In today’s briefing:
- Names for a Preemptive Long Short Setup for KOSPI 200 June Rebalancing
- Shorting Event on LX International’s Potential Rights Offer for HMM Takeover
- SK Networks: 100 Billion Won in Share Buyback + 70 Billion Won in Treasury Shares Cancellation
- MSCI Korea Potential Adds & Deletes in May 2023 Amid Heightened Market Volatility
- Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential
Names for a Preemptive Long Short Setup for KOSPI 200 June Rebalancing
- Kum Yang and Youlchon Chemical are within the borderline for inclusion, whereas Hwaseung Enterprise and K Car are in the deletion zone.
- Since the review period has reached 75%, it seems reasonable to consider a somewhat aggressive buildup for them.
- We can also consider setting up preemptive positions only for Kum Yang and Hwaseung Enterprise and then sequentially look for entry opportunities for Youlchon and K Car later on.
Shorting Event on LX International’s Potential Rights Offer for HMM Takeover
- The opinion rapidly spreading in the local market is that LX International is increasing its available shares by twice the amount to plan a paid-in increase for the HMM acquisition.
- The size of an offering is estimated at ₩1.2T to ₩1.5T. The short-term price impact will undoubtedly be significant for LX International having a market cap of ₩1.2T.
- The market has already witnessed a preemptive position buildup targeting this. However, since there is a time gap until the offering announcement, an entry point opportunity may still be available.
SK Networks: 100 Billion Won in Share Buyback + 70 Billion Won in Treasury Shares Cancellation
- SK Networks announced that it will repurchase 100 billion won in common shares and also cancel nearly 70 billion won of existing treasury shares.
- The combined share buyback and treasury shares cancellation will represent nearly 14% of the company’s total outstanding shares.
- The combined share buyback and treasury shares cancellation which will represent nearly 14% of the company’s total outstanding shares, will likely have a positive impact on SK Network’s share price.
MSCI Korea Potential Adds & Deletes in May 2023 Amid Heightened Market Volatility
- In this insight, we discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement in May 2023 amid heightened market volatility.
- The potential inclusions (high probability) in the MSCI Korea index in May are Hanwha Aerospace and Ecopro. Potential adds (low probability) include POSCO International, Cosmo AM&T, and SM Entertainment.
- The three most likely exclusions in the MSCI Korea index in May include Lotte Shopping, SD Biosensor, and S1 Corporation.
Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential
- Lutronic Corp (085370 KS) recorded its highest ever revenue and operating profit in 2022, driven by strong performance of overseas business, which contributed 88% of revenue and grew 62% YoY.
- Overall, business has recovered with the reopening of the dermatology clinics and resumption of elective procedures globally. In addition to product sales, sales of consumables and services are steadily increasing.
- Despite stellar performance in 2022, ongoing lawsuit against U.S.-based competitor remains an overhang on Lutronic’s overseas growth aspirations, especially in the U.S.
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