In today’s briefing:
- What Arb Trading Opportunities Should We Target in SK Innovation’s Rights Offering?
- Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?
- Samsung Electronics (005930 KS): Ongoing Struggles with Technology Leaks and Governance Issues
- Hugel: A Solid Turnaround Story With Resumption of Botulax Sales in China
- Hugel Inc (145020 KS): Expanding Global Presence Provides Solace Amid Patent Tussle with Competitor
- Potential Changes to NPS’s KOSDAQ Benchmark with the Launch of KOSDAQ Global Index ETFs
What Arb Trading Opportunities Should We Target in SK Innovation’s Rights Offering?
- We should seize the arbitrage trading opportunities between SSF and subscription rights during the rights trading window. SK Innovation’s SSF is highly liquid, being traded at nearly 0.5x spot.
- The key is to catch the timing of basis widening. SK Innovation traditionally experiences significant intraday basis fluctuations, making it a crucial factor in maximizing our profitability.
- The ex-date play, betting on the tendency for prices to close above the base price on the ex-date, may not hold significant appeal. This pattern has become less pronounced recently.
Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?
- Invest Chosun recently reported that the three Celltrion Group companies including Celltrion Inc, Celltrion Healthcare, and Celltrion Pharm are close to announcing a merger in July.
- Although Celltrion was not included this time as suppliers of Humira biosimilar products by OptumRX, there is still a potential for Cigna Express Scripts to include Celltrion’s product this year.
- We think Celltrion Inc and Celltrion Healthcare’s share prices are oversold.
Samsung Electronics (005930 KS): Ongoing Struggles with Technology Leaks and Governance Issues
- Former Samsung executive attempted to construct replicated factory 1.5 km away from Samsung Electronics’ Chinese plant by stealing technology
- Prosecutors described this case as a leakage of “core national technologies”
- This technology theft incident falls under the category of risk oversight, and currently, Samsung Electronics’ company risk is rated at an extreme level of 4.0
Hugel: A Solid Turnaround Story With Resumption of Botulax Sales in China
- Hugel is a solid turnaround story. The recent resumption of its Botulax product sales in China is likely to boost the company’s sales and profits in 2023 and 2024.
- Despite this important catalyst, Hugel continues to face potential legal battle with Medytox over the botulinum toxin-related patent in the United States.
- The overall valuation on Hugel remains attractive and it is trading at EV/EBITDA of 7.1x and P/E of 18.2x in 2023.
Hugel Inc (145020 KS): Expanding Global Presence Provides Solace Amid Patent Tussle with Competitor
- Hugel Inc (145020 KS) is expected to start shipment of Botulax to China this month. Moreover, the company will launch its HA filler in China by middle of 2023.
- Hugel plans to focus on expanding into the global market in 2H23. The company began full-scale sales of Botulax in Australia in April and plans to enter Canada this year.
- Preliminary ruling regarding legal dispute in US is expected in November, while final ruling will come in March 2024. Hugel pushed back its US entry to 2025.
Potential Changes to NPS’s KOSDAQ Benchmark with the Launch of KOSDAQ Global Index ETFs
- NPS has expressed concerns about the wide risk range of the KOSDAQ 150 index, and there has been speculation about whether they will take advantage of the KOSDAQ Global Index.
- The launch of these ETFs should be closely watched as it could potentially be a turning point in the investment patterns of local pension funds in KOSDAQ.
- It may be worth considering the constituents included in this index where the NPS ownership stake does not reach 5%.
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