Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Korean Pref Vs Common Shares Dividend Yield Changes

Korean Prefs Vs Common: Closing the Gaps on Select Stocks

Gap Trades in Korean Prefs Vs Common Share Pairs in 4Q 2022

SK Innovation: To Split SK Battery & SK E&P Business Units

Pair Trade Set-Ups (Korean Pref Vs. Common Stocks)

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Equity Bottom-Up

<p>In this insight, we highlight the continuing outperformance and closing the gaps of the major common and preferred shares. In Korea, there tends to be a greater amount of interest among many investors on the cheaper and higher dividend paying preferred stocks vs. common stocks in Korea, especially in the fourth quarter. </p><p>We provide visual highlights of 24 pair trades that involve common and preferred shares. Among these 48 stocks (24 pairs), 19 of them had their preferred shares outperforming the common shares YTD (as of 25 September 2021). In the remaining 5 pairs, the common shares outperformed the preferred shares YTD in 2021. </p><div class="content-highlight">
<p>The pref/common shares ratio of the 21 companies below increased from 0.60 on 31 December 2020 to 0.64 on 25 September 2021.</p>
<ul>
<li>In other words, the discount of the preferred shares narrowed from 40% (versus the common shares) at the end of 2020 to 36% today.</li>
<li>This shows a continued strong demand for preferred shares among many investors.</li>
<li>Over the next several years, we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains versus the common counterparts. </li>
</ul>
</div>

In this insight, we highlight the continuing outperformance and closing the gaps of the major common and preferred shares. In Korea, there tends to be a greater amount of interest among many investors on the cheaper and higher dividend paying preferred stocks vs. common stocks in Korea, especially in the fourth quarter. We provide visual highlights of 24 pair trades that involve common and preferred shares. Among these 48 stocks (24 pairs), 19 of them had their preferred shares outperforming the common shares YTD (as of 25 September 2021). In the remaining 5 pairs, the common shares outperformed the preferred shares YTD in 2021. 
The pref/common shares ratio of the 21 companies below increased from 0.60 on 31 December 2020 to 0.64 on 25 September 2021.

In other words, the discount of the preferred shares narrowed from 40% (versus the common shares) at the end of 2020 to 36% today.
This shows a continued strong demand for preferred shares among many investors.
Over the next several years, we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains versus the common counterparts. 



Continuing Outperformance & Closing the Gaps of Preferred Vs Common Shares in Korea