Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In the past week, several leading Korean instant noodle makers including Nongshim, Samyang Foods, and Ottogi announced that they will be reducing instant noodle and snack prices starting July.</li>
<li>This government pressure to lower instant noodle and snack prices are likely to negatively impact companies including Nongshim, Samyang Foods, and Ottogi Corp.</li>
<li>We believe the share prices of the three major instant noodle makers including Nongshim, Samyang Foods, and Ottogi could face further underperformance relative to KOSPI in the next 3-6 months. </li>
</ul>


In the past week, several leading Korean instant noodle makers including Nongshim, Samyang Foods, and Ottogi announced that they will be reducing instant noodle and snack prices starting July.
This government pressure to lower instant noodle and snack prices are likely to negatively impact companies including Nongshim, Samyang Foods, and Ottogi Corp.
We believe the share prices of the three major instant noodle makers including Nongshim, Samyang Foods, and Ottogi could face further underperformance relative to KOSPI in the next 3-6 months. 


Government Pressures Korean Instant Noodles & Flour Makers to Lower Prices

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/monde-nissin-corp" target="_blank" data-smartkarma-citation="entities:32188:1" rel="noopener">Monde Nissin Corp (MONDE PM)</a> shares are down 18% on the back of FY22 results which revealed a net loss of PHP13 billion mainly due to a large impairment charge.</li>
<li>While softening demand in meat alternatives is a headwind, Monde should benefit from the tailwinds of market share gains (in APAC BFB) and margin improvement (easing cost inflation).</li>
<li>The valuation is undemanding (SOTP valuation of PHP10.21 per share) and will prove attractive to investors with a longer-term investment horizon.</li>
</ul>



Monde Nissin Corp (MONDE PM) shares are down 18% on the back of FY22 results which revealed a net loss of PHP13 billion mainly due to a large impairment charge.
While softening demand in meat alternatives is a headwind, Monde should benefit from the tailwinds of market share gains (in APAC BFB) and margin improvement (easing cost inflation).
The valuation is undemanding (SOTP valuation of PHP10.21 per share) and will prove attractive to investors with a longer-term investment horizon.


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

Index Rebalance

<ul>
<li>A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.</li>
<li>There should be a couple of index changes prior to the June review due to the merger of <a href="https://www.smartkarma.com/entities/meritz-financial-group-inc" target="_blank" data-smartkarma-citation="entities:11776:1" rel="noopener">Meritz Financial Group</a>, <a href="https://www.smartkarma.com/entities/meritz-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:19692:1" rel="noopener">Meritz Securities</a> and <a href="https://www.smartkarma.com/entities/meritz-fire-marine-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:20468:1" rel="noopener">Meritz Fire &amp; Marine Insurance</a>.</li>
<li>Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.</li>
</ul>


A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire &amp; Marine Insurance.
Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.


KOSPI200 Index Rebalance Preview (June): Changes from Now to June

<ul>
<li>In this insight, we discuss a pair trade of Nongshim Holdings (072710 KS) (go long) and Nongshim Co Ltd (004370 KS) (go short).  </li>
<li>We believe the price gap between these two stocks have widened too much in the past six months and this gap is likely to decrease again.</li>
<li>Nongshim Holdings' stake in Youlchon Chem has been rising rapidly in the past six months which should also act as a positive catalyst on Nongshim Holdings. </li>
</ul>


In this insight, we discuss a pair trade of Nongshim Holdings (072710 KS) (go long) and Nongshim Co Ltd (004370 KS) (go short).  
We believe the price gap between these two stocks have widened too much in the past six months and this gap is likely to decrease again.
Nongshim Holdings' stake in Youlchon Chem has been rising rapidly in the past six months which should also act as a positive catalyst on Nongshim Holdings. 


A Pair Trade Between Nongshim Co & Nongshim Holdings (Youlchon Chem Is Breaking Out)

<ul>
<li>In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short). </li>
<li>Orion Holdings has a dividend yield of 4.6% versus 0.7% for Orion Corp. For the value investors that seek higher dividends, Orion Holdings is more attractive versus Orion Corp. </li>
<li>We believe the price gap between these two stocks have widened too much in the past several months and this gap is likely to decrease again.</li>
</ul>


In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short). 
Orion Holdings has a dividend yield of 4.6% versus 0.7% for Orion Corp. For the value investors that seek higher dividends, Orion Holdings is more attractive versus Orion Corp. 
We believe the price gap between these two stocks have widened too much in the past several months and this gap is likely to decrease again.


A Pair Trade Between Orion Holdings and Orion Corp

South Korea

Nongshim Co., Ltd. manufactures, and markets instant noodles, snacks, and beverages.  The Company also produces refined palm oil and food ingredients.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Nongshim Co Ltd (004370 KS)

Government Pressures Korean Instant Noodles & Flour Makers to Lower Prices

We believe the share prices of the three major instant noodle makers including Nongshim, Samyang Foods, and Ottogi could face further...

Douglas Kim

Monde Nissin: The Investment Case

The sentiment is weak due to the large impairment charges. The valuation is undemanding (SOTP valuation of PHP10.21) and will prove attractive to...

Arun George

KOSPI200 Index Rebalance Preview (June): Changes from Now to June

There could be two changes in Jan & April and then another 3 changes in June. Impact on the stocks is not excessive and short interest is minimal....

Brian Freitas

A Pair Trade Between Nongshim Co & Nongshim Holdings (Youlchon Chem Is Breaking Out)

In this insight, we discuss a pair trade of Nongshim Holdings (072710 KS) (go long) and Nongshim Co Ltd (004370 KS) (go short).

Douglas Kim

A Pair Trade Between Orion Holdings and Orion Corp

In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short).

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)