South Korea Daily Briefs | Page 56 of 128

Feb 05

Daily Brief South Korea: Kakao Pay and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO

By Brian Freitas

There were some review cutoffs last week as well as the implementation of the PCOMP INDEX, IDX 30 Index, LQ 45 Index and IDX 80 Index.
The big event in the coming week is the announcement of the MSCI February QCIR on Friday morning Asia time with implementation at the close of trading on 28 February.
Inflows to iShares Core MSCI Emerging Markets ETF (IEMG US) continue while IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) continues to see redemptions.

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Feb 04

Daily Brief South Korea: Jeju Air, Korea Stock Exchange Kospi 200 Index, SK Biopharmaceuticals Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Jeju Air: A Big Beneficiary of Travel Resurgence in Asia + A Likely Inclusion in KOSPI 200 in 2023
Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective
SK Biopharmaceuticals (326030 KS): Global Expansion to Accelerate Growth Trajectory of Epilepsy Drug

Jeju Air: A Big Beneficiary of Travel Resurgence in Asia + A Likely Inclusion in KOSPI 200 in 2023

By Douglas Kim

We believe that Jeju Air is in a sweet spot right now. Jeju Air is one of the major beneficiaries of the travel resurgence in Asia.
Jeju Air is a potential inclusion candidate in the KOSPI 200 index in 2023. There are 42 companies in KOSPI 200 which have lower market cap than Jeju Air.
Outbound travel from Korea recovered strongly with 6.6 million outbound tourists from South Korea in 2022, up 436% YoY. However, this is still 77% lower than the figure in 2019.

Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective

By Sanghyun Park

The new rules allow investors to decide whether to hold the stock until the dividend record date after knowing the dividend amount in advance.
The new rules will be applied starting with the annual dividends for this fiscal year. We will know this year’s yearend dividend amount before deciding whether to receive it.
From a trading perspective, the yearend dividend arb targeting ex-date mispricing will no longer be effective, which will likely change the swing trading strategy at the beginning of the year.

SK Biopharmaceuticals (326030 KS): Global Expansion to Accelerate Growth Trajectory of Epilepsy Drug

By Tina Banerjee

SK Biopharmaceuticals Co Ltd (326030 KS) is reporting continued stellar performance of its flagship drug Xcopri (cenobamate) in the U.S., with 9M2022 sales rising 137% YoY to KRW119B.
Since its launch, Xcopri maintained strong momentum in US in terms of prescription volume. Xcopri reported 1.8x higher launching TRx than recently launched competitive anti-epileptic drugs (AEDs).
The company plans to launch cenobamate in the Middle East and Africa this year, following launches in the U.S., China, Japan, and major countries in Europe.

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Feb 03

Daily Brief South Korea: Dentium Co Ltd, KakaoBank and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Dentium: An Undervalued Corporate Activist Target + Likely Inclusion Candidate for KOSPI 200 in 2023
KakaoBank- The Only One

Dentium: An Undervalued Corporate Activist Target + Likely Inclusion Candidate for KOSPI 200 in 2023

By Douglas Kim

We believe Dentium is an attractive stock to own right now. It has an excellent combination of strong growth in sales and profits and discounted valuations.
Driven by its strong share price appreciation in the past year, Dentium now has become a strong candidate for a potential inclusion in KOSPI 200 index in 2023.
There is a growing probability that Dentium could be targeted by corporate activists to pressure the company to cancel treasury shares and provide higher dividends.

KakaoBank- The Only One

By Daniel Tabbush

There is only one large, liquid, listed, internet bank in all of the Asia-Pacific markets
Earnings have been strong, with uplift in NIM and loan balance to support this
Regulatory change to provisioning not likely to affect this bank, but big peers

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Feb 02

Daily Brief South Korea: Osstem Implant, Konan Technology, Alibaba Group and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

(Mostly) Asia M&A, Jan 2023: Essential Metals, Relia Inc, Osstem Implant, Esso Thailand
Konan Technology: Surging Share Price Due to Global Interest in Chat GPT AI
Aequitas Korea IPOs Bookrunner Performance (2021-2022)
Aequitas Korea Placements Bookrunner Performance (2019-2022)

(Mostly) Asia M&A, Jan 2023: Essential Metals, Relia Inc, Osstem Implant, Esso Thailand

By David Blennerhassett

For the month of January, four new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$3bn.
The average premium for the new deals announced (or first discussed) in January was ~28%, which is distorted by the take under for Esso Thailand (ESSO TB).
This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Konan Technology: Surging Share Price Due to Global Interest in Chat GPT AI

By Douglas Kim

Konan Technology is one of the competitors to Open AI (Chat GPT) in Korea.
Konan Technology’s share price is up more than 4x this year. We would not chase the stock at current levels. We provide a framework of valuing Konan Technology.
Four large Korean companies that could be long-term winners in AI space in Korea include Naver, Kakao Corp, SK Telecom, and KT Corp. SK Telecom owns 20.8% of Konan Technology.

