Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<p>With Value funds making gains on Growth funds this year, where are EM Value managers positioned?</p><p><strong>Country: </strong></p><p>U/W China &amp; HK and India, O/W South Korea and Mexico.  Note also the overweight in Turkey, with 71% of the Value funds in our analysis positioned overweight versus the iShares MSCI Emerging Markets ETF.</p><p><strong>Sector:</strong></p><p>U/W Consumer Discretionary, Communication Services and Health Care.  O/W  Materials, Industrials and Financials.</p><p>Read on for further data and analysis on Industry and Stock positioning.</p><p><em>Analysis taken from our Emerging Markets Research, covering 242 active GEM funds with combined AUM of $500bn</em></p>

With Value funds making gains on Growth funds this year, where are EM Value managers positioned?Country: U/W China &amp; HK and India, O/W South Korea and Mexico.  Note also the overweight in Turkey, with 71% of the Value funds in our analysis positioned overweight versus the iShares MSCI Emerging Markets ETF.Sector:U/W Consumer Discretionary, Communication Services and Health Care.  O/W  Materials, Industrials and Financials.Read on for further data and analysis on Industry and Stock positioning.Analysis taken from our Emerging Markets Research, covering 242 active GEM funds with combined AUM of $500bn

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a>, <a href="https://www.smartkarma.com/entities/ganfeng-lithium-co-ltd" target="_blank" data-smartkarma-citation="entities:26795:1" rel="noopener">Ganfeng Lithium (1772 HK)</a>, <a href="https://www.smartkarma.com/entities/pharmaron-beijing-co-ltd" target="_blank" data-smartkarma-citation="entities:28428:1" rel="noopener">Pharmaron Beijing Co Ltd-H (3759 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/ck-asset-holdings-ltd" target="_blank" data-smartkarma-citation="entities:22650:1" rel="noopener">CK Asset Holdings (1113 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a> and <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>. Shorts increased in the Consumer Discretionary sector, while decreasing in the Communication Services, Real Estate, Financials and Industrials sectors.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/fujitsu-ltd" target="_blank" data-smartkarma-citation="entities:16968:1" rel="noopener">Fujitsu Ltd (6702 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a>, <a href="https://www.smartkarma.com/entities/brother-industries-ltd" target="_blank" data-smartkarma-citation="entities:6114:1" rel="noopener">Brother Industries (6448 JP)</a> and <a href="https://www.smartkarma.com/entities/casio-computer-co-ltd" target="_blank" data-smartkarma-citation="entities:18338:1" rel="noopener">Casio Computer (6952 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/sumco-corp" target="_blank" data-smartkarma-citation="entities:379:1" rel="noopener">SUMCO Corp (3436 JP)</a>, <a href="https://www.smartkarma.com/entities/seiko-epson-corp" target="_blank" data-smartkarma-citation="entities:16793:1" rel="noopener">Seiko Epson (6724 JP)</a>, <a href="https://www.smartkarma.com/entities/symbio-pharmaceuticals-ltd" target="_blank" data-smartkarma-citation="entities:10456:1" rel="noopener">Symbio Pharmaceuticals (4582 JP)</a> and <a href="https://www.smartkarma.com/entities/ebara-corp" target="_blank" data-smartkarma-citation="entities:4728:1" rel="noopener">Ebara Corp (6361 JP)</a>. Shorts increased on Information Technology and Consumer Discretionary stock, while reducing on Industrials and Health Care names.