Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Equity Capital Markets

DongYang Piston Co., Ltd. / Equity Capital Markets

Korea's No 1. vehicle engine piston manufacturer, which was founded in 1967, is finally set to go public. Its bookbuilding actually ends on Nov 23. <a href="https://www.smartkarma.com/entities/26039" target="_blank" data-smartkarma-citation="entities:26039:1">DongYang Piston Co., Ltd. (092780 KS)</a>'s market share in Korea's local market stands at a whopping 51%. Hyundai Motor Group's affiliates are its main customers as they still account for about 40% of its total sales. But it has also had many success with such prestigious major car makers other than Hyundai. Its overseas clients include Japan's Mitsubishi and Germany's BMW and Audi, just to name a few.Dong Yang Piston manufactures and sells almost all types of pistons used for all types of vehicles.<table class="table table-striped"><tbody><tr><td colspan="2" style="width: 725px;">Product line-up</td></tr><tr><td style="width: 293.915771484375px;">Compact pistons</td><td style="width: 431.084228515625px;">Gasoline, diesel, LPI, and hybrid engines used in passenger cars and SUVs</td></tr><tr><td style="width: 293.915771484375px;">Mid-size pistons</td><td style="width: 431.084228515625px;">Diesel and natural gas engines used in vans, mini buses, compact trucks, and buses</td></tr><tr><td style="width: 293.915771484375px;">Large-size pistons</td><td style="width: 431.084228515625px;">Gasoline engines used in medium and heavy duty trucks, construction equipment, and generators</td></tr><tr><td style="width: 293.915771484375px;">Other pistons</td><td style="width: 431.084228515625px;">Gasoline engines used in two-wheelers, military vehicles, vessels, agricultural vehicles</td></tr><tr><td colspan="2" style="width: 725px;">Source: Dong Yang Piston, Bloomberg </td></tr></tbody></table><div class="content-caption">(Dong Yang Piston's product line-up - Courtesy Dong Yang Piston)</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/038/918/original/1.png?1511360459" class="editor-image img-responsive" data-smartkarma-image-id="38918"></figure>But compact pistons for passenger cars account for nearly 80% of its total sales. Of this, pistons for diesel engines of passenger cars have been delivering very impressive growth over the past three years.<table class="table table-striped"><colgroup></colgroup><tbody><tr><td colspan="2" style="width: 65pt;" data-sheets-value='{"1":3,"3":10.29}'>Sales breakdown</td><td style="text-align: right; width: 65pt;">2014</td><td style="text-align: right; width: 65pt;">2015</td><td style="text-align: right; width: 65pt;">2016</td><td colspan="2" style="text-align: right; width: 65pt;">1H17</td></tr><tr><td rowspan="3" data-sheets-value='{"1":2,"2":"승용"}'>Pistons for passenger cars (gasoline)</td><td data-sheets-value='{"1":2,"2":"승용"}'>Local</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":65178}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>65,178</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":53223}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>53,223</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":43199}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>43,199</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":25023}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>25,023</td><td style="text-align: right;">19.68%</td></tr><tr><td data-sheets-value='{"1":2,"2":"(가솔린)"}'>Overseas</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":39591}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>39,591</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":37828}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>37,828</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":41909}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>41,909</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":23706}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>23,706</td><td style="text-align: right;">18.64%</td></tr><tr><td data-sheets-value='{"1":2,"2":"소 계"}'>Sub-total</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":104770}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>104,770</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":91051}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>91,051</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":85108}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>85,108</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":48729}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>48,729</td><td style="text-align: right;">38.31%</td></tr><tr><td rowspan="3" data-sheets-value='{"1":2,"2":"승용"}'>Pistons for passenger cars (diesel)</td><td data-sheets-value='{"1":2,"2":"승용"}'>Local</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":45888}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>45,888</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":53428}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>53,428</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":55149}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>55,149</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":26011}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>26,011</td><td style="text-align: right;">20.45%</td></tr><tr><td data-sheets-value='{"1":2,"2":"(디젤)"}'>Overseas</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":19160}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>19,160</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":32960}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>32,960</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":40620}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>40,620</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":22574}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>22,574</td><td style="text-align: right;">17.75%</td></tr><tr><td data-sheets-value='{"1":2,"2":"소 계"}'>Sub-total</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":65048}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>65,048</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":86388}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>86,388</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":95769}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>95,769</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":48585}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>48,585</td><td style="text-align: right;">38.20%</td></tr><tr><td rowspan="3" data-sheets-value='{"1":2,"2":"내 수"}'>Total</td><td data-sheets-value='{"1":2,"2":"내 수"}'>Local</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":146564}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>146,564</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":144212}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>144,212</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":138927}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>138,927</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":68215}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>68,215</td><td style="text-align: right;">53.64%</td></tr><tr><td data-sheets-value='{"1":2,"2":"수 출"}'>Overseas</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":82489}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>82,489</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":111883}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>111,883</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":120750}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>120,750</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":58966}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>58,966</td><td style="text-align: right;">46.36%</td></tr><tr><td data-sheets-value='{"1":2,"2":"소 계"}'>Total</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":229053}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>229,053</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":256095}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>256,095</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":259677}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>259,677</td><td style="text-align: right;" data-sheets-value='{"1":3,"3":127181}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>127,181</td><td style="text-align: right;">-</td></tr><tr><td colspan="7" data-sheets-value='{"1":2,"2":"소 계"}'>Source: DART</td></tr></tbody></table>

Korea's No 1. vehicle engine piston manufacturer, which was founded in 1967, is finally set to go public. Its bookbuilding actually ends on Nov 23. DongYang Piston Co., Ltd. (092780 KS)'s market share in Korea's local market stands at a whopping 51%. Hyundai Motor Group's affiliates are its main customers as they still account for about 40% of its total sales. But it has also had many success with such prestigious major car makers other than Hyundai. Its overseas clients include Japan's Mitsubishi and Germany's BMW and Audi, just to name a few.Dong Yang Piston manufactures and sells almost all types of pistons used for all types of vehicles.Product line-upCompact pistonsGasoline, diesel, LPI, and hybrid engines used in passenger cars and SUVsMid-size pistonsDiesel and natural gas engines used in vans, mini buses, compact trucks, and busesLarge-size pistonsGasoline engines used in medium and heavy duty trucks, construction equipment, and generatorsOther pistonsGasoline engines used in two-wheelers, military vehicles, vessels, agricultural vehiclesSource: Dong Yang Piston, Bloomberg (Dong Yang Piston's product line-up - Courtesy Dong Yang Piston)But compact pistons for passenger cars account for nearly 80% of its total sales. Of this, pistons for diesel engines of passenger cars have been delivering very impressive growth over the past three years.Sales breakdown2014201520161H17Pistons for passenger cars (gasoline)Local65,17853,22343,19925,02319.68%Overseas39,59137,82841,90923,70618.64%Sub-total104,77091,05185,10848,72938.31%Pistons for passenger cars (diesel)Local45,88853,42855,14926,01120.45%Overseas19,16032,96040,62022,57417.75%Sub-total65,04886,38895,76948,58538.20%TotalLocal146,564144,212138,92768,21553.64%Overseas82,489111,883120,75058,96646.36%Total229,053256,095259,677127,181-Source: DART

Dong Yang Piston IPO Summary - Solid but Not So Exciting Engine Piston Maker