Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li><em><strong>In this insight, I discuss about SK Innovation (096770 KS) and four other stocks in KOSPI that could experience additional selling with end of mandatory lock-up periods in September.</strong></em></li>
<li>The end of these lock-up periods could potentially result in additional selling by insiders which could negatively impact the share prices of these companies (on average) in the coming weeks.</li>
<li>SK Innovation recently announced its merger plans with SK IE Technology (361610 KS) which I viewed negatively due to negative impact on SK Innovation's financials. </li>
</ul>


In this insight, I discuss about SK Innovation (096770 KS) and four other stocks in KOSPI that could experience additional selling with end of mandatory lock-up periods in September.
The end of these lock-up periods could potentially result in additional selling by insiders which could negatively impact the share prices of these companies (on average) in the coming weeks.
SK Innovation recently announced its merger plans with SK IE Technology (361610 KS) which I viewed negatively due to negative impact on SK Innovation's financials. 


SK Innovation and Other Stocks in KOSPI With End of Mandatory Lock-Up Period In September

<ul>
<li>On 25 August, SK Innovation (096770 KS) announced a merger with SK IE Technology (361610 KS) (SK IET).</li>
<li>I believe this will have a negative impact on SK Innovation and a neutral impact on SK IET.</li>
<li>The biggest concern is the fact that SK IET has been generating continued net losses in the past several years and this could negatively impact SK Innovations' financial structure. </li>
</ul>


On 25 August, SK Innovation (096770 KS) announced a merger with SK IE Technology (361610 KS) (SK IET).
I believe this will have a negative impact on SK Innovation and a neutral impact on SK IET.
The biggest concern is the fact that SK IET has been generating continued net losses in the past several years and this could negatively impact SK Innovations' financial structure. 


SK Innovation Announces a Merger With SK IET (Before New Regulation Kicks In)

Cross Asset Strategy

<ul>
<li>Now that Lee Jae-Myung has become new South Korean President, the uncertainty revolving who will lead South Korea in the next five years is now over.</li>
<li>In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the market for the remainder of 2025.</li>
<li>The four investment themes include Korean Holdcos/Quasi Holdcos, Korean Cultural Contents, Securities, and SK Group Companies.</li>
</ul>


Now that Lee Jae-Myung has become new South Korean President, the uncertainty revolving who will lead South Korea in the next five years is now over.
In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the market for the remainder of 2025.
The four investment themes include Korean Holdcos/Quasi Holdcos, Korean Cultural Contents, Securities, and SK Group Companies.


Lee Jae-Myung Becomes the New South Korean President - Four Investment Themes That Could Outperform

Equity Bottom-Up

<ul>
<li>Three main reasons why SK Inc is our high conviction in 2026 include mandatory cancellation of treasury shares, deep discount to NAV, and the end of divorce for Chairman Chey. </li>
<li>SK Inc has 17.98 million shares in treasury, representing 24.8% of outstanding shares. Among the stocks included in KOSPI200, this is one of the highest percentage of treasury shares.</li>
<li>Our NAV valuation analysis suggests NAV of 28 trillion won or NAV per share of 386,469 won. This represents a 46% upside to its current price.</li>
</ul>


Three main reasons why SK Inc is our high conviction in 2026 include mandatory cancellation of treasury shares, deep discount to NAV, and the end of divorce for Chairman Chey. 
SK Inc has 17.98 million shares in treasury, representing 24.8% of outstanding shares. Among the stocks included in KOSPI200, this is one of the highest percentage of treasury shares.
Our NAV valuation analysis suggests NAV of 28 trillion won or NAV per share of 386,469 won. This represents a 46% upside to its current price.


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Korea Stock Exchange KOSPI 200 / Event-Driven

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

<ul>
<li>Korea banned all short selling in March 2020 and resumed short selling only on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> index constituents in May 2021.</li>
<li>News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.</li>
<li>There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.</li>
</ul>


Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.


Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

South Korea

SK Innovation Co., Ltd. refines, markets, and distributes oil.  The Company produces a variety of petroleum products, such as gasoline, kerosene, liquefied petroleumgas (LPG), and diesel oil.  SK Energy also manufactures petrochemical p roducts, including paraxylene, synthetic resins, styrene monomer, and ethylene.

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SK Innovation (096770 KS)

SK Innovation and Other Stocks in KOSPI With End of Mandatory Lock-Up Period In September

In this insight, I discuss about SK Innovation (096770 KS) and four other stocks in KOSPI that could experience additional selling with end of...

Douglas Kim

SK Innovation Announces a Merger With SK IET (Before New Regulation Kicks In)

On 25 August, SK Innovation (096770 KS) announced a merger with SK IE Technology (361610 KS) (SK IET). I believe this will have a negative impact...

Douglas Kim

Lee Jae-Myung Becomes the New South Korean President - Four Investment Themes That Could Outperform

In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the...

Douglas Kim

2026 High Conviction Idea: SK Inc

SK Inc (034730 KS) just announced that it will cancel about 20% of its outstanding shares, representing 4.8 trillion won ($3.3 billion). This is...

Douglas Kim

Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Media reports indicate that there could be a temporary short sell ban in Korea. This could lead to futures backwardation, market manipulation and a...

Brian Freitas

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