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

Hanwha Systems Offering: SO/Float Changes & Index Treatment

HYBE Subscription Rights at a Decent Arb Yield: Why Not Trading It

Hanwha Systems Rights Offer: Outright Trade on Subs Rights Ahead of Ex-Rights

Hanwha Systems ₩1.2T Rights Offer Summary & Dynamics

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<p>Hanwha Systems' ₩1.2T offering subscription rights trade begins <strong>May 13 (this Thursday)</strong>. It will last for 5 trading sessions until May 20.</p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Timetable"}'>Timetable</td></tr>
<tr>
<td style="width: 364.545px;" data-sheets-value='{"1":2,"2":"Subscription rights trade beginning"}'><strong>Subscription rights trade</strong></td>
<td style="text-align: right; width: 338.182px;" data-sheets-value='{"1":3,"3":44329}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 5. 13 ~ 5. 20</strong></td>
</tr>
<tr>
<td style="width: 364.545px;" data-sheets-value='{"1":2,"2":"Final pricing"}'><strong>Final pricing</strong></td>
<td style="text-align: right; width: 338.182px;" data-sheets-value='{"1":3,"3":44347}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 5. 31</strong></td>
</tr>
<tr>
<td style="width: 364.545px;">Subscription</td>
<td style="text-align: right; width: 338.182px;">2021. 6. 03</td>
</tr>
<tr>
<td style="width: 364.545px;">Payment</td>
<td style="text-align: right; width: 338.182px;">2021. 6. 11</td>
</tr>
<tr>
<td style="width: 364.545px;" data-sheets-value='{"1":2,"2":"Listing"}'><strong>Listing</strong></td>
<td style="text-align: right; width: 338.182px;" data-sheets-value='{"1":3,"3":44370}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 6. 23</strong></td>
</tr>
<tr><td colspan="2" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody></table><p><strong>The 1st round price settled at ₩15,800, giving an 11.73% discount to the last close</strong>. This price of ₩15,800 will likely serve as our ceiling price in this offering.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"1st round pricing"}'>1st round pricing</td></tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"Calculation period"}'>Calculation period</td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":2,"2":"2021.03.20 ~ 2021.04.19"}'><div><div>2021.03.20 ~ 2021.04.19</div></div></td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"Reference date"}'><strong>Reference date</strong></td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":44305}' data-sheets-numberformat='{"1":5,"2":"mmmm d","3":1}'><strong>April 19</strong></td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"1-month volume weighted average price"}'>1-month volume-weighted average price (VWAP)</td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":20817}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩20,817</td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"1-week volume weighted average price"}'>1-week volume-weighted average price (VWAP)</td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":20222}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩20,222</td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"1-day close on April 19"}'>1-day close on April 19</td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":20600}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩20,600</td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"(A+B+C)/3"}'>(A+B+C)/3</td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":20546}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩20,546</td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"Reference price: Min(C,D)"}'><strong>Reference Price: Min(C,D)</strong></td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":20546}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[-1]C[0]"><strong>₩20,546</strong></td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"Discount rate"}'>Discount rate</td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":0.15}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>15.00%</td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"Capital increase rate"}'>Capital increase rate</td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":2,"2":"71,39%"}'>71,39%</td>
</tr>
<tr>
<td style="width: 370.909px;" data-sheets-value='{"1":2,"2":"1st round price: Reference Price × (1 - 15%) / [1 + (71.39% × 15%)]"}'><strong>1st round price: Reference Price × (1 - 15%) / [1 + (71.39% × 15%)]</strong></td>
<td style="text-align: right; width: 331.818px;" data-sheets-value='{"1":3,"3":15800}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'><strong>₩15,800</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><hr><p><strong>Why does this subscription rights trade deserve attention?</strong></p><div><ul>
<li>Korea now has the short-selling restriction to ban short-sellers from participating in a rights offer. Those having shorted between a day after an offering announcement day and an offering price-fixing day face the restriction.</li>
<li>But this restriction applies only to the offerings announced after April 6. <strong>This Hanwha Systems offering allows us to enjoy the loophole for the last time,</strong> as the offering announcement was made on <strong>March 29</strong>.</li>
</ul></div>

Hanwha Systems' ₩1.2T offering subscription rights trade begins May 13 (this Thursday). It will last for 5 trading sessions until May 20.
Timetable

Subscription rights trade
2021. 5. 13 ~ 5. 20


Final pricing
2021. 5. 31


Subscription
2021. 6. 03


Payment
2021. 6. 11


Listing
2021. 6. 23

Source: DART
The 1st round price settled at ₩15,800, giving an 11.73% discount to the last close. This price of ₩15,800 will likely serve as our ceiling price in this offering.





1st round pricing

Calculation period
2021.03.20 ~ 2021.04.19


Reference date
April 19


1-month volume-weighted average price (VWAP)
₩20,817


1-week volume-weighted average price (VWAP)
₩20,222


1-day close on April 19
₩20,600


(A+B+C)/3
₩20,546


Reference Price: Min(C,D)
₩20,546


Discount rate
15.00%


Capital increase rate
71,39%


1st round price: Reference Price × (1 - 15%) / [1 + (71.39% × 15%)]
₩15,800

Source: DART

Why does this subscription rights trade deserve attention?
Korea now has the short-selling restriction to ban short-sellers from participating in a rights offer. Those having shorted between a day after an offering announcement day and an offering price-fixing day face the restriction.
But this restriction applies only to the offerings announced after April 6. This Hanwha Systems offering allows us to enjoy the loophole for the last time, as the offering announcement was made on March 29.


Hanwha Systems Subscription Rights Trading Begins May 13: Should Aim at the First Day

Hanwha Systems Co Ltd

Hanwha Systems Subscription Rights Trading Begins May 13: Should Aim at the First Day