Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The short sell ban in Korea that was instated on 16 March 2020 is set to expire on 15 March.However, with mayoral elections in Seoul and Busan around the corner, politicians are said to be leaning on the FSC to extend the short sell ban. Add to that the retail outrage - from petitions to the Blue House, bus tours, and posts on K-Streetbets of targeting stocks with high short interest.There is a high likelihood that the short sell ban gets extended by three more months to tide the politicians over the mayoral elections.In the event that the short sell ban expires, we highlight stocks that have seen the most short covering since the start of the short sell ban, stocks with high short interest as a percentage of market cap and free float, and high days of ADV to cover.This will have implications for many strategies and will open the door to trade the ordinaries vs preferred shares, long/short and other related strategies.

The short sell ban in Korea that was instated on 16 March 2020 is set to expire on 15 March.However, with mayoral elections in Seoul and Busan around the corner, politicians are said to be leaning on the FSC to extend the short sell ban. Add to that the retail outrage - from petitions to the Blue House, bus tours, and posts on K-Streetbets of targeting stocks with high short interest.There is a high likelihood that the short sell ban gets extended by three more months to tide the politicians over the mayoral elections.In the event that the short sell ban expires, we highlight stocks that have seen the most short covering since the start of the short sell ban, stocks with high short interest as a percentage of market cap and free float, and high days of ADV to cover.This will have implications for many strategies and will open the door to trade the ordinaries vs preferred shares, long/short and other related strategies.

Korea Short Sell Ban: Elections, Public Outrage, Bus Tours, Blue House Petitions, K-Streetbets

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

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It is not often that a Korean company goes activist on another publicly listed company so it pays attention to this new development where HYK Partners (with major investment backing from <a href="https://www.smartkarma.com/entities/kyungbang-ltd" target="_blank" data-smartkarma-citation="entities:16840:1" rel="noopener">Kyungbang Ltd (000050 KS)</a>) has publicly declared that it is going activist on <a href="https://www.smartkarma.com/entities/hanjin-transportation-co" target="_blank" data-smartkarma-citation="entities:12583:1" rel="noopener">Hanjin Transportation Co (002320 KS)</a>. 
<a href="https://www.smartkarma.com/entities/hanjin-transportation-co" target="_blank" data-smartkarma-citation="entities:12583:1" rel="noopener">Hanjin Transportation Co (002320 KS)</a> is an interesting stock right now. Its fundamentals are improving as evidenced by higher sales and profits of its delivery/parcel, shipping, and unloading services. Plus, HYK Partners is going activist on Hanjin Transportation. Another hedge fund (KCGI) has been reducing its stake in Hanjin Transportation (down to 9.79% as of 6 November). There may be an increasing possibility that HYK Partners could partner with KCGI in trying to improve corporate governance of Hanjin Transportation. Meanwhile, Hanjin Transportation is trading at only 0.7x P/B. Overall, we think that there are numerous positive catalysts with Hanjin Transportation and it is a stock that we believe could outperform the market over the next 6-12 months. 
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It is not often that a Korean company goes activist on another publicly listed company so it pays attention to this new development where HYK Partners (with major investment backing from Kyungbang Ltd (000050 KS)) has publicly declared that it is going activist on Hanjin Transportation Co (002320 KS). 
Hanjin Transportation Co (002320 KS) is an interesting stock right now. Its fundamentals are improving as evidenced by higher sales and profits of its delivery/parcel, shipping, and unloading services. Plus, HYK Partners is going activist on Hanjin Transportation. Another hedge fund (KCGI) has been reducing its stake in Hanjin Transportation (down to 9.79% as of 6 November). There may be an increasing possibility that HYK Partners could partner with KCGI in trying to improve corporate governance of Hanjin Transportation. Meanwhile, Hanjin Transportation is trading at only 0.7x P/B. Overall, we think that there are numerous positive catalysts with Hanjin Transportation and it is a stock that we believe could outperform the market over the next 6-12 months. 


HYK Partners (Kyungbang) Goes Activist on Hanjin Transportation

In this insight, we discuss the impact of a potential big selling in the shares of <a href="https://www.smartkarma.com/entities/hanjin-kal-corp" target="_blank" data-smartkarma-citation="entities:19086:1" rel="noopener">Hanjin KAL Corp (180640 KS)</a>, the holding company of Korean Air and the Hanjin Group. The lock-up period of 46.7% of shares of Hanjin Kal ends towards the end of this month. That is a lot of shares! The 46.7% of the shares of Hanjin Kal are related to the KCGI consortium including KCGI, Bando Construction, and Cho Hyun-Ah.One of the likely scenarios of the changing shareholdings of Hanjin Kal post the additional capital injection by KDB is for<a href="http://news.heraldcorp.com/view.php?ud=20201118000257" target="_blank" rel="noopener"> KDB's stake</a> to increase from 0% to 10.7%, KCGI consortium stake to decline from 46.7% to 41.7%, and Chairman Cho and related parties' stake to decline from 41.1% to 37.7%. Investors are pushing down the share price of Hanjin Kal as many of them now believe an M&amp;A fight between the KCGI consortium and Chairman Cho/related parties is less likely.Our base case NAV analysis suggests a base price of 39,830 won for Hanjin Kal shares, down 41% from the current price.