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a>, <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/mando-corp" target="_blank" data-smartkarma-citation="entities:8119:1" rel="noopener">Mando Corp (204320 KS)</a> and <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, <a href="https://www.smartkarma.com/entities/pan-ocean-co-ltd" target="_blank" data-smartkarma-citation="entities:5279:1" rel="noopener">Pan Ocean (028670 KS)</a>, <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/wan-hai-lines-ltd" target="_blank" data-smartkarma-citation="entities:14262:1" rel="noopener">Wan Hai Lines (2615 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a> and <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a>, <a href="https://www.smartkarma.com/entities/hsin-kuang-steel-co-ltd" target="_blank" data-smartkarma-citation="entities:19760:1" rel="noopener">Hsin Kuang Steel (2031 TT)</a>, <a href="https://www.smartkarma.com/entities/genius-electronic-optical-co-ltd" target="_blank" data-smartkarma-citation="entities:9632:1" rel="noopener">Genius Electronic Optical (3406 TT)</a> and <a href="https://www.smartkarma.com/entities/china-airlines-ltd" target="_blank" data-smartkarma-citation="entities:4591:1" rel="noopener">China Airlines (2610 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Geely Auto (175 HK), Ganfeng Lithium (1772 HK), Pharmaron Beijing Co Ltd-H (3759 HK), Sunny Optical (2382 HK) and Evergrande Real Estate Group (3333 HK) while there was short covering on Alibaba Group (9988 HK), CK Asset Holdings (1113 HK), Tencent (700 HK), Ping An Insurance (H) (2318 HK) and NetEase (9999 HK). Shorts increased in the Consumer Discretionary sector, while decreasing in the Communication Services, Real Estate, Financials and Industrials sectors.In Japan, stocks increased on Fujitsu Ltd (6702 JP), Canon Inc (7751 JP), Renesas Electronics (6723 JP), Brother Industries (6448 JP) and Casio Computer (6952 JP) while there was short covering on Toshiba Corp (6502 JP), SUMCO Corp (3436 JP), Seiko Epson (6724 JP), Symbio Pharmaceuticals (4582 JP) and Ebara Corp (6361 JP). Shorts increased on Information Technology and Consumer Discretionary stock, while reducing on Industrials and Health Care names.In Korea, shorts increased on Samsung Electronics (005930 KS), LG Display (034220 KS), HMM Co., Ltd. (011200 KS), Mando Corp (204320 KS) and SK Hynix (000660 KS) while shorts were covered on Doosan Heavy Industries &amp; Construction (034020 KS), Kakao Corp (035720 KS), Pan Ocean (028670 KS), NCSOFT Corp (036570 KS) and Samsung SDI (006400 KS).In Taiwan, shorts increased on TSMC (2330 TT), Yang Ming Marine Transport (2609 TT), Wan Hai Lines (2615 TT), Innolux Corp (3481 TT) and Evergreen Marine Corp (2603 TT) while shorts covered on AU Optronics (2409 TT), United Microelectronics Corp (2303 TT), Hsin Kuang Steel (2031 TT), Genius Electronic Optical (3406 TT) and China Airlines (2610 TT).

