In today’s briefing:
- KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
- An Update on Medtronic’s Tender Offer of Eoflow
- Seeking Clues for a Preemptive Position in the Korean Local Block Deal Market in H2
- KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor
- [Coupang Inc. (CPNG US, SELL, TP US$13.7) TP Change]: Taiwan Expansion Will Lower the Profit Margin
KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
- The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
- There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
- There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.
An Update on Medtronic’s Tender Offer of Eoflow
- In this insight, we provide an update of Medtronic’s tender offer of Eoflow.
- The foreign ownership of Eoflow has surged in the past two months from 6.5% on 25 May to 33.2% as of 24 July.
- We continue to believe that there is 95%+ probability of this M&A getting completed at the tender offer price of 30,000 won and Eoflow eventually becoming delisted in 2H 2023.
Seeking Clues for a Preemptive Position in the Korean Local Block Deal Market in H2
- As the possibility of implementing the pre-disclosure rule in the second half of this year arises, the local block deal market is expected to become more active.
- Specifically, there are observable movements among Kosdaq mid-sized companies that are particularly sensitive to deal execution risk. This suggests that LHJ’s KIS may further solidify its dominance.
- Significant increases in trading volume through KB Securities could serve as potential clues indicating the imminence of block deals in companies where the likelihood of such deals is high.
KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor
- KRX stated in this press release that they have identified the suspected stocks involved in illegal trading and have reported them to the financial authorities (Korea FSC and Korea FSS).
- The primary concern in the short term seems to revolve around whether the battery stocks are among the ones suspected of illegal trading, as reported to the financial authorities.
- We must remain vigilant and ready for the potential recurrence of CFD-related price plunges, as seen in the recent two instances, affecting specific stocks in the short term.
[Coupang Inc. (CPNG US, SELL, TP US$13.7) TP Change]: Taiwan Expansion Will Lower the Profit Margin
- We expect CPNG to report C2Q23 revenue and profit in-line and (31.6%) vs. cons., respectively. CPNG’s profit miss is largely due to rapid expansion in Taiwan…
- …which we estimate it will impact net profit by up to 40% this year. AliExpress continues its development in South Korea, Temu, is expected to put pressure on Coupang.
- We maintain SELL on Coupang and revise down this year’s EPS estimate by 16% and cut our TP to US$ 13.7 to reflect the changes on the profit side.
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