Category

South Korea

Dec 25
0

Daily Brief South Korea: Amorepacific Group and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Estimating Fund Size Tracking KOSPI MID Cap Index

Estimating Fund Size Tracking KOSPI MID Cap Index

By Sanghyun Park

  • About ₩3T trillion is presumed to flow from NPS to KOSPI MID. Then, ₩0.8T from local publicly raised funds should be sitting in KOSPI MID. Adding these two alone amounts ₩4T.
  • Of course, this is ACTIVE. In other words, they do not need to proceed with universe changes due to rebalancing at the same pace as ETFs.
  • Nevertheless, we should note that the domestic fund industry does not allow a large gap with BM. Hence, at least ₩4T of funds follow KOSPI MID quite tightly.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 24
0

Daily Brief South Korea: Jeio, Temc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • JEIO Lowers IPO Price Range
  • TEMC IPO Valuation Analysis

JEIO Lowers IPO Price Range

By Douglas Kim

  • JEIO, a manufacturer of carbon nanotubes for rechargeable batteries, has lowered its IPO price range and offering amount in order to list on the KOSDAQ market.
  • The company lowered the IPO price range to 10,000 won to 13,000 won from 15,000 won to 18,000 won range previously.
  • Our base case valuation of JEIO is target price of 11,268 won per share, which is 2% lower than the mid-point of the IPO price range.

TEMC IPO Valuation Analysis

By Douglas Kim

  • Our base valuation of TEMC is target price of 38,363 won per share. At the mid point of the IPO price range, our target price would represent a 10% upside. 
  • Typically, we require a 15-20% upside in terms of target price versus the IPO price. In this case, given the lack of upside, we have a Negative View. 
  • Our target price is based on a target P/E of 8.5x in 2023 which is the average P/E of the comps.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 23
0

Daily Brief South Korea: Hana Financial and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Revised CGT/SST in Korea: Intense Selling Flow on T-1 Ex-Date Will Be Intact Until 2024

Revised CGT/SST in Korea: Intense Selling Flow on T-1 Ex-Date Will Be Intact Until 2024

By Sanghyun Park

  • The all-inclusive CGT will be implemented in 2025. The current partial capital gains tax will be maintained until 2024. And the STT will drop from 0.23% to 0.15% in 2024.
  • The critical cause of an arb opportunity on ex-date price correction+dividend yield has been the yearend selling flow on T-1 ex-date for the purpose of tax avoidance by majority shareholders.
  • So, from this year to 2024, we should keep an eye on this arbitrage opportunity, which will continue to arise.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 22
0

Daily Brief South Korea: S.M.Entertainment Co, Bionote, WCP and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Mandatory Offer Arrives in Korea: Detailed Rules & Trading Ramifications
  • Bionote IPO Trading – Weakest Demand Even After Cutting Price and Size
  • TIGER (WISE) Secondary Battery ETF Rebalancing in January: Names to Watch

Mandatory Offer Arrives in Korea: Detailed Rules & Trading Ramifications

By Sanghyun Park

  • The target is those who purchase 25% or more of the shares of a listed company and become the largest shareholder with management rights.
  • The minimum volume of a mandatory offer is [(50% of total shares + 1 share) – the management right purchase volume].
  • We will be exposed to pro-rata risk, so it will be essential to figure out the nature and propensity of the shareholder composition to estimate the tendering rate in advance.

Bionote IPO Trading – Weakest Demand Even After Cutting Price and Size

By Clarence Chu

  • Bionote (377740 KS) raised US$72.2m in its Korean IPO. The IPO had consisted of both a primary and secondary selldown.
  • Bionote is an integrated producer of diagnostics test products and biocontent products. 
  • In this note, we will talk about the demand for the deal and other trading dynamics.

