In today’s briefing:
- Potential Delisting of 5 Preferred Stocks in Korea at End of June
- Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names
- KOSDAQ150 Ad Hoc Index Rebalance: HFR (230240) To Replace BH (090460)
- SD Biosensor: Rights Offering Worth Nearly 310 Billion Won (Will Bionote Fund Most of This?)
- ESG Risks: Conflict Arises over POSCO Holdings’ Hydrogen Reduction Steel Project
- SK Bioscience (302440 KS): Core Vaccines Gaining Traction; COVID Vaccine Gets International Approval
Potential Delisting of 5 Preferred Stocks in Korea at End of June
- In this insight, we discuss the increasing likelihood of delisting of five preferred stocks in Korea at end of June.
- These five preferred stocks are as follows: Samsung Heavy Industries Pref, SK Networks Pref, DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B.
- Because the combined market cap of these five preferred shares is 37 billion won, it will have only a minor, positive impact on their common counterparts.
Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names
- The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week’s seminar served as a proactive way to inform the market about it.
- The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies’ treasury stock holdings.
- Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.
KOSDAQ150 Ad Hoc Index Rebalance: HFR (230240) To Replace BH (090460)
- Following Bh Co Ltd (090460 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with HFR Inc (230240 KS).
- The change will be implemented at the close on 19 June and passive trackers will need to trade over 1x ADV on both stocks.
- We had HFR Inc (230240 KS) as a potential replacement candidate and there could be pre-positions built up on the stock.
SD Biosensor: Rights Offering Worth Nearly 310 Billion Won (Will Bionote Fund Most of This?)
- SD Biosensor announced a rights offering of nearly 20 million shares (representing 19.1% of outstanding shares) at the expected rights offering price of 15,520 won.
- Bionote has announced its intentions to purchase up to 260 billion won worth of rights offering of SD Biosensor, representing 84% of rights offering amount of nearly 310 billion won.
- This is likely to be viewed negatively by both SD Biosensor and Bionote shareholders, but more so by the latter due to the lack of rights offering discount price.
ESG Risks: Conflict Arises over POSCO Holdings’ Hydrogen Reduction Steel Project
- As the development of POSCO Holdings’ hydrogen reduction steel project progresses, so do conflicts with the local community.
- Opinions clash over hydrogen reduction steel plant construction for carbon neutrality by 2050 and concerns about ecological threats from ocean reclamation.
- This incident falls under the category of community relations risks, and currently, POSCO Holdings’ company risk is rated at an extreme level of 4.8.
SK Bioscience (302440 KS): Core Vaccines Gaining Traction; COVID Vaccine Gets International Approval
- SK Bioscience (302440 KS) recorded 5% YoY growth in core vaccine revenue to KRW17B in 1Q23, mainly driven by shingles vaccine, SKY Zoster due to its continued market leadership.
- In May 2023, SK Bioscience received marketing authorization of its COVID-19 vaccine, SKYCovion from the UK MHRA. SKYCovion became the eighth COVID-19 vaccine approved in the UK.
- SK Bioscience targets revenue of KRW220 billion by 2024 mainly through global expansion of existing in-house vaccines and expanding its contract manufacturing business.
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