South Korea: Iljin Hysolus, Asiana Airlines, LG Corp and more

In today’s briefing:

Post KOSPI 200 Rebalancing Shorting Event: Watch Iljin Hysolus, F&F, & K Car

We should pay attention to the following three stocks: F&F, Iljin Hysolus, and K Car. They all have recently seen a drastic increase in the loan balance.
Their passive flow sizes relative to ADTVs are the lowest among the additions. It seems that those with relatively little passive impact are targeted.
Also, their projected earnings are highly volatile, and they all face overvaluation issues, whereas the other four names have more clear projections for earnings.

Korean Air might have already notified the creditors of its early repayment decision. Asiana will likely follow suit, immediately triggering the creditors to exercise the conversion rights.
So, both Korean Air and Asiana’s conversion should be a foregone conclusion. There is only uncertainty about how many conversions we will actually see for Asiana from the KDB.
Instead of preemptive position setup at this point, I would consider starting the position build-up within the 2-3 day window from the repayment filing to CB conversion.

LG Corp announced a share buyback worth 500 billion won, representing 4.3% of market cap. This is the company’s first major buyback in 22 years.
LG Corp will also remove the “limit” on dividend income, in order to secure the flexibility of the dividend income such as when one of its affiliated stakes are sold.
A sizeable buyback, improved dividend policy, and a significant discount to its NAV are likely to lead to continued outperformance of LG Corp relative to KOSPI.

Before it’s here, it’s on Smartkarma