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

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LJY's New Samsung May Begin with Sale of Financial Arm (Life)

Samsung Elec Dividend or Buyback? Tax & Net Cash-In Calculations to the Family

Clepsydra Capital

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

Event-Driven

<p>The April 30 tax report/payment deadline is around the corner.</p><p>The Samsung Lee family must report all of the inheritance tax to the local tax authorities by April 30.</p><p>They are also obligated to pay at least one-sixth of the total by then if they opt for a 5-year grace period option, which is very likely at this point.</p><p>So, it works like this:</p><ul>
<li><strong>One-sixth by April 30</strong></li>
<li><strong>The reminder (five-sixth) in 5 annual installments (an equal one-sixth) at an interest rate of 1.8% per annum</strong></li>
</ul><hr><div class="content-highlight"><h2>Tax amount estimations</h2></div><div><p>Inheritance tax on listed company equity is calculated based on the average of 4-month daily closing prices: 2 months before and 2 months after the passing. The calculation period is August 25 to December 25.</p></div><div><p>At the 2M average prices, it comes at ₩19.1T.</p></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 212.5px;" data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Lee Kun-hee's shareholding (₩B)&quot;}">Lee Kun-hee's shareholding (₩B)</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right; width: 79.1667px;" data-sheets-value='{"1":2,"2":"Shares"}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>Shares</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"%"}'>%</td>
<td style="text-align: right; width: 94.1667px;" data-sheets-value='{"1":2,"2":"Aug 25~Dec 25"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>60D avg price on Aug 25~Dec 25</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"Value (₩B)"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}'>Value (₩B)</td>
</tr>
<tr>
<td style="width: 212.5px;" data-sheets-value='{"1":2,"2":"Samsung Electronics Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Samsung Electronics Co Ltd</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"005930"}' data-sheets-formula='="005930"'>005930</td>
<td style="text-align: right; width: 79.1667px;" data-sheets-value='{"1":3,"3":249273200}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>249,273,200</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":0.04175582576286636}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[0]C[-1]/googlefinance(R[0]C[-2], "shares")'>4.18%</td>
<td style="text-align: right; width: 94.1667px;" data-sheets-value='{"1":3,"3":62789.28571428572}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=average(index(googlefinance(R[0]C[-3], "price", today()-236, today()-111), 0, 2))'><strong>₩62,789</strong></td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":15651.686175714287}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}' data-sheets-formula="=R[0]C[-1]*R[0]C[-3]/1000000000"><strong>15,651.7</strong></td>
</tr>
<tr>
<td style="width: 212.5px;" data-sheets-value='{"1":2,"2":"Samsung Electronics Co Ltd Preference Shares Non Voting"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Samsung Electronics Co Ltd Preference Shares Non Voting</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"005935"}' data-sheets-formula='="005935"'>005935</td>
<td style="text-align: right; width: 79.1667px;" data-sheets-value='{"1":3,"3":619900}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>619,900</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":0.0007533236349548485}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[0]C[-1]/googlefinance(R[0]C[-2], "shares")'>0.08%</td>
<td style="text-align: right; width: 94.1667px;" data-sheets-value='{"1":3,"3":56154.166666666664}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=average(index(googlefinance(R[0]C[-3], "price", today()-236, today()-111), 0, 2))'><strong>₩56,154</strong></td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":34.809967916666665}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}' data-sheets-formula="=R[0]C[-1]*R[0]C[-3]/1000000000"><strong>34.8</strong></td>
</tr>
<tr>
<td style="width: 212.5px;" data-sheets-value='{"1":2,"2":"Samsung Life Insurance co., Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Samsung Life Insurance co., Ltd</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"032830"}' data-sheets-formula='="032830"'>032830</td>
<td style="text-align: right; width: 79.1667px;" data-sheets-value='{"1":3,"3":41519180}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>41,519,180</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":0.2075959}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[0]C[-1]/googlefinance(R[0]C[-2], "shares")'>20.76%</td>
<td style="text-align: right; width: 94.1667px;" data-sheets-value='{"1":3,"3":66707.14285714286}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=average(index(googlefinance(R[0]C[-3], "price", today()-236, today()-111), 0, 2))'><strong>₩66,707</strong></td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":2769.625871571429}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}' data-sheets-formula="=R[0]C[-1]*R[0]C[-3]/1000000000"><strong>2,769.6</strong></td>
</tr>
<tr>
<td style="width: 212.5px;" data-sheets-value='{"1":2,"2":"Samsung C&amp;T Corp"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Samsung C&amp;T Corp</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"028260"}' data-sheets-formula='="028260"'>028260</td>
<td style="text-align: right; width: 79.1667px;" data-sheets-value='{"1":3,"3":5425733}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>5,425,733</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":0.029032145887066426}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[0]C[-1]/googlefinance(R[0]C[-2], "shares")'>2.90%</td>
