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

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Equity Capital Markets

Hanwha Ocean Co., Ltd. operates as a shipbuilding and offshore company. The Company provides floating structure construction, steel wire drying, commercial vessels, specialty vessels, gas carrier, tanker, containership, ro ro, bulk carrier, submarine, warship, auxiliaries, cruise ships, and ferries manufacturing services. Hanwha Ocean also offers onshore plants services.

<ul>
<li>KDB sells 4.3% of total shares, offloading about one fifth of its holdings. The price range was 81,265–81,710 won, at an 8.51–9.00% discount, totaling 1.056–1.062 trillion won.</li>
<li>With more float and passive buying (KOSPI 200) potential, plus shipbuilding momentum, the stock’s pullback likely won’t exceed today’s discount — it might be worth taking a swing.</li>
<li>There’s buzz KDB might sell its HMM stake through block trades, like Hanwha Ocean. However, with HMM’s cash reserves, a tender offer seems more likely to drive stock action instead.</li>
</ul>


KDB sells 4.3% of total shares, offloading about one fifth of its holdings. The price range was 81,265–81,710 won, at an 8.51–9.00% discount, totaling 1.056–1.062 trillion won.
With more float and passive buying (KOSPI 200) potential, plus shipbuilding momentum, the stock’s pullback likely won’t exceed today’s discount — it might be worth taking a swing.
There’s buzz KDB might sell its HMM stake through block trades, like Hanwha Ocean. However, with HMM’s cash reserves, a tender offer seems more likely to drive stock action instead.


KDB's Hanwha Ocean Block Deal: Worth Taking a Swing

Event-Driven

SK Holdings Co., Ltd. is a holdings company that is engaged in various industries including energy, chemicals, information technology, semiconductors, marketing, and services businesses in South Korea and internationally.

<ul>
<li>Local traders are betting SK Inc will preemptively announce a treasury share cancellation before the June election, positioning it as the center of the regime change momentum play.</li>
<li>From a trading perspective, SK Inc could rally as a "buyback stock" and offer NAV gap trading opportunities.</li>
<li>Another option could be an event-driven hedge strategy: go long on SK and short index futures post-election. If Lee Jae-myung wins, SK could outperform, but the broader market may drop.</li>
</ul>


Local traders are betting SK Inc will preemptively announce a treasury share cancellation before the June election, positioning it as the center of the regime change momentum play.
From a trading perspective, SK Inc could rally as a "buyback stock" and offer NAV gap trading opportunities.
Another option could be an event-driven hedge strategy: go long on SK and short index futures post-election. If Lee Jae-myung wins, SK could outperform, but the broader market may drop.


Next Target After Hanwha for Regime Change Momentum Play: SK Inc's Share Cancellation

HLB Life Science Co., Ltd. wholesales and distributes pharmaceutical drugs. The Company through its subsidiaries provides targeted therapy, cell therapy, new drug development, medical devices production, and other related services. HLB Life Science also offers solar, geothermal, and other renewable energy engineering services.

<ul>
<li>We go long on HLB LS, short on HLB Inc, and close the short once HLB LS converts. If the deal falls through, there’s potential for extra profits.</li>
<li>The view that the merger’s worse for HLB LS is gaining support, making it likely the spread could go negative, though there’s risk, the chances are pretty high.</li>
<li>The 4% spread is the floor for arb profit, and cancellation risk could add extra gains. This angle deserves serious consideration right now.</li>
</ul>


We go long on HLB LS, short on HLB Inc, and close the short once HLB LS converts. If the deal falls through, there’s potential for extra profits.
The view that the merger’s worse for HLB LS is gaining support, making it likely the spread could go negative, though there’s risk, the chances are pretty high.
The 4% spread is the floor for arb profit, and cancellation risk could add extra gains. This angle deserves serious consideration right now.


HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits

Samsung C&T Corporation conducts diversified business support services and resort operation activities. The Company offers a range of services in areas including clothing retail, construction, energy, real estate, food service, and resort accommodations. Samsung C&T also operates a resort with amusement rides, a zoo, water park, golf clubs, and restaurants.

<ul>
<li>The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.</li>
<li>We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&amp;T, LG, and Hyundai Glovis could attract attention too.</li>
<li>Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.</li>
</ul>


The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.
We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&amp;T, LG, and Hyundai Glovis could attract attention too.
Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.


Korea Dems' Surprise Proposal: Separate Tax for Dividends Over 35% Payout

LG Energy Solution / Equity Capital Markets

LG Energy Solution produces and sells batteries. The Company manufactures and sells automobile batteries, small batteries, energy storage system batteries, and other products. LG Energy Solution markets its products worldwide.

<ul>
<li>With a $2B deal expected, LG Chem will likely issue before end June as the 2023 EB’s put date nears and redemption pressure builds amid strained financials.</li>
<li>Two years ago, hedge shorting spiked post-issuance and post-exchange start, but price impact was mild—only 3% and 6% drops—likely due to strong sector sentiment then.</li>
<li>Sector sentiment’s turned sharply, so more aggressive price action is likely post-EB announcement. Timing is tricky, but the setup’s worth watching closely.</li>
</ul>


With a $2B deal expected, LG Chem will likely issue before end June as the 2023 EB’s put date nears and redemption pressure builds amid strained financials.
Two years ago, hedge shorting spiked post-issuance and post-exchange start, but price impact was mild—only 3% and 6% drops—likely due to strong sector sentiment then.
Sector sentiment’s turned sharply, so more aggressive price action is likely post-EB announcement. Timing is tricky, but the setup’s worth watching closely.


Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares

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

Sanghyun Park
Korea / Special Sits, Pairs, Index Rebalancing
• Clepsydra Capital

KDB's Hanwha Ocean Block Deal: Worth Taking a Swing

The deal presents an interesting opportunity, and despite the overhang risk, the attractive discount and potential passive buying flows could make...

Sanghyun Park

HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits

This post explores the angle where cancellation risk in the HLB merger swap arb setup could actually turn into extra profits.

Sanghyun Park

Korea Dems' Surprise Proposal: Separate Tax for Dividends Over 35% Payout

Korea Democratic Party’s surprise move this morning: separate taxation on dividend income will only apply to companies with a payout ratio of 35%...

Sanghyun Park

Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares

This post covers the trading playbook around LG Chem’s large-scale EB issuance backed by LG Energy Solution shares, likely dropping before the end...

Sanghyun Park

KDB's Hanwha Ocean Block Deal: Worth Taking a Swing

The deal presents an interesting opportunity, and despite the overhang risk, the attractive discount and potential passive buying flows could make...

Sanghyun Park

Next Target After Hanwha for Regime Change Momentum Play: SK Inc's Share Cancellation

This post investigates the movements in Korea's local trading scene as traders target the next play after Hanwha: SK Inc's treasury share...

Sanghyun Park

HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits

This post explores the angle where cancellation risk in the HLB merger swap arb setup could actually turn into extra profits.

Sanghyun Park

Korea Dems' Surprise Proposal: Separate Tax for Dividends Over 35% Payout

Korea Democratic Party’s surprise move this morning: separate taxation on dividend income will only apply to companies with a payout ratio of 35%...

Sanghyun Park

Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares

This post covers the trading playbook around LG Chem’s large-scale EB issuance backed by LG Energy Solution shares, likely dropping before the end...

Sanghyun Park