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

<ul>
<li>The Korean government has introduced policies ahead of April's elections, with a recent notable announcement addressing the "Korea Discount" by enhancing low PBR stock valuations.</li>
<li>A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.</li>
<li>Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, &amp; DL E&amp;C.</li>
</ul>


The Korean government has introduced policies ahead of April's elections, with a recent notable announcement addressing the "Korea Discount" by enhancing low PBR stock valuations.
A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.
Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, &amp; DL E&amp;C.


Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

GS Engineering & Construction / Equity Bottom-Up

GS Engineering & Construction (006360 KS)

<ul>
<li>We argue that the top 20 listed construction companies in Korea are likely to underperform KOSPI in 2024 mainly due to the excessive risks in the housing/commercial real estate sectors.</li>
<li>We expect the share prices of these 20 domestic construction companies to fall by at least 15%-20%+ on average in the next 6-12 months. </li>
<li>On 2 January 2024, Financial Supervisory Service (FSS) announced that there will be new reporting requirements for PF loans of Korean construction companies starting 2023 annual reports.</li>
</ul>


We argue that the top 20 listed construction companies in Korea are likely to underperform KOSPI in 2024 mainly due to the excessive risks in the housing/commercial real estate sectors.
We expect the share prices of these 20 domestic construction companies to fall by at least 15%-20%+ on average in the next 6-12 months. 
On 2 January 2024, Financial Supervisory Service (FSS) announced that there will be new reporting requirements for PF loans of Korean construction companies starting 2023 annual reports.


Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices

Amorepacific Corporation / 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 1Q 2024. </li>
<li>We highlight 38 pair trades that involve Korean holdcos and opcos.</li>
<li>Of the 38 pair trades, 26 of them involved holdcos outperforming opcos in the past six months and 12 of them involved 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 1Q 2024. 
We highlight 38 pair trades that involve Korean holdcos and opcos.
Of the 38 pair trades, 26 of them involved holdcos outperforming opcos in the past six months and 12 of them involved opcos outperforming holdcos in the same period.


Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 2024

<ul>
<li>In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in October and November 2023.</li>
<li>We provide a list of 24 stocks in the Korean stock market that have announced share buyback programs in October and November 2023.</li>
<li>The top five market cap stocks that have announced share repurchases include Celltrion Inc, Celltrion Healthcare, Shinhan Financial, Amore Pacific Corp, and Mirae Asset Securities. </li>
</ul>


In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in October and November 2023.
We provide a list of 24 stocks in the Korean stock market that have announced share buyback programs in October and November 2023.
The top five market cap stocks that have announced share repurchases include Celltrion Inc, Celltrion Healthcare, Shinhan Financial, Amore Pacific Corp, and Mirae Asset Securities. 


Alpha Generation Through Share Buybacks in Korea: October & November 2023

<ul>
<li>On 18 October, DL E&amp;C announced that it will conduct a small scale share swap with DL Construction to make it into a 100% wholly owned subsidiary.</li>
<li>We believe this merger share swap will have a positive impact on both DL E&amp;C (375500 KS) and DL Construction (001880 KS) shares.</li>
<li>To prevent shares dilution, DL E&amp;C plans to cancel the same number of treasury shares of common stock as the number of newly issued shares of DL E&amp;C common stock.</li>
</ul>


On 18 October, DL E&amp;C announced that it will conduct a small scale share swap with DL Construction to make it into a 100% wholly owned subsidiary.
We believe this merger share swap will have a positive impact on both DL E&amp;C (375500 KS) and DL Construction (001880 KS) shares.
To prevent shares dilution, DL E&amp;C plans to cancel the same number of treasury shares of common stock as the number of newly issued shares of DL E&amp;C common stock.


Small Scale Share Swap Between DL E&C and DL Construction + Delisting

South Korea

DL E&C Co.,Ltd. provides construction services. The Company builds industrial plants, infrastructure, high-rise residential buildings, low-rise apartments, villas, and other related areas. DL E&C offers services in Korea.

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DL E&C (375500 KS)

Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

You'll find the Excel file with targeted names related to low PBR attached below in the DISCUSSION Section. I screened based on estimated consensus...

Sanghyun Park

Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices

Lotte Chemical (011170 KS)'s share price declined by 9.1% YTD. Lotte Chemical has a 44.02% stake in Lotte Construction whose PF loan balance as...

Douglas Kim

Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 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

Price Gauge

52-week Range

Market Cap (USDm)

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Dividend (Yield)