TIGER (WISE) Secondary Battery ETF Rebalancing in January: Names to Watch

By Sanghyun Park

  • The key to this rebalancing is the inclusion of WCP, which satisfies the requirements of minimum listing period and secondary battery sales amount.
  • As a hedge for the LONG WCP position, we can use Soulbrain and Solus Advanced, whose passive outflow is relatively high among those of a similar size to WCP.
  • Among large caps, we should pay attention to L&F, Posco Chemical, and Iljin Materials. However, we should be cautious about approaching them as an active trading target.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 21
0

Daily Brief South Korea: Kum Yang Co Ltd, SK Innovation, Hanmi Science and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI 200 Rebalancing Early Preview: Few Names Stand Out
  • Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications
  • Korea Biotech & Healthcare: A Pair Trade Between Hanmi Science and Hanmi Pharm

KOSPI 200 Rebalancing Early Preview: Few Names Stand Out

By Sanghyun Park

  • One name is screened to newly join the index. That is Kum Yang (001570 KS). With a YTD performance of over 400%, it is currently in very safe territory.
  • Two constituents stand out as likely deletes at this point: Zinus (013890 KS) and Hwaseung Enterprise (241590 KS). The market cap gap with the next ones in line isn’t small.
  • Kum Yang’s passive impact is substantially low due to the recent surge in TV. But if it moves sideways and TV stabilizes downward, we should build preemptive flow trade setups. 

Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications

By Sanghyun Park

  • The exercise price is the arithmetic average of weighted average prices for the past two months, the past month, and the past week from the day before the board resolution.  
  • Considering the governance structure of most local companies, a split-off will still be more likely to be preferred than a spin-off. Split-offs will emerge despite the mandate of appraisal rights.
  • We should look into staggering spread openings, with the pricing done on a two-month window, as a downward price revision will likely intensify toward the announcement with mandatory appraisal rights.

Korea Biotech & Healthcare: A Pair Trade Between Hanmi Science and Hanmi Pharm

By Douglas Kim

  • In this insight, we discuss a pair trade between Hanmi Science (long) and Hanmi Pharm (short). There are three major reasons we like this pair trade.
  • First, the gap between these two stocks have widened too much in the past year. Second, Hanmi Science may pay higher cash dividends due to inheritance tax issue. 
  • Third, Hanmi Pharm’s valuations remain lofty and Hanmi Science’s valuation discount relative to its historical valuation has become more compelling. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 20
0

Daily Brief South Korea: Hyperlounge and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyperlounge Raises US$8M in Series A to Grow Beyond Being a Business Analytics Platform

Hyperlounge Raises US$8M in Series A to Grow Beyond Being a Business Analytics Platform

By e27

  • Hyperlounge, a real-time data analysis and management insights SaaS platform for small and medium-sized (SME) business executives, announced that it had raised US$8 million in Series A investment.
  • The funding round is led by Altara Ventures, together with FuturePlay, StoneBridge, BA Partners, RyuKyung PSG, and Nextrans.
  • South Korean software reseller UClick joined the funding round as a strategic investor.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 19
0

Daily Brief South Korea: Kakao Pay, E Mart Inc, Kurly Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • MSCI Korea: An Early Assessment of February Index Review
  • KOSPI Size Index: Early Preview at One Fourth into Screening Period
  • Korea FSC’s Official Rule Changes for Local IPOs & Key Takeaways

MSCI Korea: An Early Assessment of February Index Review

By Sanghyun Park

  • MSCI’s quarterly comprehensive index review begins with the February review. QIR disappears, and all quarters are subject to the SAIR rules.
  • Currently, no constituents face deletion risk. On the other hand, we have three potential additions: Hanwha Aerospace (012450 KS), Meritz Financial Group (138040 KS), and Kakao Pay (377300 KS).
  • Meritz Financial will likely take Meritz Fire’s place through a Continuation. Kakao’s chances have increased significantly due to the recent price rise and the comprehensive index review.