<td style="text-align: right; width: 94.1667px;" data-sheets-value='{"1":3,"3":115208.33333333333}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=average(index(googlefinance(R[0]C[-3], "price", today()-236, today()-111), 0, 2))'><strong>₩115,208</strong></td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":625.0896560416667}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}' data-sheets-formula="=R[0]C[-1]*R[0]C[-3]/1000000000"><strong>625.1</strong></td>
</tr>
<tr>
<td style="width: 212.5px;" data-sheets-value='{"1":2,"2":"Samsung SDS Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Samsung SDS Co Ltd</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"018260"}' data-sheets-formula='="018260"'>018260</td>
<td style="text-align: right; width: 79.1667px;" data-sheets-value='{"1":3,"3":9701}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>9,701</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":0.0001253718766881457}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[0]C[-1]/googlefinance(R[0]C[-2], "shares")'>0.01%</td>
<td style="text-align: right; width: 94.1667px;" data-sheets-value='{"1":3,"3":173345.2380952381}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=average(index(googlefinance(R[0]C[-3], "price", today()-236, today()-111), 0, 2))'><strong>₩173,345</strong></td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":1.681622154761905}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}' data-sheets-formula="=R[0]C[-1]*R[0]C[-3]/1000000000"><strong>1.7</strong></td>
</tr>
<tr>
<td style="width: 212.5px;" data-sheets-value='{"1":2,"2":" - Total"}'>- Total</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 79.1667px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 94.1667px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 77.5px;" data-sheets-value='{"1":3,"3":19082.89329339881}' data-sheets-numberformat='{"1":2,"2":"#,##0.0","3":1}' data-sheets-formula="=sum(R[-5]C[0]:R[-1]C[0])"><strong>19,082.9</strong></td>
</tr>
<tr><td colspan="6" rowspan="1" style="width: 722.5px;" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>The late Lee's artwork collection is estimated at ₩2.8T, and his other assets (real-estates and cash) are valued at ₩2T.</p><p>All combined, the total gross taxable amount comes at ₩23.9T, which then spits out a total inheritance tax of ₩12T after deductibles and extra charges at a 60% tax rate.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Inheritance tax (₩B)"}'>Inheritance tax (₩B)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shareholding value"}'><strong>Total shareholding value</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":19082.89329339881}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=R[-4]C[4]"><strong>19,082.89</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Art works"}'><strong>Artworks</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2800}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'><strong>2,800.00</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Real-estates &amp; cash"}'><strong>Real-estates &amp; cash</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2000}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'><strong>2,000.00</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total gross taxable"}'><strong>Total gross taxable</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":23882.89329339881}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=sum(R[-3]C[0]:R[-1]C[0])"><strong>23,882.89</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Taxable after various deductibles (70%)"}'>Taxable after various deductibles (70%)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":16718.025305379168}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=R[-1]C[0]*0.7">16,718.03</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"20% extra charge (management premium)"}'>20% extra charge (management premium)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":20061.630366455}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=R[-1]C[0]*1.2">20,061.63</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Inheritance tax at a 60% tax rate"}'><strong>Inheritance tax at a 60% tax rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":12036.978219872999}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=R[-1]C[0]*0.6"><strong>12,036.98</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX FIND, Chosun, &amp; Korean NTS"}'>Source: KRX FIND, Chosun, &amp; Korean NTS</td></tr>
</tbody>
</table><p>Unless specified in the will, the inheritance will go at a 1/3 (spouse) to 2/3/N (each child) ratio.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Inheritance tax burden for each family member (₩B)"}'>The inheritance tax burden for each family member (₩B)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Inheritance tax at a 60% tax rate"}'>Total Inheritance tax</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":12036.978219872999}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=R[-4]C[0]">12,036.98</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Lee JY (oldest)"}'> - Lee JY (oldest)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2674.884048860666}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=2/3*R21C2/3">2,674.88</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Lee Bu-jin (second)"}'> - Lee Bu-jin (second)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2674.884048860666}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=2/3*R21C2/3">2,674.88</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Lee Seo-hyun (third)"}'> - Lee Seo-hyun (third)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2674.884048860666}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=2/3*R21C2/3">2,674.88</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hong Ra-hee(spouse)"}'> - Hong Ra-hee (spouse)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4012.3260732909994}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula="=1/3*R[-4]C[0]">4,012.33</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX FIND &amp; Korean NTS"}'>Source: KRX FIND &amp; Korean NTS</td></tr>
</tbody>
</table>

