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.

Equity Capital Markets

<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

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Korea Development Bank (KDB) plans to raise around US$740m via selling around 5%+ stake in <a href="https://www.smartkarma.com/entities/hanwha-ocean-co-ltd" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Hanwha Ocean (042660 KS)</a>.</li>
<li>HO’s shares have nearly tripled since the start of the year, and the company reported its results today.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>


Korea Development Bank (KDB) plans to raise around US$740m via selling around 5%+ stake in Hanwha Ocean (042660 KS).
HO’s shares have nearly tripled since the start of the year, and the company reported its results today.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


Hanwha Ocean Placement - Recent Run-Up, Results Make It Tricky

Index Rebalance

<ul>
<li>March 5 price action overshot passive impact. Theme-trade momentum, one-way institutional flows, and ETF rebalancing (~10% turnover) juiced the move—Hanwha Ocean -5.41%, Samsung Heavy +5.34%, HD KSOE +6.58%.</li>
<li>June’s rebalance gets spicier—another ETF, ARIRANG K-Defense ETF (449450 KS), also runs the same 20% reversion on June 13, doubling the flow impact and setting up amplified price action.</li>
<li>Key 20% reversion hits: Hanwha Ocean (SOL Shipbuilding) &amp; Hanwha Aerospace (PLUS K-Defense). ~5%p passive outflows (~0.1x DTV) expected, with Hanwha Ocean facing double impact from both ETFs.</li>
</ul>


March 5 price action overshot passive impact. Theme-trade momentum, one-way institutional flows, and ETF rebalancing (~10% turnover) juiced the move—Hanwha Ocean -5.41%, Samsung Heavy +5.34%, HD KSOE +6.58%.
June’s rebalance gets spicier—another ETF, ARIRANG K-Defense ETF (449450 KS), also runs the same 20% reversion on June 13, doubling the flow impact and setting up amplified price action.
Key 20% reversion hits: Hanwha Ocean (SOL Shipbuilding) &amp; Hanwha Aerospace (PLUS K-Defense). ~5%p passive outflows (~0.1x DTV) expected, with Hanwha Ocean facing double impact from both ETFs.


Hunting for Outsized Moves in Off-The-Radar Korean Sector ETFs: SOL Shipbuilding & PLUS K-Defense

Event-Driven

<ul>
<li>This 20% reversion and 30% cap setup creates solid flow trades. With just 13 holdings, SOL ETF’s weight swings hard—Hanwha Ocean's already pushing 27% post-rebal.</li>
<li>Constituent changes drive the biggest dislocations—still the main setup. "The other 10" names are FICS-screened by market cap (May/Nov cut), making rotations fairly predictable.</li>
<li>With AUM only ramping recently, this ETF is still in price discovery mode. Pre-positioning ahead of flows has juice, making it a prime target for aggressive flow trading.</li>
</ul>


This 20% reversion and 30% cap setup creates solid flow trades. With just 13 holdings, SOL ETF’s weight swings hard—Hanwha Ocean's already pushing 27% post-rebal.
Constituent changes drive the biggest dislocations—still the main setup. "The other 10" names are FICS-screened by market cap (May/Nov cut), making rotations fairly predictable.
With AUM only ramping recently, this ETF is still in price discovery mode. Pre-positioning ahead of flows has juice, making it a prime target for aggressive flow trading.


SOL Shipbuilding Top 3 ETF Throws off Some Serious Flow Trading Plays with Plenty of Juice

<ul>
<li>KEXIM ignoring this premium could be a breach of duty, making Hanwha Ocean a prime short play. With 20% of shares, past cases suggest a 5-10% pullback.</li>
<li>This play’s tougher than HMM’s. Without step-ups, timing the conversion is tricky. Early redemption’s unlikely, so the focus is on when KEXIM pulls the trigger on the conversion.</li>
<li>No hints from KEXIM on the CB conversion yet, so loading up aggressively could be risky. We’ll likely need to wait for a signal from KEXIM before jumping in.</li>
</ul>


KEXIM ignoring this premium could be a breach of duty, making Hanwha Ocean a prime short play. With 20% of shares, past cases suggest a 5-10% pullback.
This play’s tougher than HMM’s. Without step-ups, timing the conversion is tricky. Early redemption’s unlikely, so the focus is on when KEXIM pulls the trigger on the conversion.
No hints from KEXIM on the CB conversion yet, so loading up aggressively could be risky. We’ll likely need to wait for a signal from KEXIM before jumping in.


Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)

South Korea

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.

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Hanwha Ocean (042660 KS)

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

Hanwha Ocean Placement - Recent Run-Up, Results Make It Tricky

Korea Development Bank (KDB) plans to raise around US$740m via selling around 5%+ stake in Hanwha Ocean (042660 KS). In this note, we talk about...

Sumeet Singh

Hunting for Outsized Moves in Off-The-Radar Korean Sector ETFs: SOL Shipbuilding & PLUS K-Defense

This post dives into hunting for outsized moves in off-the-radar Korean sector ETFs: SOL Shipbuilding and PLUS K-Defense.

Sanghyun Park

SOL Shipbuilding Top 3 ETF Throws off Some Serious Flow Trading Plays with Plenty of Juice

The Shipbuilding Top 3 ETF’s ad-hoc rebalance (25% reversion after hitting the 30% cap) is locked in. Hanwha Ocean blew past 30%, so the rebal...

Sanghyun Park

Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)

This post highlights the Hanwha Ocean CB conversion risk, with nearly 20% of the shares outstanding potentially being converted.

Sanghyun Park

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