Daily Brief South Korea: Amorepacific Corp, Doosan Bobcat Inc, Hana Financial and more

In today’s briefing:

StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
GEM Banks; Focus on Value Attributes and Returns Recovery Potential

StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low

A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
Preceding my comments on Amorepacific are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone.
We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire.

Among bigger cap GEM banks, we pick five longs and two shorts as our conviction calls; we add country-based equity risk premia to our screening process
Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, CIMB Group from Malaysia, Bradesco from Brazil and CCB from China; four of these are value picks
Our sells are Kotak Mahindra Bank and ICICI Bank from India, both richly valued larger cap banks that have benefited from past economic and political tailwinds with headwinds now emerging

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