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.

Event-Driven

Bobcat Company specializes in design, manufacture, marketing and distribution of compact equipment for construction, rental, landscaping, agriculture, grounds maintenance, government, utility, industry and mining.

<ul>
<li>The FSS requested Doosan Robotics to revise the prospectuses for both the Share Swap with Doosan Bobcat and Merger with Doosan Enerbility.</li>
<li>Although the FSS's wording seems aggressive, it does not request the cancellation. Authorities are displeased but lack political momentum to derail Doosan's restructuring.</li>
<li>The FSS asks Doosan to clarify merger synergies, warn of Robotics' overvalued stock price and potential decline, and highlight the collaborative robot market's growth risks.</li>
</ul>


The FSS requested Doosan Robotics to revise the prospectuses for both the Share Swap with Doosan Bobcat and Merger with Doosan Enerbility.
Although the FSS's wording seems aggressive, it does not request the cancellation. Authorities are displeased but lack political momentum to derail Doosan's restructuring.
The FSS asks Doosan to clarify merger synergies, warn of Robotics' overvalued stock price and potential decline, and highlight the collaborative robot market's growth risks.


Clarifications Regarding the FSS's Unexpected Revision Request for the Doosan Mergers

Korea Stock Exchange Kospi Index / Event-Driven

The KOSPI Index is a capitalization-weighted index of all common shares on the Korean Stock Exchanges. The Index was developed with a base value of 100 as of January 4, 1980. Note: The preferred shares are excluded in calculating the KOSPI Index from June 14, 2002. 

Korea Stock Exchange Kospi Index (KOSPI INDEX)

<ul>
<li>The highest dividend tax rate drops from 49.5% to 25%, leading the local capital market to view the reform as more shareholder-focused than company-focused.</li>
<li>The top inheritance tax rate drops from the 60% range to 40%, a meaningful reduction for conglomerates like Hyundai and Hanwha, though below initial expectations.</li>
<li>Tax incentives in the reform are less aggressive than expected, with modest corporate and inheritance tax cuts. However, this compromise increases the likelihood of its passage, boosting short-term market expectations.</li>
</ul>


The highest dividend tax rate drops from 49.5% to 25%, leading the local capital market to view the reform as more shareholder-focused than company-focused.
The top inheritance tax rate drops from the 60% range to 40%, a meaningful reduction for conglomerates like Hyundai and Hanwha, though below initial expectations.
Tax incentives in the reform are less aggressive than expected, with modest corporate and inheritance tax cuts. However, this compromise increases the likelihood of its passage, boosting short-term market expectations.


Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today

Equity Capital Markets

K Bank Co Ltd provides banking services. The Bank accept deposits and make loans to retail customers. K Bank Co serves customers in South Korea.

<ul>
<li>FSS's leaked IPO guidelines include new, highly attention-grabbing additions: specifically, the disclosure of extra information from the bookbuilding and lockup results not mentioned in May.</li>
<li>Institutions submitting prices outside the indicative band must be disclosed by KRX investor type. Additionally, average placed price information for lockup-pledged investors must be disclosed.</li>
<li>FSS will distribute new IPO guidelines this week and apply them from next month. Major IPOs like K Bank must disclose more detailed bookbuilding and lockup results, impacting trading dynamics.</li>
</ul>


FSS's leaked IPO guidelines include new, highly attention-grabbing additions: specifically, the disclosure of extra information from the bookbuilding and lockup results not mentioned in May.
Institutions submitting prices outside the indicative band must be disclosed by KRX investor type. Additionally, average placed price information for lockup-pledged investors must be disclosed.
FSS will distribute new IPO guidelines this week and apply them from next month. Major IPOs like K Bank must disclose more detailed bookbuilding and lockup results, impacting trading dynamics.


Korea's New IPO Bookbuilding & Lockup Results Disclosure Rule, Effective from August

<ul>
<li>During Kim Byung-hwan's hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan's ability to maintain the original merger ratio.</li>
<li>Calculating Bobcat's net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.</li>
<li>Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.</li>
</ul>


During Kim Byung-hwan's hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan's ability to maintain the original merger ratio.
Calculating Bobcat's net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.


Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

KakaoBank Corp. operates bank businesses. The Company provides deposit money, withdraw money, credit cards, stock accounts, linked loans, and other services. KakaoBank conducts businesses in South Korea.

<ul>
<li>Kakao's Kim Beom-su has been arrested over alleged stock price manipulation in the SM Entertainment buyout, marking a new peak in the company's legal troubles.</li>
<li>Kakao Corp’s stock might drop due to the absence of a key figure. KakaoBank could also struggle from uncertainty about its largest shareholder and weakened business ties.</li>
<li>Kakao’s potential sale of SM Entertainment shares could initially hurt the stock price, but potential bidding interest might boost it.</li>
</ul>


Kakao's Kim Beom-su has been arrested over alleged stock price manipulation in the SM Entertainment buyout, marking a new peak in the company's legal troubles.
Kakao Corp’s stock might drop due to the absence of a key figure. KakaoBank could also struggle from uncertainty about its largest shareholder and weakened business ties.
Kakao’s potential sale of SM Entertainment shares could initially hurt the stock price, but potential bidding interest might boost it.


Kakao's Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies

Clepsydra Capital
Korea / Special Sits, Pairs, Index Rebalancing

Clarifications Regarding the FSS's Unexpected Revision Request for the Doosan Mergers

The Korea Economic Daily (Hankyung) released an article this morning covering Doosan Group's stance. According to the article, Doosan Group plans...

Sanghyun Park

Korea's New IPO Bookbuilding & Lockup Results Disclosure Rule, Effective from August

This post investigates the FSS's revised IPO prospectus guidelines, set for release later this week, with a focus on the enhanced disclosure rules...

Sanghyun Park

Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

On July 11, Bobcat announced an EGM on September 25 to address the merger approval and capital reduction. Initially, details about the capital...

Sanghyun Park

Clarifications Regarding the FSS's Unexpected Revision Request for the Doosan Mergers

The Korea Economic Daily (Hankyung) released an article this morning covering Doosan Group's stance. According to the article, Doosan Group plans...

Sanghyun Park

Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today

This post provides an overall assessment of the value-up policy-related aspects of Korea's tax reform plan released today.

Sanghyun Park

Korea's New IPO Bookbuilding & Lockup Results Disclosure Rule, Effective from August

This post investigates the FSS's revised IPO prospectus guidelines, set for release later this week, with a focus on the enhanced disclosure rules...

Sanghyun Park

Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

On July 11, Bobcat announced an EGM on September 25 to address the merger approval and capital reduction. Initially, details about the capital...

Sanghyun Park

Kakao's Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies

Kakao Chairman Kim Beom-su has been arrested for alleged stock price manipulation in last year’s SM Entertainment buyout. This post examines the...

Sanghyun Park