Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>In this insight, we review the major equity indices in Korea in 2024 including KOSPI 200 and Korea Value Up Index. </li>
<li>Some alpha generating performances continue in terms of adding stocks to be included in the KOSPI 200 and reducing stocks that could be excluded.</li>
<li>Korea Value Up Index has been heavily promoted by the Korean Exchange this year. Korea Exchange plans to make special changes to the Korea Value-Up Index constituents on 20 December. </li>
</ul>


In this insight, we review the major equity indices in Korea in 2024 including KOSPI 200 and Korea Value Up Index. 
Some alpha generating performances continue in terms of adding stocks to be included in the KOSPI 200 and reducing stocks that could be excluded.
Korea Value Up Index has been heavily promoted by the Korean Exchange this year. Korea Exchange plans to make special changes to the Korea Value-Up Index constituents on 20 December. 


A Review of Major Equity Indices in Korea in 2024

Equity Bottom-Up

<ul>
<li>In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.</li>
<li>Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. </li>
<li>Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. </li>
</ul>


In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.
Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. 
Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. 


Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

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.

<ul>
<li>From early June until yesterday, local pension funds have purchased nearly 4% of DB HiTek's SO. This places DB HiTek in a dominant first position in their net buying list.</li>
<li>The timing of local pension funds beginning to buy DB HiTek coincidentally aligns with May 22, when DB Inc was requested by the KFTC to transition into a holding company.</li>
<li>Focus on potential price impact from DB Inc.'s buying and value-up index inflows. Considering a relative overweight in DB HiTek may be strategic despite some risk.</li>
</ul>


From early June until yesterday, local pension funds have purchased nearly 4% of DB HiTek's SO. This places DB HiTek in a dominant first position in their net buying list.
The timing of local pension funds beginning to buy DB HiTek coincidentally aligns with May 22, when DB Inc was requested by the KFTC to transition into a holding company.
Focus on potential price impact from DB Inc.'s buying and value-up index inflows. Considering a relative overweight in DB HiTek may be strategic despite some risk.


Trading Situation Arising from Local Pensions' Unusual Buying of DB HiTek

<ul>
<li>DB Hitek's investment in a golf course operating company is a poor investment, one that destroys shareholder value.</li>
<li>Most investors would rather have DB Hitek increase shareholder returns through share buybacks/cancellations and dividends as well as invest in its core semiconductor business rather then buy a golf course. </li>
<li>Given DB Inc's lack of cash, there is a growing possibility that it will use the proceeds from selling its DB World shares to increase its stake in DB Hitek. </li>
</ul>


DB Hitek's investment in a golf course operating company is a poor investment, one that destroys shareholder value.
Most investors would rather have DB Hitek increase shareholder returns through share buybacks/cancellations and dividends as well as invest in its core semiconductor business rather then buy a golf course. 
Given DB Inc's lack of cash, there is a growing possibility that it will use the proceeds from selling its DB World shares to increase its stake in DB Hitek. 


DB Hitek: Buying a Golf Course Overshadows Corporate Value Up Efforts

<ul>
<li>Value-Up plan announcements had a significant immediate price impact, especially for Woori Financial and Shinhan Financial, amplified by recent dividend tax reductions.</li>
<li>We should target companies likely to announce value-up disclosures soon, focusing on those with prior notices. Notably, KB Financial and DB HiTek have issued prior notices.</li>
<li>Both companies hold many treasury shares. KB Financial is a dividend stock, with value-up disclosures likely during their Q3 and Q4 earnings announcements.</li>
</ul>


Value-Up plan announcements had a significant immediate price impact, especially for Woori Financial and Shinhan Financial, amplified by recent dividend tax reductions.
We should target companies likely to announce value-up disclosures soon, focusing on those with prior notices. Notably, KB Financial and DB HiTek have issued prior notices.
Both companies hold many treasury shares. KB Financial is a dividend stock, with value-up disclosures likely during their Q3 and Q4 earnings announcements.


Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures

South Korea

DB Hitek Co., Ltd. manufactures system semiconductor and provides foundry services. The Company's products inculde fabricated wafer and integrated circuits for mobile handsets and flat panel LCDs.

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DB Hitek Co., Ltd. (000990 KS)

A Review of Major Equity Indices in Korea in 2024

We review the major equity indices in Korea in 2024 including KOSPI 200 and Korea Value Up Index. KRX plans to make special changes to the Korea...

Douglas Kim

Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in...

Douglas Kim

Trading Situation Arising from Local Pensions' Unusual Buying of DB HiTek

This post explores the reasons for the local pension funds' unusually high purchasing of DB HiTek over the past two months and identifies potential...

Sanghyun Park

DB Hitek: Buying a Golf Course Overshadows Corporate Value Up Efforts

DB Hitek's investment in a golf course destroys shareholder value. There is a growing possibility that DB Inc will use the proceeds from selling...

Douglas Kim

Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures

This post explores the feasibility and key targets of a proactive flow trading setup aimed at Korea's value-up plan disclosures.

Sanghyun Park

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