In today’s briefing:
- An Optimal Way to Sourcing and Screening Data for Low PBR Theme Stocks in Korea
- New World Development (17 HK): Stock Trading Cheap as Passive Selling Nears
- Quiddity Primer for KOSPI 200 Index Rebal Events (2024)
- China Traditional Chinese Med (570 HK): Third Time’s the Charm as Sinopharm Revives Its Interest?
- China Traditional Chinese Medicine (570.HK) – Will This Privatization Rumor Come True ?
- KOSPI200 Index Adhoc Rebalance: Potential Replacements for SsangyongC&E
- Kerry Express (KEX TB)’s MTO Update
- Rule Changes to Swap Ratio Calculations for Merger Swaps in Korea
- A First Major Class Action Lawsuit Against KT&G’s Directors by FCP + KT&G’s Results Analysis in 2023
- EQD | KOSPI 200 Rally: WEEKLY Resistance Levels
An Optimal Way to Sourcing and Screening Data for Low PBR Theme Stocks in Korea
- We can use KRX to access PER, PBR, and dividend yield. However, except for PER, the data, being based on the most recent information, limits its usefulness for proactive positions.
- So, we should look into FnGuide, which aggregates and provides exclusive consensus data. This website also requires payment for access.
- However, FnGuide provides some data for free, including PBR. Therefore, we can make use of this within the scope of its free offerings.
New World Development (17 HK): Stock Trading Cheap as Passive Selling Nears
- New World Development (17 HK) stock has continued to drop and the decrease in market cap should result in selling from passive trackers at the end of the month.
- New World Development (17 HK) has underperformed its peers and now trades at cheaper valuations on most parameters.
- Passive trackers will need to sell over 100m shares of New World Development. That could provide liquidity for investors that see value and for shorts to cover their positions.
Quiddity Primer for KOSPI 200 Index Rebal Events (2024)
- KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
- KOSPI 200 is also used as the underlying index for various financial products such as ETPs, ELS, index funds, and futures/options.
- In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of KOSPI 200 index rebalance baskets.
China Traditional Chinese Med (570 HK): Third Time’s the Charm as Sinopharm Revives Its Interest?
- Bloomberg reports that Sinopharm is reviving its interest in privatising China Traditional Chinese Medicine (570 HK)/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.
- Sinopharm’s best bet is to partner with Ping An Insurance Group of (601318 CH) and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.
- Due to Sinopharm’s previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.
China Traditional Chinese Medicine (570.HK) – Will This Privatization Rumor Come True ?
- We once again heard privatization rumor of China TCM, but China TCM denied it at this stage. We still recommend investors to remain vigilant until receive definite official announcement.
- One important background of privatization is the integration of SOE carried out in recent years. We do not rule out the possibility that Taiji Group would drive this privatization.
- It may not be an optimal time for the proposal of privatization by major shareholders. Other shareholders may not want to give up high-quality stocks, which makes privatization challenging.
KOSPI200 Index Adhoc Rebalance: Potential Replacements for SsangyongC&E
- Hahn & Co hold 79.9% of Ssangyong Cement Industrial (003410 KS) and have made a tender offer to acquire the remaining 20.1% at KRW 7,000/share.
- Ssangyong Cement Industrial (003410 KS) should be deleted from the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) once Hahn & Co acquire 90% of the company.
- Aekyung Chemical (161000 KS) is a potential addition to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) but inclusion is dependent on Hahn & Co reaching 90% of shares out.
Kerry Express (KEX TB)’s MTO Update
- On the 29th December 2023, Kerry Logistics Network (636 HK) (KLN) announced it would in-specie its entire 52.1% stake in Kerry Express Thailand (KEX TB).
- Given S.F. Holding (002352 CH) holds a 51.5% stake in KLN, it will hold 26.8% in KET post-in-specie, triggering an unconditional MTO. The MTO price will be THB5.50/share.
- Thai SFC approval has now been satisfied. The MTO should commence around the 13th Feb. with payment ~26th March. KLN, cum-entitlement to KEX, is the 19 Feb.
Rule Changes to Swap Ratio Calculations for Merger Swaps in Korea
- The Financial Services Commission plans to delegate merger swap ratio determination to corporate autonomy. Initially, only mergers between non-affiliated companies will be affected, with potential extension to affiliate mergers later.
- The Financial Services Commission aims to start the legislative process in mid-February and complete the amendment by the third quarter of this year.
- This change will enhance trading dynamics by decreasing the likelihood of prices aligning with the ratio just before merger announcements due to pre-information leakage.
A First Major Class Action Lawsuit Against KT&G’s Directors by FCP + KT&G’s Results Analysis in 2023
- One of the biggest news facing KT&G this year as been a class action lawsuit against KT&G’s directors by Flashlight Capital Partners.
- KT&G announced that it will cancel 3.5 million shares (about 315 billion won) on 16 February, which represent 2.6% of its outstanding shares and 16.7% of treasury shares.
- One of the major reasons why we remain positive on KT&G is that there is a relatively high probability of the company announcing cigarette price hikes in 2H 2024.
EQD | KOSPI 200 Rally: WEEKLY Resistance Levels
- The KOSPI 200 INDEX last week displayed and impressive bounce, maybe too impressive, too quick, too fast.
- A short-selling ban is in place until June 2024 for this market, but that does not mean it cannot pull back: according to our models the KOSPI 200 INDEX is OVERBOUGHT.
- We expect a pullback next week, unless the index closes this week down, in that case SHORT resistance levels will be reset.
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