The April 30 tax report/payment deadline is around the corner.The Samsung Lee family must report all of the inheritance tax to the local tax authorities by April 30.They are also obligated to pay at least one-sixth of the total by then if they opt for a 5-year grace period option, which is very likely at this point.So, it works like this:
One-sixth by April 30
The reminder (five-sixth) in 5 annual installments (an equal one-sixth) at an interest rate of 1.8% per annum
Tax amount estimationsInheritance tax on listed company equity is calculated based on the average of 4-month daily closing prices: 2 months before and 2 months after the passing. The calculation period is August 25 to December 25.At the 2M average prices, it comes at ₩19.1T.










Lee Kun-hee's shareholding (₩B)
Ticker
Shares
%
60D avg price on Aug 25~Dec 25
Value (₩B)


Samsung Electronics Co Ltd
005930
249,273,200
4.18%
₩62,789
15,651.7


Samsung Electronics Co Ltd Preference Shares Non Voting
005935
619,900
0.08%
₩56,154
34.8


Samsung Life Insurance co., Ltd
032830
41,519,180
20.76%
₩66,707
2,769.6


Samsung C&amp;T Corp
028260
5,425,733
2.90%
₩115,208
625.1


Samsung SDS Co Ltd
018260
9,701
0.01%
₩173,345
1.7


- Total
-
-
-
-
19,082.9

Source: KRX

The late Lee's artwork collection is estimated at ₩2.8T, and his other assets (real-estates and cash) are valued at ₩2T.All combined, the total gross taxable amount comes at ₩23.9T, which then spits out a total inheritance tax of ₩12T after deductibles and extra charges at a 60% tax rate.





Inheritance tax (₩B)

Total shareholding value
19,082.89


Artworks
2,800.00


Real-estates &amp; cash
2,000.00


Total gross taxable
23,882.89


Taxable after various deductibles (70%)
16,718.03


20% extra charge (management premium)
20,061.63


Inheritance tax at a 60% tax rate
12,036.98

Source: KRX FIND, Chosun, &amp; Korean NTS

Unless specified in the will, the inheritance will go at a 1/3 (spouse) to 2/3/N (each child) ratio.





The inheritance tax burden for each family member (₩B)

Total Inheritance tax
12,036.98


 - Lee JY (oldest)
2,674.88


 - Lee Bu-jin (second)
2,674.88


 - Lee Seo-hyun (third)
2,674.88


 - Hong Ra-hee (spouse)
4,012.33

Source: KRX FIND &amp; Korean NTS



Samsung Electronics Pref Shares (005935 KS)

Samsung Inheritance Tax Event: Why Market Being Bearish on Samsung Electronics?