Daily Brief South Korea: Mirae Asset Tiger 200 It ETF, Enchem, Boryung Pharmaceutical and more

In today’s briefing:

An Alternative Flow Trading Angle for K200 Rebalancing in June
Enchem: Block Deal Sale of 14% of Outstanding Shares
Boryung Pharmaceutical (003850 KS): Strong 4Q22 Result; New Drugs to Drive Long-Term Growth

An Alternative Flow Trading Angle for K200 Rebalancing in June

In KOSPI 200 IT Sector Index rebalancing in June, we should consider using Samsung SDS as a hedge for short positions on KakaoPay from a day trading perspective.
The expected performance of traditional flow trading based on passive impact has become uncertain due to flexible rebalancing trading by local pensions and short selling resumption on K200 new entrants.
As such, flow events on these sector indices that are still pretty much under the radar in the market could be a meaningful alternative for us.

Chosun Business Daily reported today that Enchem is considering on conducting a block deal sale of nearly 14% of its outstanding shares, representing about 160 billion won.
Brahman PS Investment is the likely seller in this block deal sale. If the block deal sale is successful, Brahman will have gained more than 6x on its original investment.
We would not be buyers of the block deal sale mainly due to unattractive valuations, volatile profitability, and not enough block deal sale discount.

Boryung Pharmaceutical (003850 KS) reported stellar Q4 results, with revenue increasing 21% YoY, driven prescription drugs. 2022 revenue and operating profit surged 20%+ YoY and surpassed guidance.
Boryung has guided for 2023 revenue and operating profit of KRW810 billion and KRW61 billion, representing growth of 12% and 1%, YoY, respectively.
Driven by in-licensed drugs and pipeline progress, Boryung’s target of KRW1 trillion revenue and KRW200 billion operating profit by 2026, seems achievable.

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