Aequitas Korea IPOs Bookrunner Performance (2021-2022)

By Ethan Aw

In this note, we will take a look at bookrunner performance for Korean IPOs from 2021-2022.
The following dataset includes all Korean IPOs above US$100m for the period of Calendar Years 2021-2022, which amounted to a total of 11 deals.
The deals you see in this note are based on our historical IPO tracker. Feel free to drop us a message for additional information on any of these IPOs.

Aequitas Korea Placements Bookrunner Performance (2019-2022)

By Ethan Aw

In this note, we will take a look at the performance of bookrunners for Korean placements from 2019-2022.
The following dataset includes all Korean placements above US$100m for the period of Calendar Years 2019-2022, which amounted to a total of 29 deals.
The deals you see in this note are based on our historical placements tracker. Feel free to drop us a message for additional information on any of these placements.

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Feb 01

Daily Brief South Korea: Samsung Biologics and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Samsung Biologics (207940 KS): 2022 Revenue Surpassed KRW3T; Strong Growth Momentum to Continue

Samsung Biologics (207940 KS): 2022 Revenue Surpassed KRW3T; Strong Growth Momentum to Continue

By Tina Banerjee

In 2022, Samsung Biologics (207940 KS) posted record-high consolidated revenue of KRW3 trillion and, driven by new orders, efficient plant utilization, and inclusion of Samsung Bioepis as a wholly-owned subsidiary.
Plant 4 is on track to be completed in H12023, with active pre-sale activities are rapidly locking in capacity. Strong order momentum continued, with 2022 CMO contract amount of $9.5B.
Samsung Bioepis reported revenue growth of 12% to KRW946B, driven by stable sales of existing products and new product launch. Humira biosimilar launch in the US is the biggest catalyst.

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Jan 31

Daily Brief South Korea: HMM Co., Ltd., Osstem Implant, Samsung C&T and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

HMM Is Likely the First to Be Subject to the Mandatory Offer that Comes into Force
Osstem Implant: Details of Tender Offer & Chairman Choi’s Children Exchange CB Call Options for BWs
Using Smartkarma/OWL ESG Analytics to Narrow Down List of Corporate Activism Targets in Korea

HMM Is Likely the First to Be Subject to the Mandatory Offer that Comes into Force

By Sanghyun Park

KDB recently initiated the process of selecting an advisory firm to sell its stake in HMM, which will likely be the first to implement the mandatory offer rule.
Potential bidders include Hyundai Glovis, LX Holdings, and Samsung SDS. As for POSCO Holdings, it recently said that it is not considering acquiring HMM.
Given that HMM is the only national shipping company, there is a good chance that multiple bidders will appear, which will lead to a premium to the market price.

Osstem Implant: Details of Tender Offer & Chairman Choi’s Children Exchange CB Call Options for BWs

By Douglas Kim

We provide details of the Osstem Implant tender offer as well as Chairman Choi’s children exchange of CB call options for BWs.
We believe that the majority of the minority shareholders in Osstem Implant are not likely to sell their shares at 190,000 won per share but hold on to it.
Over a longer time frame, Osstem’s share price could reach higher levels driven by its improving sales and profit growth, deep valuation discount to global peers, and further M&A fight.

Using Smartkarma/OWL ESG Analytics to Narrow Down List of Corporate Activism Targets in Korea

By Douglas Kim

We discuss how to use the OWL ESG Analytics (available on Smartkarma) to narrow down the list of companies that could be the next targets of corporate activism in Korea.
We go through in detail, step-by-step process of how to narrow down the list of companies, using the OWL ESG Analytics.
Corporate activism has been one of the most important, market moving factors moving the Korean stock market this year.

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Jan 30

Daily Brief South Korea: Osstem Implant, KOSDAQ 150 Index and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Clarifications About Osstem Implant Tender Event
Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts

Clarifications About Osstem Implant Tender Event

By Sanghyun Park

The acquirer would cancel the deal unless at least 2.394M shares (15.4% of SO) were tendered. This is the minimum purchase quantity condition that will trigger a cancellation.
If the minimum purchase volume is exceeded, will there be a pro rata allocation risk? The answer is no. The acquirer will purchase all the tendered shares
The cancellation risk seems slim as only 15.4% of the SO should be tendered, which doesn’t seem to be a challenging target.

Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts

By Sanghyun Park

KRX (and Korea FSS) no longer collects foreign investors’ entire trade records in real time, as foreign investors are no longer traced based on their unique registration numbers.
Foreign investors are likely to engage in more aggressive short-term trading. We need to be prepared for significant price volatility, mainly for small and mid-cap stocks.
System changes for trade history management changes will be completed within the third quarter. So, we will likely witness new trading patterns from the fourth quarter of this year.

