Daily Brief South Korea: KT&G Corporation, DB Hitek Co., Ltd., LIG Nex1 Co and more

In today’s briefing:

Oasis Management Invests in KT&G
Never-Seen Price Pattern Detected in a Split-Off Event Granting Appraisal Rights in Korea
LIG Nex1: 10x Increase in Operating Profit from 2019 to 2022 Not Adequately Reflected in Share Price

Oasis Management Invests in KT&G

It was reported on 22 February in numerous local Korean media that Oasis Management has invested about 1.5% stake in KT&G Corporation (033780 KS).
This investment in KT&G is reportedly Oasis Mgmt’s first investment in Korea. For now, Oasis Mgmt has not made any public announcement about its investment in KT&G.
With Oasis Mgmt investing 1.5% stake in KT&G, we believe it is increasingly likely that it could start its activist campaign on KT&G sometime in 2023.

A rather unusual price movement came out on February 20 for HLB. On the first trading day after the board of directors’ decision, the price reached the upper daily limit.
The short covering got to a temporarily excessive level in the process of securing appraisal rights should be the reason that led to the upper limit.
We should design a trading setup targeting excessive short covering-triggered price overheating in split-off events. At this point, the most likely candidate to pursue a split-off is DB Hitek.

LIG Nex1 produces a wide range of advanced precision electronic systems, including missile, radars, electronic warfare, avionics, tactical communication systems, fire control systems, and naval combat systems.
LIG Nex1’s operating profit has jumped by nearly 10x from 2019 to 2022. However, its share price has not adequately reflected this growth.
The company reached its highest ever order backlog of 12.2 trillion won at the end of 2022. The company is benefiting from increased demand for precision guided weapons worldwide.

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