Category

South Korea

Jan 05
0

Daily Brief South Korea: Hyundai Mipo Dockyard, Shinsegae and more

By | Daily Briefs, South Korea

In today’s briefing:

  • What Is NPS Buying & Selling?
  • Korea Loan Guarantees: A Pair Trade Between Shinsegae & Hyundai Dept Store

What Is NPS Buying & Selling?

By Douglas Kim

  • In this insight, we discuss a list of 60 stocks in Korea where NPS recently added or reduced 1% or more stake (27 adds and 33 reduce). 
  • Among the stocks NPS increased its stake, many of them are clear beneficiaries of the end of zero COVID policies in China including Hotel Shilla, Amorepacific Corp, and GKL. 
  • Among the top market cap stocks where the NPS decreased its stake by 1% or more, they include Lg Innotek, Hyundai E&C, Hyundai Mipo, and Posco International. 

Korea Loan Guarantees: A Pair Trade Between Shinsegae & Hyundai Dept Store

By Douglas Kim

  • Amid sharply rising interest rates and greater economic uncertainty, the subject of loan guarantees to affiliates among Korean companies has become more important. 
  • In this insight, we discuss a pair trade between Shinsegae (long) and Hyundai Dept Store Co (short).
  • Four major reasons why we prefer Shinsegae vs Hyundai Dept Store include negative impact from equity spin-off, increasing leverage (including loan guarantees), valuations, and economies of scale. 

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Jan 04
0

Daily Brief South Korea: Golfzon County, BNC Korea and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Initial Thoughts on Golfzon County IPO: Impact on Golfzon Newdin Holdings
  • BNC Korea (256840 KS): Base Business Faces Regulatory Headwind; Delay in COVID Drugs Approval

Initial Thoughts on Golfzon County IPO: Impact on Golfzon Newdin Holdings

By Douglas Kim

  • In this insight, we discuss our initial thoughts on the Golfzon County IPO which is likely in 1H 2023.
  • As of September 2022, Golfzon County owned and operated 18 golf courses and 387 holes, the largest in Korea. 
  • Golfzon Newdin owns a 43.2% in Golfzon County. We estimate Golfzon Newdin’s market cap to be 273 billion won or 6,369 won per share, representing a 44% upside. 

BNC Korea (256840 KS): Base Business Faces Regulatory Headwind; Delay in COVID Drugs Approval

By Tina Banerjee

  • BNC Korea (256840 KS) has been found guilty for the violation of the Pharmaceutical Affairs Act. Consequently, production of its Bienox injection has temporarily been halted till May 30, 2023.
  • The company’s in-licensed COVID-19 drug candidate could not secure emergency use approval from the FDA, which has asked for further clinical trial demonstrating efficacy and safety.
  • BNC Korea is not a bottom fishing idea, due to lack of any strong growth engine in near-term. Despite attractive valuation, we still like to avoid the stock.     

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Jan 03
0

Daily Brief South Korea: Shinhan Financial, Shinwon Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Align Partners Goes Activist on Seven Banking Group Companies in Korea
  • Korea Small Cap Gem #18: Shinwon

Align Partners Goes Activist on Seven Banking Group Companies in Korea

By Douglas Kim

  • On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.
  • According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.
  • Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x. 

Korea Small Cap Gem #18: Shinwon

By Douglas Kim

  • Shinwon Corp (009270 KS) is the 18th company in our Korea Small Cap Gems series.
  • Established in 1973, Shinwon is a leading apparel company which has been in business for nearly 50 years. Its most popular apparel brands include Besti Belli, Si, Viki, and SIEG.
  • The four key catalysts with Shinwon include significant share buybacks, strong growth in sales and profits driven by exports, potential change in the controlling shareholding structure, and discounted valuations.

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Jan 02
0

Daily Brief South Korea: Jb Financial Group, Sun Kwang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI200 Index Rebalance Preview (June): Changes from Now to June
  • KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In

KOSPI200 Index Rebalance Preview (June): Changes from Now to June

By Brian Freitas

  • A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
  • There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire & Marine Insurance.
  • Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.

KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In

By Brian Freitas

  • One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX). 
  • One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
  • The potential adds have massively outperformed the potential deletes over the last year. We’d wait for a reversal before entering a trade here – worth monitoring.

