In today’s briefing:
- Delisting of 5 Korean Preferred Stocks on 17 July
- Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store
- The Rise of the Fourth Telco in Korea – Breaking the Oligopoly
- Fadu Pre-IPO – Stupendous Revenue Growth but Heavily Reliant on Two Key Customers
- EQD | KOSPI 200 Index WEEKLY: Time to Go LONG?
Delisting of 5 Korean Preferred Stocks on 17 July
- The Korea Exchange officially announced today that the following five preferred stocks will be delisted on 17 July.
- These five stocks including Samsung Heavy Industries Pref, SK Networks Pref, DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B fell sharply today.
- Despite the warning by the Korea Exchange since end of May, it was not until today that these five stocks dropped sharply. On average, these five stocks fell 44% today.
Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store
- Hyundai G.F. Holdings will conduct a tender offer to Hyundai Green Food and Hyundai Dept Store shareholders. The tendering period is August 11-September 1.
- The target volume is 10,125,700 (Hyundai Green Food) and 4,669,556 (Hyundai Dept Store), corresponding to 29.89% and 19.95% of the outstanding shares, respectively.
- We should approach this event trading with caution, taking into account the risk of an unhedged setup while monitoring the potential widening of the spread opening during the tendering period.
The Rise of the Fourth Telco in Korea – Breaking the Oligopoly
- The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three existing telcos.
- This decision to allow another telco in Korea will have a major negative impact on the existing three telcos in Korea.
- On a relative basis, we think that this could have a worse impact than LG Uplus as compared to SK Telecom due to greater price sensitivity of LG Uplus’ customers.
Fadu Pre-IPO – Stupendous Revenue Growth but Heavily Reliant on Two Key Customers
- Fadu (440110 KS) is looking to raise up to US$147m in its Korean IPO.
- Fadu is a South Korean fabless semiconductor maker mainly engaged in flash storage technology innovation. Its core products are Enterprise Solid State Drive (SSD) and Enterprise SSDs.
- Fadu’s revenue growth has been stupendous, to say the least. However, the firm’s revenues are derived mainly from two customers, which exposes it to a large degree of concentration risk.
EQD | KOSPI 200 Index WEEKLY: Time to Go LONG?
- The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) has been (mildly) falling for 4 weeks, it may be now ready to resume its multi-month uptrend.
- Friday July 7th would be a good time to enter this LONG trade at support prices between 337 and 333 (ideal range; it’s riskier below 333).
- Hedge your bets in case the market keeps falling more next week and the following (it shouldn’t… but it can).
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