Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>Contec is getting ready to complete an IPO on the KOSDAQ exchange in October 2023. The IPO price range is from 20,300 won to 22,500 won. </li>
<li>According to the bankers' valuation, the expected IPO market cap is from 292 billion won to 324 billion won.</li>
<li>Contec was spun off from Korea Aerospace Research Institute and offers Space Ground Station Services and Satellite Image Processing &amp; Application Services.</li>
</ul>


Contec is getting ready to complete an IPO on the KOSDAQ exchange in October 2023. The IPO price range is from 20,300 won to 22,500 won. 
According to the bankers' valuation, the expected IPO market cap is from 292 billion won to 324 billion won.
Contec was spun off from Korea Aerospace Research Institute and offers Space Ground Station Services and Satellite Image Processing &amp; Application Services.


Event-Driven

<ul>
<li>After the market close on 23 August, Hanwha Ocean (042660 KS) confirmed that it will conduct a massive rights offering of 2 trillion won.</li>
<li>The expected rights offering price is 22,350 won, which is 36% discount to current price. </li>
<li>We believe this rights offering is likely to dilute the existing shareholders and negatively impact Hanwha Ocean's share price.</li>
</ul>


After the market close on 23 August, Hanwha Ocean (042660 KS) confirmed that it will conduct a massive rights offering of 2 trillion won.
The expected rights offering price is 22,350 won, which is 36% discount to current price. 
We believe this rights offering is likely to dilute the existing shareholders and negatively impact Hanwha Ocean's share price.


Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.</li>
<li>A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.</li>
<li>South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. </li>
</ul>


According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.
A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.
South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. 


Equity Bottom-Up

<ul>
<li>The Starlink service is expected to be launched in Korea in 2Q/3Q 2023. Starlink gained more than 1 million active subscribers globally as of December 2022.</li>
<li>The launch of the Starlink service in Korea is likely to have a positive impact on  companies such as Hanwha Aerospace, Solu-M, Intellian Technologies, and Satrec Initiative.</li>
<li>We like a pair trade involving long (basket of 8 stocks above that are positively impacted by Starlink launch in Korea) and short (three major Korean telcos).</li>
</ul>


The Starlink service is expected to be launched in Korea in 2Q/3Q 2023. Starlink gained more than 1 million active subscribers globally as of December 2022.
The launch of the Starlink service in Korea is likely to have a positive impact on  companies such as Hanwha Aerospace, Solu-M, Intellian Technologies, and Satrec Initiative.
We like a pair trade involving long (basket of 8 stocks above that are positively impacted by Starlink launch in Korea) and short (three major Korean telcos).


Launch of Starlink Service by SpaceX - Impact on 11 Korean Companies

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<ul>
<li>Price adjustment by passive flow started one month before the effective date. The LONG/SHORT basket set a month towards the effective dates provided a higher yield than seven days ahead.</li>
<li>The yield tended to be relatively low when the overall market was in a bearish phase. We see a positive correlation between the yields and the market direction.</li>
<li>Overall, the LONG/SHORT basket trading on this event over the past decade has shown a fairly high persistence and winning rate, substantial enough for us to have a careful look.</li>
</ul>


Price adjustment by passive flow started one month before the effective date. The LONG/SHORT basket set a month towards the effective dates provided a higher yield than seven days ahead.
The yield tended to be relatively low when the overall market was in a bearish phase. We see a positive correlation between the yields and the market direction.
Overall, the LONG/SHORT basket trading on this event over the past decade has shown a fairly high persistence and winning rate, substantial enough for us to have a careful look.


KOSPI Size Index Migration: 10-Year Backtesting

South Korea

Hanwha Aerospace Co., Ltd. operates as an aircraft parts manufacturing company. The Company produces and sells aircraft gas turbine engine products, aircraft compressors, low pressure turbines, and other products. Hanwha Aerospace markets its products worldwide.

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Hanwha Aerospace (012450 KS)

Contec IPO Preview

Contec is getting ready to complete an IPO on the KOSDAQ exchange in October 2023.Contec offers Space Ground Station Services and Satellite Image...

Douglas Kim

Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won

Hanwha Ocean confirmed that it will conduct a rights offering of 2 trillion won. We believe this rights offering is likely to dilute the existing...

Douglas Kim

Asian Defence Contractors: Up In Arms

Defence spending beneficiaries include Hyundai Rotem (064350 KS) and Aerospace Industrial Development (2634 TT). For relval, short Poongsan Corp...

David Blennerhassett

Launch of Starlink Service by SpaceX - Impact on 11 Korean Companies

The launch of the SpaceX's Starlink service in Korea in 2Q/3Q 2023 is likely to have a positive impact on companies such as Hanwha Aerospace, Solu...

Douglas Kim

KOSPI Size Index Migration: 10-Year Backtesting

This post backtests the KOSPI Size Index Migration events, going for ten years from September of this year to March 2012, and discusses the yields...

Sanghyun Park

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