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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Event-Driven

<ul>
<li>Revised values of Holdco's unlisted holdings put Holdco discount at 48.95% to GAV and 34.87% to NAV. Given that Korea's average holdco discount is at 40% (to NAV), SK Holdings discount level is pretty much 'average' at this point.</li>
<li>Last Friday, SK Group head Chey Tae-won handed over ₩1tril worth of Holdco shares to his direct relatives. Nearly half trillion won have to be raised to pay for the tax. Virtually none of the recipients has enough cash for this. They have no other option but to raise funds through Holdco dividends.</li>
<li>For common, yield has been at only 1.4~1.6%. This year, local street consensus is a bit higher, but still at 1.82%. This'd be way short. A drastic dividend hike is very likely, and this will push up Holdco value.</li>
<li>I wouldn't do a pair trade at this point. Holdco and the two major listed stocks, SKT and SK Innovation, are currently moving on different momentums. Price ratio wise, Holdco isn't particularly undervalued either at the moment.</li>
</ul>


Revised values of Holdco's unlisted holdings put Holdco discount at 48.95% to GAV and 34.87% to NAV. Given that Korea's average holdco discount is at 40% (to NAV), SK Holdings discount level is pretty much 'average' at this point.
Last Friday, SK Group head Chey Tae-won handed over ₩1tril worth of Holdco shares to his direct relatives. Nearly half trillion won have to be raised to pay for the tax. Virtually none of the recipients has enough cash for this. They have no other option but to raise funds through Holdco dividends.
For common, yield has been at only 1.4~1.6%. This year, local street consensus is a bit higher, but still at 1.82%. This'd be way short. A drastic dividend hike is very likely, and this will push up Holdco value.
I wouldn't do a pair trade at this point. Holdco and the two major listed stocks, SKT and SK Innovation, are currently moving on different momentums. Price ratio wise, Holdco isn't particularly undervalued either at the moment.


SK Holdco Trade: Initiate Long Position on Higher Dividends

SK Inc

SK Holdco Trade: Initiate Long Position on Higher Dividends