Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.</li>
<li>We are positive on Dongwon Industries. This large amount of share cancellation will boost the company's earnings per share and book value per share.</li>
<li>The shares subject to cancellation are the treasury stocks acquired by Dongwon Industries when it merged with Dongwon Enterprises in 2022.</li>
</ul>


On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.
We are positive on Dongwon Industries. This large amount of share cancellation will boost the company's earnings per share and book value per share.
The shares subject to cancellation are the treasury stocks acquired by Dongwon Industries when it merged with Dongwon Enterprises in 2022.


Dongwon Industries - Announces Cancellation of 22.5% of Outstanding Shares

Equity Capital Markets

Dongwon Industries / Equity Capital Markets

<ul>
<li>It was reported in the local Korean <a href="https://economist.co.kr/article/view/ecn202309260026" target="_blank" rel="noopener">media</a> that the Dongwon Group is considering on listing three private companies including Starkist, Dongwon Loex, and Dongwon Home Food.</li>
<li>Prior to their IPOs, Dongwon Group is reviewing the potential of selling partial stakes in these companies in pre-IPO investments.</li>
<li>One of the major purposes of the IPOs would be to gain access to more capital which could be used by the Dongwon Group to acquire HMM. </li>
</ul>


It was reported in the local Korean media that the Dongwon Group is considering on listing three private companies including Starkist, Dongwon Loex, and Dongwon Home Food.
Prior to their IPOs, Dongwon Group is reviewing the potential of selling partial stakes in these companies in pre-IPO investments.
One of the major purposes of the IPOs would be to gain access to more capital which could be used by the Dongwon Group to acquire HMM. 


Three IPO Candidates of the Dongwon Group (StarKist, Dongwon Loex, and Dongwon Home Food)

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>Based on the average daily full market cap up until the last close, the following additions have been identified as high-probability candidates: Sam A Aluminum, Dentium, and Dongwon Industries.</li>
<li>Three constituents will likely leave as they rank at the bottom in descending order of full market cap among those failing the screening: Cuckoo Homesys, Zinus, and Hyundai Home Shopping.</li>
<li>Dongwon Industries seems to be the most attractive, but given the uncertainty surrounding its inclusion, it may be more appropriate to target Dentium.</li>
</ul>


Based on the average daily full market cap up until the last close, the following additions have been identified as high-probability candidates: Sam A Aluminum, Dentium, and Dongwon Industries.
Three constituents will likely leave as they rank at the bottom in descending order of full market cap among those failing the screening: Cuckoo Homesys, Zinus, and Hyundai Home Shopping.
Dongwon Industries seems to be the most attractive, but given the uncertainty surrounding its inclusion, it may be more appropriate to target Dentium.


Early Targetable Names in KOSPI 200 December Rebalancing

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>There will be 2 additions and 2 deletions for the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> at the June rebalance that will be implemented on 8 June.</li>
<li>
<a href="https://www.smartkarma.com/entities/kum-yang-co-ltd" target="_blank" data-smartkarma-citation="entities:10364:1" rel="noopener">Kum Yang (001570 KS)</a> and <a href="https://www.smartkarma.com/entities/cosmochemical-co-ltd" target="_blank" data-smartkarma-citation="entities:3747:1" rel="noopener">Cosmochemical (005420 KS)</a>, both high probability names, are inclusions while <a href="https://www.smartkarma.com/entities/hwaseung-enterprise-co-ltd" target="_blank" data-smartkarma-citation="entities:35611:1" rel="noopener">Hwaseung Enterprise (241590 KS)</a> and <a href="https://www.smartkarma.com/entities/dongwon-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:1783:1" rel="noopener">Dongwon Industries (006040 KS)</a> are deletions.</li>
<li>Not surpisingly, there is almost no short interest on the adds. Short interest on the deletes is higher and rising. Expect short covering on the deletes prior to implementation.</li>
</ul>


There will be 2 additions and 2 deletions for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the June rebalance that will be implemented on 8 June.

Kum Yang (001570 KS) and Cosmochemical (005420 KS), both high probability names, are inclusions while Hwaseung Enterprise (241590 KS) and Dongwon Industries (006040 KS) are deletions.
Not surpisingly, there is almost no short interest on the adds. Short interest on the deletes is higher and rising. Expect short covering on the deletes prior to implementation.


KOSPI200 Index Rebalance: Two Sets of Changes

<ul>
<li>Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. </li>
<li>Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.</li>
<li>We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on <em>"buy on rumor, sell on news"</em> strategy.</li>
</ul>


Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. 
Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.
We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on "buy on rumor, sell on news" strategy.


Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150

South Korea

Dongwon Industries Co., Ltd. is a deep-sea fishing company.  The Company produces and distributes fish can goods and processed seafood products including tuna sashimi.

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Dongwon Industries (006040 KS)

Dongwon Industries - Announces Cancellation of 22.5% of Outstanding Shares

On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.

Douglas Kim

Three IPO Candidates of the Dongwon Group (StarKist, Dongwon Loex, and Dongwon Home Food)

It was reported in the local Korean media that the Dongwon Group is considering on listing three private companies including Starkist, Dongwon...

Douglas Kim

Early Targetable Names in KOSPI 200 December Rebalancing

This post highlights the names that may be targeted for potential constituent changes in the upcoming December review of KOSPI 200.

Sanghyun Park

KOSPI200 Index Rebalance: Two Sets of Changes

Kumyang & CosmoChem will be added to the KOSPI200 in June. Both stocks ran up a lot and are now correcting - they become short sell eligible from...

Brian Freitas

Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150

Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. We expect continued underperformance of Kumyang and Cosmo...

Douglas Kim

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