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Jan 29

Daily Brief South Korea: Posco International Corporation, LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Names to Watch for Inclusion in MSCI Korea May Review
LG Energy Solution: Consensus Likely to Lower Sales and OP Estimates in 2023

Names to Watch for Inclusion in MSCI Korea May Review

By Sanghyun Park

Posco International‘s recent merger with Posco Energy increased the share count. The distance from the float market cap borderline is catchable, given the current share price uptrend.
Hanwha Aerospace will likely fail inclusion in this February review. The gap with the hurdle is not large, so it can aim for inclusion in the May review.
Among Outside IMI, Korea Gas is tricky as it is a FOL stock. MSCI-concluded float is 30%, and the gap with the float market cap hurdle is still quite large.

LG Energy Solution: Consensus Likely to Lower Sales and OP Estimates in 2023

By Douglas Kim

On 27 January, LG Energy Solution provided financial and operational guidance for 2023.
We believe that the consensus is likely to reduce sales estimate by 3% and operating profit estimates by 10-15% in 2023.
Out of the total of 3.4% of ESOP shares, about 0.5% to 1.5% of the shares could be sold in the first few weeks after the end of the lock-up.

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Jan 27

Daily Brief South Korea: OASIS Corp, Hyundai Motor, Korea Stock Exchange Kospi 200 Index and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Oasis Corporation IPO – Thoughts on Valuation
Hyundai Motor: Solid Earnings in 4Q 2022 + Shares Cancellation
EQD | KOSPI2 Index: Buy Calls/Call Spreads into CPI Release – Update

Oasis Corporation IPO – Thoughts on Valuation

By Ethan Aw

OASIS Corp (370190 KS) is looking to raise up to US$166m in its upcoming Korea IPO.
Oasis Corporation is an early morning delivery service business that delivers fresh food to consumers. It runs an e-commerce platform named ‘Oasis Market’ as well as offline stores.
In our previous notes, we looked at the company’s past performance and peer comparison. In this note, we talk about valuations.

Hyundai Motor: Solid Earnings in 4Q 2022 + Shares Cancellation

By Douglas Kim

Hyundai Motor’s EV sales as a percentage of total sales increased from 4.3% in 4Q 2021 to 5.7% in 4Q 2022.
Hyundai Motor announced that it will cancel 2.14 million common shares, representing 1% of its outstanding common shares.
The company beat consensus sales and operating profit estimates in 4Q 2022 and the consensus is likely to revise up their earnings estimates.

EQD | KOSPI2 Index: Buy Calls/Call Spreads into CPI Release – Update

By Simon Harris

On Jan 19th we recommended a call and call spread to play upside in the KOSPI2 Index
Since then the market has rallied 3.75% and has moved through our first strikes
We look at restructuring the trades to play further momentum

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Jan 26

Daily Brief South Korea: Kepco Engineering & Construction, Osstem Implant, Samsung Electronics Pref Shares, Samsung C&T and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes
MBK/Unison Capital Korea Do a Deal for Osstem Implant (048260 KS) Thwarting Activist KCGI
Samsung Electronics 1P Pushed to a Substantial Diversion (Below -2σ) Today
Korean Holdcos Vs Opcos Gap Spreads Opportunities in 1Q 2023

Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes

By Brian Freitas

Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There are 6 adds and 5 deletes with implementation at the close on 31 January.
Estimated one-way turnover is in excess of 12% and will result in a one-way trade of US$207m. There are 11 stocks with estimated passive flows greater than 5x ADV.
Some of the inclusions have had BIG rallies over the last couple of months and there could be profit taking on those names in the next few days.

MBK/Unison Capital Korea Do a Deal for Osstem Implant (048260 KS) Thwarting Activist KCGI

By Travis Lundy

Just over a year ago, leading Korean dental implant and dentistry supply company Osstem Implant (048260 KS) announced the largest-ever embezzlement case in Korea. The stock was suspended.
There were fears about forced selling by the founder, and PE funds circled. Activist KCGI probably bought in Q3 but built a 5+% stake by end-December 2022.
Korean PE Firms MBK and Unison Capital have now launched an MBO-style Tender Offer to buy 2.4-11.2mm shares in the company at a sharp premium to the pre-activism undisturbed price.

Samsung Electronics 1P Pushed to a Substantial Diversion (Below -2σ) Today

By Sanghyun Park

SamE PREF’s relative underperformance compared to ORD has been getting a bit worse lately. And finally, today, it went down below -2.0σ on a 20-day moving average.
This much diversion is the first in recent months, and the pref discount is close to last year’s peak. The dividend yield difference is also the widest in recent years.
The current diversion appears to be a byproduct of the SamE overbuying amid the recent market rally, and we should expect a quick reversion.

Korean Holdcos Vs Opcos Gap Spreads Opportunities in 1Q 2023

By Douglas Kim

In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 1Q 2023.
Of the 33 pair trades, 2/3 of them involved holdcos outperforming opcos in the past year and 1/3 of them involved opcos outperforming holdcos in the same period.
We highlight 33 pair trades that involve Korean holdcos and opcos.

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