Asia Shorts: Geely, Ganfeng, Pharmaron, Evergrande, Fujitsu, Canon, Renesas, Toshiba, LGD, Doosan

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Event-Driven

<p>There seems to be confusion about the financial statements disclosed by SK Telecom through public disclosure.</p><hr><h2>Spinoff ratio</h2><p>First, the spinoff ratio is calculated as the equity ratio of the split-based financial statements.</p><ul>
<li>Post-spinoff SKT (the surviving company)'s spinoff ratio comes at <strong>₩10,441.3B / (₩10,441.3B + ₩6,829.9B)</strong>.</li>
<li>Similarly, SKT Investment (the new company)'s spinoff ratio is obtained by dividing <strong>₩6,829.9B by (₩10,441.3B + ₩6,829.9B)</strong>.</li>
</ul><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Financials"}'>Financials</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Surviving"}'>Surviving</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"New"}'>New</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SK Telecom"}'>Post-spinoff SKT</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SKT Investment"}'>SKT Investment</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total equity"}'><strong>Total equity</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10441.3}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩10,441.3B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6829.9}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩6,829.9B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Spinoff ratio"}'><strong>Spinoff ratio</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6073625}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>60.74%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3926375}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>39.26%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>De-consolidated sales of each spinoff company</h2><p>Now, what's confusing many investors is the FY2020 de-consolidated sales.</p><p>The company specified <strong>₩11.75T for post-spinoff SKT's FY2020 de-consolidated sales and ₩0.17T for SKT Investment in the regulatory filing</strong>.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Financials"}'>Financials</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Surviving"}'>Surviving</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"New"}'>New</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SK Telecom"}'>Post-spinoff SKT</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SKT Investment"}'>SKT Investment</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"FY2020 de-consolidated sales"}'><strong>FY2020 de-consolidated sales</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩11,746.6B"}'><strong>₩11,746.6B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩173.2B"}'><strong>₩173.2B</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>Consolidated sales for the fiscal year 2020 were ₩18.62T. If the de-consolidated sales of the spin-off companies are simply added up, we will see a difference of ₩6.7T.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Consolidated financials"}'>Consolidated financials for FY2020</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Sales"}'><strong>Sales</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩18,624.7B"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><strong>₩18,624.7B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Operating profit"}'> - Operating profit</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩1,349.3B"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>₩1,349.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NP to controlling stake"}'> - NP to the controlling stake</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1504.4}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>₩1,504.4B</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: SK Telecom"}'>Source: SK Telecom</td></tr>
</tbody>
</table><h2>IFRS treatment &amp; consolidated sales breakdown</h2><p>I guess this is where the confusion comes from. For this, we need to know how the IFRS treats consolidated and de-consolidated sales.</p><p>In IFRS accounting standards, consolidated sales include sales of subsidiaries. In the case of affiliated companies, only gains and losses are accounted for as equity method gains and losses. Here are the general rules of determining whether a subsidiary or an affiliate.</p><ul>
<li>+50% stake: subsidiary</li>
<li>+30% stake AND the largest shareholder: subsidiary</li>
<li>20~50% stake: affiliate</li>
</ul><p><strong>Here is the FY2020 consolidated sales breakdown of pre-spinoff SKT. We have a de-consolidated sales of ₩11.75T, supposedly from SKT's MNO business. We then have an additional ₩6.88T sales from the subsidiaries. The affiliates, including SK Hynix, are reflected in the equity method income.</strong></p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Pre-spinoff SKT consolidated sales breakdown for FY2020"}'>Pre-spinoff SKT consolidated sales breakdown for FY2020</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telecom"}'>SK Telecom</td>
<td data-sheets-value='{"1":2,"2":"De-consolidated sales"}'>De-consolidated sales</td>
<td data-sheets-value='{"1":3,"3":11746.6}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-24]C[-4]"><strong>₩11,746.6B</strong></td>
</tr>
<tr><td colspan="3"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Broadband"}'>SK Broadband</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
<td rowspan="15" data-sheets-value='{"1":3,"3":6878.1}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[-13]C[-4]-R[-1]C[0]"><div><strong>₩6,878.1B</strong></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telink"}'>SK Telink</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PS&amp;Marketing"}'>PS&amp;Marketing</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Service Top"}'>Service Top</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Service Ace"}'>Service Ace</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK O&amp;S"}'>SK O&amp;S</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ADT Caps"}'>ADT Caps</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"T Map Mobility"}'>T Map Mobility</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"One Store"}'>One Store</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dream Us Company"}'>Dream Us Company</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Planet"}'>SK Planet</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Incross"}'>Incross</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telecom TMT Investment"}'>SK Telecom TMT Investment</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ID Quantique"}'>ID Quantique</td>