KOSPI Size Index: Early Preview at One Fourth into Screening Period

By Sanghyun Park

Korea FSC’s Official Rule Changes for Local IPOs & Key Takeaways

By Sanghyun Park

  • Extending bookbuilding period to seven days (and test-the-waters) is unlikely to make any real difference. Leaving the financial capacity check to underwriters will likely cause sharp confusion in the market.
  • The purpose of penalizing so-called hot money, like flippers and non-pricing institutions, is understandable. However, whether FSC has fully considered the side effects caused by uniformly applying this is questionable.
  • Expanding the allowable price range on a listing day is the most crucial point we should pay attention to, and we must design a post-IPO trading strategy accordingly.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 18
0

Daily Brief South Korea: Celltrion Inc, SK Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Celltrion Siblings Announced Dividends: Trading Based on Past Patterns
  • SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis

Celltrion Siblings Announced Dividends: Trading Based on Past Patterns

By Sanghyun Park

  • The three Celltrion companies are showing the same pattern of boosting share prices towards the yearend T-1 ex-date. This isn’t unique to Celltrion, but the intensity is high for them.
  • Celltrion’s yearend dividend effect has an inverse correlation with the market’s overall performance. Fortunately, this year’s market-wide performance was the worst in the past five years.
  • For this year, the dividend yield isn’t bad either, swing on Dec 17 to T-1 ex-date or day trade on T-1 ex-date should provide juicy returns based on past patterns.

SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis

By Douglas Kim

  • In early December, the divorce settlement between SK Group Chairman Chey Tae-Won and his former wife Roh So-Young was finalized after 6+ years of long proceedings.
  • The end of the divorce settlement means that there is now a greater probability of SK Inc materially cancelling some of its treasury shares in 2023. 
  • Our SoTP valuation of SK Inc suggests an implied valuation of 260,712 won per share, suggesting 28.1% upside from current levels.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 17
0

Daily Brief South Korea: Celltrion Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Celltrion Group Companies – Sharp Increase in Dividends

Celltrion Group Companies – Sharp Increase in Dividends

By Douglas Kim

  • Celltrion Inc, Celltrion Healthcare, and Celltrion Pharm all announced much higher dividend payments for this year as compared to last year. 
  • Based on the new dividend payments, the dividend yields are as follows: (Celltrion Inc – 4.2%, Celltrion Healthcare – 4.2%, and Celltrion Pharm – 5%). 
  • Merger of three companies is likely to have long-term positive impact on the their share prices. Although exact timing is uncertain, 2023 could be the year of this merger. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Dec 16
0

Daily Brief South Korea: Meritz Financial Group, Kakao Corp, Lotte Shopping Co and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Discussing Why Meritz Swap Spread Not Being Narrowed & When to Enter
  • Kakao Corp: FTC Going After Chairman Kim Beom-Su’s K Cube Holdings
  • Lotte Shopping: A Deep Value Stock Poised for a Turnaround

Discussing Why Meritz Swap Spread Not Being Narrowed & When to Enter

By Sanghyun Park

  • The swap arb spread has been consistently within the 3% to 5% band since November 23, when arb trading should have actually started.
  • Meritz Financial’s buyback seems to be making it difficult to build positions on expectations that the price gap relative to Fire and Securities will converge quickly with the swap ratio.
  • As the actual risk of repaying financial borrows is small, we should start building up positions two weeks before the end of January, aiming to exit in early or mid-February.

Kakao Corp: FTC Going After Chairman Kim Beom-Su’s K Cube Holdings

By Douglas Kim

  • On 15 December, it was announced that Korea’s FTC decided to refer K Cube Holdings (KCH) to the prosecution over alleged illegal execution of voting rights to Kakao companies.
  • This could signal that the financial regulators may become more forceful in enforcing numerous other regulatory pressures on Kakao Corp and its affiliated companies to reduce their monopolistic business practices
  • Our NAV valuation of Kakao Corp suggests NAV per share of 45,942 won, which is 17% lower than current price.

Lotte Shopping: A Deep Value Stock Poised for a Turnaround

By Douglas Kim

  • Lotte Shopping is a deep value stock poised for a turnaround. 
  • Lotte Shopping has clear turnaround catalysts, cheap valuations, and a solid technical setup. 
  • Perhaps the most important catalysts for Lotte Shopping include getting rid of the most restrictions/social distancing measures related to COVID-19 which have been in place in the past three years.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free