In this insight, we discuss the impact of a potential big selling in the shares of Hanjin KAL Corp (180640 KS), the holding company of Korean Air and the Hanjin Group. The lock-up period of 46.7% of shares of Hanjin Kal ends towards the end of this month. That is a lot of shares! The 46.7% of the shares of Hanjin Kal are related to the KCGI consortium including KCGI, Bando Construction, and Cho Hyun-Ah.One of the likely scenarios of the changing shareholdings of Hanjin Kal post the additional capital injection by KDB is for KDB's stake to increase from 0% to 10.7%, KCGI consortium stake to decline from 46.7% to 41.7%, and Chairman Cho and related parties' stake to decline from 41.1% to 37.7%. Investors are pushing down the share price of Hanjin Kal as many of them now believe an M&amp;A fight between the KCGI consortium and Chairman Cho/related parties is less likely.Our base case NAV analysis suggests a base price of 39,830 won for Hanjin Kal shares, down 41% from the current price.

A Big Potential Selling in Hanjin Kal Once Lock-Up Period Ends & The Collapse of Warrant Price

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On November 16th, Korean Air Lines stated that it will acquire Asiana Airlines for 1.8 trillion won ($1.6 billion) that would create the 10th biggest airline by fleets in the world. In this deal, the Korean Development Bank (KDB) will help Hanjin Group Chairman Cho Won-Tae &amp; related parties retain control of Hanjin Kal and the Korean Air.
However, things are not so simple as they initially look on paper. This is mainly because in 2021 and beyond, the global air travel industry may not return quickly to the pre-COVID-19 environment. The overall media coverage of this event has been positive. However, we believe that there could be a bigger risk that things may not turn out so rosy for the combined companies. Rather, there is an increasing likelihood that the combined Korean Air and Asiana Airlines may become another KEPCO (which is controlled by the Korean government).  
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On November 16th, Korean Air Lines stated that it will acquire Asiana Airlines for 1.8 trillion won ($1.6 billion) that would create the 10th biggest airline by fleets in the world. In this deal, the Korean Development Bank (KDB) will help Hanjin Group Chairman Cho Won-Tae &amp; related parties retain control of Hanjin Kal and the Korean Air.
However, things are not so simple as they initially look on paper. This is mainly because in 2021 and beyond, the global air travel industry may not return quickly to the pre-COVID-19 environment. The overall media coverage of this event has been positive. However, we believe that there could be a bigger risk that things may not turn out so rosy for the combined companies. Rather, there is an increasing likelihood that the combined Korean Air and Asiana Airlines may become another KEPCO (which is controlled by the Korean government).  


Korean Air + Asiana Airlines - Is This Becoming Another KEPCO?

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Hanjin Kal and KDB are currently in talks over an Asiana Airlines takeover.The widely reported deal structure is quite similar to the previous one proposed to the HDC Group.The KDB will make a capital injection (in the form of 3rd party allocation rights offer) to Hanjin Kal, which will then use the money to buy a 30.77% stake in Asiana.

Hanjin Kal and KDB are currently in talks over an Asiana Airlines takeover.The widely reported deal structure is quite similar to the previous one proposed to the HDC Group.The KDB will make a capital injection (in the form of 3rd party allocation rights offer) to Hanjin Kal, which will then use the money to buy a 30.77% stake in Asiana.

Hanjin Kal Buying Asiana? KDB Dilution-Adj. Shareholding & Likely Market Impact

South Korea

Hanjin KAL Corporation is a holding company. The Company, through its subsidiaries, engages in airline, hotel, and travel related services. Hanjin also invests in real estates.

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Hanjin KAL Corp (180640 KS)

Korea Short Sell Ban: Elections, Public Outrage, Bus Tours, Blue House Petitions, K-Streetbets

With the short sell ban in Korea scheduled to expire 15 March, we look at stocks that have seen the most short covering since the start of the ban,...

Brian Freitas

HYK Partners (Kyungbang) Goes Activist on Hanjin Transportation

HYK Partners (with major investment backing from Kyungbang Ltd (000050 KS)) has publicly declared that it is going activist on Hanjin...

Douglas Kim

A Big Potential Selling in Hanjin Kal Once Lock-Up Period Ends & The Collapse of Warrant Price

The lock-up period of 46.7% of shares of Hanjin Kal related to the KCGI consortium including KCGI, Bando Construction, and Cho Hyun-Ah. ends...

Douglas Kim

Korean Air + Asiana Airlines - Is This Becoming Another KEPCO?

Perhaps the worst-case scenario is that the combined Korean Air + Asiana Airlines becomes another KEPCO, which would be culminated with KDB taking...

Douglas Kim

Hanjin Kal Buying Asiana? KDB Dilution-Adj. Shareholding & Likely Market Impact

Hanjin Kal and KDB are reportedly in talks over taking over Asiana Airlines. This insight examines KDB fund injection-adjusted shareholding % and...

Sanghyun Park

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