<td data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr><td colspan="3"><div></div></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Hynix"}'>SK Hynix</td>
<td data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
<td rowspan="6" data-sheets-value='{"1":2,"2":"Equity method income"}'><div><strong>Equity method income</strong></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Contents Wavve"}'>Contents Wavve</td>
<td data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"F&amp;U Credit Info"}'>F&amp;U Credit Info</td>
<td data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"FSK L&amp;S"}'>FSK L&amp;S</td>
<td data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Nano N Tech"}'>Nano N Tech</td>
<td data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telecom CST1"}'>SK Telecom CST1</td>
<td data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: SK Telecom &amp; FnGuide"}'>Source: SK Telecom &amp; FnGuide</td></tr>
</tbody>
</table><h2>Post-spinoff consolidated sales</h2><p>Now, below are the post-spinoff consolidated sales of each spinoff company.</p><ul>
<li>Post-spinoff SKT: <strong>₩11.75T + the sum of its post-spinoff subsidiaries</strong>
</li>
<li>SKT Investment: <strong>₩0.17T + the sum of its post-spinoff subsidiaries</strong>
</li>
</ul><p>The sum of both companies' consolidated sales (not de-consolidated sales) should be equal to <strong>₩18.62T</strong>, the consolidated sales of pre-spinoff SKT.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td colspan="2" style="width: 352.94px;" data-sheets-value='{"1":2,"2":"SK Telecom"}'>Post-spinoff SKT</td>
<td colspan="2" style="width: 352.074px;" data-sheets-value='{"1":2,"2":"SK Investment"}'>SKT Investment</td>
</tr>
<tr>
<td style="width: 170px;"><strong> - Deconsolidated</strong></td>
<td style="width: 161.946px;"><strong>₩11,746.6B</strong></td>
<td style="width: 169.588px;"><strong> - Deconsolidated</strong></td>
<td style="width: 161.491px;"><strong>₩173.2B</strong></td>
</tr>
<tr>
<td style="width: 170px;" data-sheets-value='{"1":2,"2":"SK Broadband"}'>SK Broadband</td>
<td style="width: 161.946px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"ADT Caps"}'>ADT Caps</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;" data-sheets-value='{"1":2,"2":"SK Telink"}'>SK Telink</td>
<td style="width: 161.946px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;" data-sheets-value='{"1":2,"2":"PS&amp;Marketing"}'>PS&amp;Marketing</td>
<td style="width: 161.946px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"T Map Mobility"}'>T Map Mobility</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;" data-sheets-value='{"1":2,"2":"Service Top"}'>Service Top</td>
<td style="width: 161.946px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"One Store"}'>One Store</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;" data-sheets-value='{"1":2,"2":"Service Ace"}'>Service Ace</td>
<td style="width: 161.946px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"Dream Us Company"}'>Dream Us Company</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;" data-sheets-value='{"1":2,"2":"SK O&amp;S"}'>SK O&amp;S</td>
<td style="width: 161.946px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"SK Planet"}'>SK Planet</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;" data-sheets-value='{"1":2,"2":"F&amp;U Credit Info"}'><strong> - Consolidated</strong></td>
<td style="width: 161.946px;" data-sheets-value='{"1":2,"2":"Affiliate"}'><strong>Sum of subsidiaries</strong></td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"Incross"}'>Incross</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;">F&amp;U Credit Info</td>
<td style="width: 161.946px;">Affiliate</td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"ID Quantique"}'>ID Quantique</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Subsidiary"}'>Subsidiary</td>
</tr>
<tr>
<td style="width: 170px;"></td>
<td style="width: 161.946px;"></td>
<td style="width: 169.588px;"><strong> - Consolidated</strong></td>
<td style="width: 161.491px;"><strong>Sum of subsidiaries</strong></td>
</tr>
<tr>
<td style="width: 170px;"></td>
<td style="width: 161.946px;"></td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"SK Hynix"}'>SK Hynix</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td style="width: 170px;"></td>
<td style="width: 161.946px;"></td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"Contents Wavve"}'>Contents Wavve</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td style="width: 170px;"></td>
<td style="width: 161.946px;"></td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"FSK L&amp;S"}'>FSK L&amp;S</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td style="width: 170px;"></td>
<td style="width: 161.946px;"></td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"Nano N Tech"}'>Nano N Tech</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr>
<td style="width: 170px;"></td>
<td style="width: 161.946px;"></td>
<td style="width: 169.588px;" data-sheets-value='{"1":2,"2":"SK Telecom CST1"}'>SK Telecom CST1</td>
<td style="width: 161.491px;" data-sheets-value='{"1":2,"2":"Affiliate"}'>Affiliate</td>
</tr>
<tr><td colspan="4" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: SK Telecom &amp; FnGuide"}'>Source: SK Telecom &amp; FnGuide</td></tr>
</tbody>
</table><p>SKT Investment is a pure holding company having zero operating operation. How come does it have ₩0.17T worth of de-consolidated sales?</p><p>SKT explains this in the filing. As stated below, SKT Investment now recognizes dividend income, which was previously recognized as non-operating income before the spinoff, as sales in its de-consolidated (separate) financial statements.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/260/original/Screen+Shot+2021-06-15+at+5.24.49+PM.png?1623793227" class="editor-image img-responsive" data-smartkarma-image-id="213260"></figure></section><p>So, the sum of both companies' consolidated sales would be a little more than <strong>₩18.62T</strong>, by a difference of ₩0.17T.</p><div class="content-highlight"><p><strong>My estimation is post-spinoff SKT will be around ₩16T (mainly due to the presence of SK Broadband), and SKT Investment's consolidated sales for FY2020 should be slightly less than ₩3T.</strong></p></div>