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Jan 01
0

Daily Brief South Korea: SmileGate Holdings and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Smilegate Holdings: A Giant Korean Game Company in Partnership with Amazon Games

Smilegate Holdings: A Giant Korean Game Company in Partnership with Amazon Games

By Douglas Kim

  • Established in 2002, Smilegate Holdings is well known for its globally popular games including Crossfire (a first person shooter game), Lost Ark (MMORPG), and Epic Seven.
  • In August 2020, Smilegate RPG entered into a partnership with Amazon Games, reaching an exclusive publishing agreement for North America and Europe.
  • At a P/S valuation of 6-7x using company’s 2021 sales of 1.4 trillion won would suggest implied valuations of 8 trillion won to 10 trillion won for Smilegate Holdings.

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Dec 31
0

Daily Brief South Korea: HPSP and more

By | Daily Briefs, South Korea

In today’s briefing:

  • End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023

End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023

By Douglas Kim

  • We discuss end of the mandatory lock-up periods for 57 stocks in Korea in January 2023, among which 5 are in KOSPI and 52 are in KOSDAQ.
  • These 57 stocks on average could be subject to further selling pressures in December and could underperform relative to the market. 
  • Among these 57 stocks, the top 5 market cap stocks include Sungeel Hitech, HPSP, CJ CGV, Sillajen, and Eoflow. 

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Dec 30
0

Daily Brief South Korea: LG Household & Health Care, NCSOFT Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date
  • China Allows Import of 45 Foreign Video Games Including 7 Korean Games

Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date

By Sanghyun Park

  • This year is less intense compared to previous years. However, given this year’s overall market returns and the lower visibility of yearend dividends, it is still a reasonably aggressive flow.
  • Most of this PROP flow should have been dividend hunting aimed at the distortion of ex-date price correction caused by RETAIL’s tax avoidance-driven selling flow.
  • The performance of the individual stock position strategy (entering on T-4~1 ex-date) might not have been as juicy as expected, but it still managed to deliver a positive return.

China Allows Import of 45 Foreign Video Games Including 7 Korean Games

By Douglas Kim

  • On 28 December, the Chinese regulators announced that it will allow import of 45 foreign video games in China, among which seven are Korean video games.
  • Now that the Chinese authorities have allowed greater imports of foreign games, this will act as a significant positive catalyst to boost share prices of Korean game companies.
  • Among the major Korean game companies, we believe that NCsoft and Netmarble are best positioned to capitalize on this catalyst.

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Dec 29
0

Daily Brief South Korea: E Mart Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • An Update to Our Pair Trade Between Emart & Coupang

An Update to Our Pair Trade Between Emart & Coupang

By Douglas Kim

  • In this insight, we discuss an update of pair trade between Emart (long) and Coupang (short). 
  • Back on 1 August 2022, we recommended a pair trade between E Mart Inc (139480 KS) (long) and Coupang (CPNG US) (short).
  • This pair trade has worked well in the past five months and we continue to like this pair trade (long Emart and short Coupang).

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Dec 28
0

Daily Brief South Korea: KODEX Korea China New Energy Vehicles ETF, Hotel Shilla and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Launching KRX CSI Joint EV & Semiconductor ETFs
  • Hotel Shilla: A Key Beneficiary of End of Zero COVID Policy in China & End of Mask Mandate in Korea

Launching KRX CSI Joint EV & Semiconductor ETFs

By Sanghyun Park

Hotel Shilla: A Key Beneficiary of End of Zero COVID Policy in China & End of Mask Mandate in Korea

By Douglas Kim

  • Hotel Shilla is a key beneficiary of the end of the zero COVID policy in China and the end of the mask mandate in Korea. 
  • In the past several weeks, there has been a major shift on the highly stringent zero COVID policies in China which should have a positive impact on Hotel Shilla. 
  • In the next several quarters, we believe that there is a good chance that the company’s results exceed the consensus expectations, driven by millions of tourists from China to Korea. 

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Dec 27
0

Daily Brief South Korea: Hyundai Motor and more

By | Daily Briefs, South Korea

In today’s briefing:

  • An Update to the Long-Short Pair Trade on Hyundai Motor & Tesla

An Update to the Long-Short Pair Trade on Hyundai Motor & Tesla

By Douglas Kim

  • In this insight, we provide an update to our long-short pair trade of Hyundai Motor (long) and Tesla Motors (short), which we presented back in June 2022.
  • Since 9 June 2022, Hyundai Motor’s share price is down 13.4% and Tesla’s share price is down 48.6% in the same period, resulting in net gains of 35.2%.
  • We discuss five major factors impacting Tesla’s share price this year including market share losses, Musk’s acquisition of Twitter, valuation multiples decline, China operations, and global recessionary fears in 2023.

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