Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>In this insight, I provide an investment thesis on Doosan Enerbility (034020 KS) which is a Korean nuclear powerhouse. </li>
<li>In addition, I highlight the likely pre-IPO investment in Westinghouse Electric (US) which is likely to occur in 4Q 2026/1Q 2027. </li>
<li>Despite the long-term higher demand for nuclear and SMRs made by Doosan Enerbility, I remain wary of the company's high valuation multiples and worsening balance sheet.</li>
</ul>


In this insight, I provide an investment thesis on Doosan Enerbility (034020 KS) which is a Korean nuclear powerhouse. 
In addition, I highlight the likely pre-IPO investment in Westinghouse Electric (US) which is likely to occur in 4Q 2026/1Q 2027. 
Despite the long-term higher demand for nuclear and SMRs made by Doosan Enerbility, I remain wary of the company's high valuation multiples and worsening balance sheet.


Doosan Enerbility: A Korean Nuclear Powerhouse + Likely Pre-IPO Investment in Westinghouse

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

Event-Driven

Korea Stock Exchange KOSPI 200 / Event-Driven

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

<ul>
<li>Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though. </li>
<li>Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.</li>
<li>There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.</li>
</ul>


Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though. 
Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.


Korea: Short Selling Is Back in March; Trade Ideas

External broker reports(aggregated public sources), Mirae Asset Securities

Mirae Asset Securities

External broker reports(aggregated public sources)

Mirae Asset Securities Co.,Ltd. provides comprehensive wealth management services. The Company offers fixed income securities brokerage, securities dealing, equity underwriting, and other services. Mirae Asset Securities also deals with mergers and acquisitions, foreign currency, and financial derivatives

<ul><li>For 2Q26, Doosan Enerbility posted operating profit of W314.3bn (+16% YoY; OP margin of 6.7%), exceeding the consensus (W262.9bn).</li><li>The Enerbility unit recorded revenue of W2.23tr (-1.5% YoY, +17.8% QoQ) and operating profit of W97.4bn (+5.4% YoY, +71% QoQ), showing meaningful QoQ improvement.</li><li>Large gas-fired power projects won in 2025-26 began making meaningful revenue contributions, while higher-than-expected progress-based revenue recognition in the nuclear equipment business provided additional support. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

For 2Q26, Doosan Enerbility posted operating profit of W314.3bn (+16% YoY; OP margin of 6.7%), exceeding the consensus (W262.9bn).The Enerbility unit recorded revenue of W2.23tr (-1.5% YoY, +17.8% QoQ) and operating profit of W97.4bn (+5.4% YoY, +71% QoQ), showing meaningful QoQ improvement.Large gas-fired power projects won in 2025-26 began making meaningful revenue contributions, while higher-than-expected progress-based revenue recognition in the nuclear equipment business provided additional support. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Doosan Enerbility (034020 KS/Buy)2Q26 review: The pieces are falling into place

<ul>
<li>Korea banned all short selling in March 2020 and resumed short selling only on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> index constituents in May 2021.</li>
<li>News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.</li>
<li>There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.</li>
</ul>


Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.


Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Thematic (Sector/Industry)

<ul><li>The Korean and US governments are reportedly close to an agreement to build eight large-scale nuclear reactors in the US as the second project under Korea’s US investment program.</li><li>Related projects are expected to have a combined value of US$120bn, or roughly US$15bn (W20tr) per reactor.</li><li>Of the eight reactors, the first four will likely comprise two Korean-designed APR1400 units and two Westinghouse AP1000 units.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The Korean and US governments are reportedly close to an agreement to build eight large-scale nuclear reactors in the US as the second project under Korea’s US investment program.Related projects are expected to have a combined value of US$120bn, or roughly US$15bn (W20tr) per reactor.Of the eight reactors, the first four will likely comprise two Korean-designed APR1400 units and two Westinghouse AP1000 units.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Power InfrastructureUS nuclear investment takes shape

South Korea

Doosan Enerbility Co., Ltd. manufactures and distributes construction machines. The Company produces gas turbines, engines, turbine generators, boilers, power plant equipment, and other related products. Doosan Enerbility also offers energy solutions for thermal power, nuclear power, and renewable energy.

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Doosan Enerbility (034020 KS)

Doosan Enerbility: A Korean Nuclear Powerhouse + Likely Pre-IPO Investment in Westinghouse

Despite the long-term higher demand for nuclear and SMRs made by Doosan Enerbility, I remain wary of the company's high valuation multiples and...

Douglas Kim

Korea: Short Selling Is Back in March; Trade Ideas

Short selling in Korea commences from Monday. There will be a lot of interest in shorting stocks/sectors depending on how they have performed since...

Brian Freitas