There seems to be confusion about the financial statements disclosed by SK Telecom through public disclosure.Spinoff ratioFirst, the spinoff ratio is calculated as the equity ratio of the split-based financial statements.
Post-spinoff SKT (the surviving company)'s spinoff ratio comes at ₩10,441.3B / (₩10,441.3B + ₩6,829.9B).
Similarly, SKT Investment (the new company)'s spinoff ratio is obtained by dividing ₩6,829.9B by (₩10,441.3B + ₩6,829.9B).








Financials
Surviving
New


Name
Post-spinoff SKT
SKT Investment


Total equity
₩10,441.3B
₩6,829.9B


Spinoff ratio
60.74%
39.26%

Source: DART

De-consolidated sales of each spinoff companyNow, what's confusing many investors is the FY2020 de-consolidated sales.The company specified ₩11.75T for post-spinoff SKT's FY2020 de-consolidated sales and ₩0.17T for SKT Investment in the regulatory filing.







Financials
Surviving
New


Name
Post-spinoff SKT
SKT Investment


FY2020 de-consolidated sales
₩11,746.6B
₩173.2B

Source: DART

Consolidated sales for the fiscal year 2020 were ₩18.62T. If the de-consolidated sales of the spin-off companies are simply added up, we will see a difference of ₩6.7T.





Consolidated financials for FY2020

Sales
₩18,624.7B


 - Operating profit
₩1,349.3B


 - NP to the controlling stake
₩1,504.4B

Source: SK Telecom

IFRS treatment &amp; consolidated sales breakdownI guess this is where the confusion comes from. For this, we need to know how the IFRS treats consolidated and de-consolidated sales.In IFRS accounting standards, consolidated sales include sales of subsidiaries. In the case of affiliated companies, only gains and losses are accounted for as equity method gains and losses. Here are the general rules of determining whether a subsidiary or an affiliate.
+50% stake: subsidiary
+30% stake AND the largest shareholder: subsidiary
20~50% stake: affiliate
Here is the FY2020 consolidated sales breakdown of pre-spinoff SKT. We have a de-consolidated sales of ₩11.75T, supposedly from SKT's MNO business. We then have an additional ₩6.88T sales from the subsidiaries. The affiliates, including SK Hynix, are reflected in the equity method income.






Pre-spinoff SKT consolidated sales breakdown for FY2020

SK Telecom
De-consolidated sales
₩11,746.6B



SK Broadband
Subsidiary
₩6,878.1B


SK Telink
Subsidiary


PS&amp;Marketing
Subsidiary


Service Top
Subsidiary


Service Ace
Subsidiary


SK O&amp;S
Subsidiary


ADT Caps
Subsidiary


11st Street
Subsidiary


T Map Mobility
Subsidiary


One Store
Subsidiary


Dream Us Company
Subsidiary


SK Planet
Subsidiary


Incross
Subsidiary


SK Telecom TMT Investment
Subsidiary


ID Quantique
Subsidiary



SK Hynix
Affiliate
Equity method income


Contents Wavve
Affiliate


F&amp;U Credit Info
Affiliate


FSK L&amp;S
Affiliate


Nano N Tech
Affiliate


SK Telecom CST1
Affiliate

Source: SK Telecom &amp; FnGuide

Post-spinoff consolidated salesNow, below are the post-spinoff consolidated sales of each spinoff company.
Post-spinoff SKT: ₩11.75T + the sum of its post-spinoff subsidiaries

SKT Investment: ₩0.17T + the sum of its post-spinoff subsidiaries

The sum of both companies' consolidated sales (not de-consolidated sales) should be equal to ₩18.62T, the consolidated sales of pre-spinoff SKT.








