpected Tender Offer to Lutronic Corp Shareholders
  • Details of the Lutronic Tender Offer M&A by Hahn & Company

Trading Plays for the Unexpected Tender Offer to Lutronic Corp Shareholders

By Sanghyun Park

  • Retail investors hold the majority of shares at 60%, and they may be interested in participating in the second tender offer based on their accumulated learning effect.
  • Based on the observed behavior of Hahn & Co, it’s unlikely that they will walk away from the delisting plan.
  • We need to consider going long on the potential upward adjustment of the second tendering price. This play can be viewed as a call option with a floor at ₩36,700.

Details of the Lutronic Tender Offer M&A by Hahn & Company

By Douglas Kim

  • In this insight, we provide details of the Lutronic tender offer M&A by Hahn & Company.
  • We believe that Hahn & Co is likely to successfully complete this M&A tender offer of Lutronic. 
  • In our view, most of the shareholders of Lutronic are likely to tender their shares, given the sharp share price appreciation and reasonable tender offer premium. 

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Jun 09
0

Daily Brief South Korea: Fila Holdings and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Merger of PGA Tour, DP World Tour, & LIV Golf – Impact on Fila Holdings and Acushnet

Merger of PGA Tour, DP World Tour, & LIV Golf – Impact on Fila Holdings and Acushnet

By Douglas Kim

  • In the past several days, one of the biggest news in the global sports industry has been the merger of PGA Tour, DP World Tour, and LIV Golf. 
  • We believe that this merger is likely to have a positive impact on the global golf industry, including on Fila Holdings (081660 KS) and Acushnet Holdings (GOLF US).
  • If this merger successfully completed this year, there is a good possibility of a pick-up in golf related equipment sales and profits for Acushnet and Fila Holdings starting 2024. 

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Jun 08
0

Daily Brief South Korea: Douzone Bizon and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX New Deal Index Rebalance Preview: A Change for Each Index

KRX New Deal Index Rebalance Preview: A Change for Each Index

By Brian Freitas

  • The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
  • There is one change currently for each of the Secondary Battery, Bio, Internet and Game indices. Large stock price moves mean no changes for the BBIG Index currently.
  • Douzone Bizon (012510 KS) has flipped from a passive sell to a passive buy over the last month and the stock could move higher from here.

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