Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>We believe a major rights offering capital raise is likely for Korean Air Lines (003490 KS) in the next 1-2 years.</li>
<li>On 25 August, Korean Air announced a 70 trillion won investment plan in the United States. This plan is likely to have been pressured heavily by the Korean government. </li>
<li>A big problem with this plan is Korean Air does not produce enough cash flow and its balance sheet is not strong enough to invest such huge amounts of capital. </li>
</ul>


We believe a major rights offering capital raise is likely for Korean Air Lines (003490 KS) in the next 1-2 years.
On 25 August, Korean Air announced a 70 trillion won investment plan in the United States. This plan is likely to have been pressured heavily by the Korean government. 
A big problem with this plan is Korean Air does not produce enough cash flow and its balance sheet is not strong enough to invest such huge amounts of capital. 


Korean Air: A Major Rights Offering Capital Raise Likely In Next 1-2 Years

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>The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.</li>
<li>Nearing the end of the review period, we forecast 49 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 1 to SmallCap.</li>
<li>There are a number of stocks that will have passive flow from global index trackers over the next few weeks, while some are potential changes to the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI2</a> in December.</li>
</ul>


The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.
Nearing the end of the review period, we forecast 49 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 1 to SmallCap.
There are a number of stocks that will have passive flow from global index trackers over the next few weeks, while some are potential changes to the KOSPI2 in December.


KOSPI Size Indices: Passive Flows for Many Active Changes

Equity Capital Markets

<ul>
<li>On 7 August, T'Way Air (091810 KS) announced a large scale capital raise plan worth 200 billion won, representing 49% of its current market cap (409 billion won).</li>
<li>This capital raise plan will include a third-party allocation worth 110 billion won based on the market price without discount. It will also issue CB/BW worth 90 billion won</li>
<li>We maintain Negative on T'Way Air. The capital raise of 200 billion won is likely to be dilutive to existing shareholders and its valuations remain high relative to its peers.</li>
</ul>


On 7 August, T'Way Air (091810 KS) announced a large scale capital raise plan worth 200 billion won, representing 49% of its current market cap (409 billion won).
This capital raise plan will include a third-party allocation worth 110 billion won based on the market price without discount. It will also issue CB/BW worth 90 billion won
We maintain Negative on T'Way Air. The capital raise of 200 billion won is likely to be dilutive to existing shareholders and its valuations remain high relative to its peers.


T'Way Air - Capital Raise Plan of 200 Billion Won (49% of Market Cap)

<ul>
<li>The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.</li>
<li>Nearing halfway in the review period, we forecast 53 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 1 to SmallCap.</li>
<li>Two potential downward migrations could be deleted from a global index in August. The new listing that is a potential LargeCap add could be added to a globalindex in September.</li>
</ul>


The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.
Nearing halfway in the review period, we forecast 53 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 1 to SmallCap.
Two potential downward migrations could be deleted from a global index in August. The new listing that is a potential LargeCap add could be added to a globalindex in September.


KOSPI Size Indices: Overlaps Between Active & Passive Flows

<ul>
<li>After the market close on 17 February, it was announced that the Daemyung Sono Group is  close to acquiring the controlling stake in T'Way Air (091810 KS) from Yelimdang.</li>
<li>As the negotiations between the two sides have come to a near agreement, Daemyung Sono is expected to be able to appoint nine directors at the next upcoming AGM.</li>
<li>Typically in cases like this in Korea, the near term impact would be decline in share prices of T'Way Air and T'Way Holdings due to lack of an M&amp;A play.</li>
</ul>


After the market close on 17 February, it was announced that the Daemyung Sono Group is  close to acquiring the controlling stake in T'Way Air (091810 KS) from Yelimdang.
As the negotiations between the two sides have come to a near agreement, Daemyung Sono is expected to be able to appoint nine directors at the next upcoming AGM.
Typically in cases like this in Korea, the near term impact would be decline in share prices of T'Way Air and T'Way Holdings due to lack of an M&amp;A play.


Daemyung Sono Group: Close to Acquiring the Controlling Stake in T'Way Air

South Korea

Jin Air Co.,Ltd. provides air transportation services. The Company offers passenger and freight air transportation services, aviation equipment maintenance, aircraft leasing services, and other services. Jin Air also provides ticket and hotel booking and consulting services.

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Jin Air Co. Ltd (272450 KS)

Korean Air: A Major Rights Offering Capital Raise Likely In Next 1-2 Years

We believe a major rights offering capital raise is likely for Korean Air in the next 1-2 years. On 25 August, Korean Air announced a 70 trillion...

Douglas Kim

KOSPI Size Indices: Passive Flows for Many Active Changes

There could be 49 migrations for the KOSPI Size Indices in Sep. Among new listings, there could be 1 LargeCap add and 3 MidCap adds. There are...

Brian Freitas

T'Way Air - Capital Raise Plan of 200 Billion Won (49% of Market Cap)

On 7 August, T'Way Air (091810 KS) announced a large scale capital raise plan worth 200 billion won, representing 49% of its current market cap...

Douglas Kim

KOSPI Size Indices: Overlaps Between Active & Passive Flows

There could be 53 migrations for the KOSPI Size Indices in Sep. Among new listings, there could be 1 LargeCap add and 3 MidCap adds. There are 2...

Brian Freitas

Daemyung Sono Group: Close to Acquiring the Controlling Stake in T'Way Air

Daemyung Sono Group announced that it signed a stock purchase agreement to acquire a 46.26% stake in T'way Holdings held by Yearimdang Publishing...

Douglas Kim

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