Post-spinoff SKT
SKT Investment


 - Deconsolidated
₩11,746.6B
 - Deconsolidated
₩173.2B


SK Broadband
Subsidiary
ADT Caps
Subsidiary


SK Telink
Subsidiary
11st Street
Subsidiary


PS&amp;Marketing
Subsidiary
T Map Mobility
Subsidiary


Service Top
Subsidiary
One Store
Subsidiary


Service Ace
Subsidiary
Dream Us Company
Subsidiary


SK O&amp;S
Subsidiary
SK Planet
Subsidiary


 - Consolidated
Sum of subsidiaries
Incross
Subsidiary


F&amp;U Credit Info
Affiliate
ID Quantique
Subsidiary




 - Consolidated
Sum of subsidiaries




SK Hynix
Affiliate




Contents Wavve
Affiliate




FSK L&amp;S
Affiliate




Nano N Tech
Affiliate




SK Telecom CST1
Affiliate

Source: SK Telecom &amp; FnGuide

SKT Investment is a pure holding company having zero operating operation. How come does it have ₩0.17T worth of de-consolidated sales?SKT explains this in the filing. As stated below, SKT Investment now recognizes dividend income, which was previously recognized as non-operating income before the spinoff, as sales in its de-consolidated (separate) financial statements.So, the sum of both companies' consolidated sales would be a little more than ₩18.62T, by a difference of ₩0.17T.My estimation is post-spinoff SKT will be around ₩16T (mainly due to the presence of SK Broadband), and SKT Investment's consolidated sales for FY2020 should be slightly less than ₩3T.

SK Telecom Spinoff Financials Confusions & Explanations

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p>According to the KRX, it plans to launch new indices which would include the top 10 stocks in KOSPI including <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>. The name of this index is expected to be called <strong>KOSPI 200 Top 10.</strong> There will also be 2x levered indices based off the KOSPI 200 Top 10 index. These indices will be catered for those investors that are interested in the highest market cap companies within KOSPI 200.</p></div><p>Currently, the top 10 constitutents of the KOSPI 200 Top 10 Index will be expected to be composed of the following:</p><ol>
<li>
<a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/kia-motors-corp" target="_blank" data-smartkarma-citation="entities:156:1" rel="noopener">Kia Motors Corp (000270 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-mobis-co-ltd" target="_blank" data-smartkarma-citation="entities:6089:1" rel="noopener">Hyundai Mobis (012330 KS)</a> </li>
</ol>

According to the KRX, it plans to launch new indices which would include the top 10 stocks in KOSPI including Samsung Electronics (005930 KS). The name of this index is expected to be called KOSPI 200 Top 10. There will also be 2x levered indices based off the KOSPI 200 Top 10 index. These indices will be catered for those investors that are interested in the highest market cap companies within KOSPI 200.Currently, the top 10 constitutents of the KOSPI 200 Top 10 Index will be expected to be composed of the following:

Samsung Electronics (005930 KS) 

SK Hynix (000660 KS) 

LG Chem Ltd (051910 KS) 

Naver Corp (035420 KS) 

Hyundai Motor Co (005380 KS) 

Samsung SDI (006400 KS) 

Celltrion Inc (068270 KS) 

Kakao Corp (035720 KS) 

Kia Motors Corp (000270 KS) 

Hyundai Mobis (012330 KS) 


KRX Plans to Launch a New Index Called 'KOSPI 200 Top 10'

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

<p>WSTS has forecast for both 2021 and 2022 semiconductor revenues to break records.  While three years of strong back-to-back revenue growth has occurred in the past, there are reasons, which we explain here, to take this forecast with a good measure of skepticism.</p>

WSTS has forecast for both 2021 and 2022 semiconductor revenues to break records.  While three years of strong back-to-back revenue growth has occurred in the past, there are reasons, which we explain here, to take this forecast with a good measure of skepticism.

WSTS Forecast: Record Semiconductor Revenues in Both 2021 & 2022

South Korea

SK Hynix Inc. provides products and services for the electronic components industry. The Company manufactures semiconductors, such as dynamic random access memory (DRAM), NAND flash memory, and static random access memory (SRAM) chips.

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