Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.</li>
<li>According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.</li>
<li>Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x. </li>
</ul>


On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.
According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.
Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x. 


Align Partners Goes Activist on Seven Banking Group Companies in Korea

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>Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200) </li>
<li>
Samsung Electronics (005930)' basis does not reflect special dividends, even though speculations have not disappeared entirely.</li>
<li>As the current basis hasn't widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.</li>
</ul>


Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200) 

Samsung Electronics (005930)' basis does not reflect special dividends, even though speculations have not disappeared entirely.
As the current basis hasn't widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.


Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

<ul>
<li>We'd better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.</li>
<li>For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.</li>
<li>They are <a href="https://www.smartkarma.com/entities/hyosung-tnc-co-ltd" target="_blank" data-smartkarma-citation="entities:27749:1" rel="noopener">Hyosung TNC (298020)</a>, <a href="https://www.smartkarma.com/entities/hd-hyundai" target="_blank" data-smartkarma-citation="entities:24075:1" rel="noopener">HD Hyundai (267250)</a>, <a href="https://www.smartkarma.com/entities/bnk-financial-group-inc" target="_blank" data-smartkarma-citation="entities:386:1" rel="noopener">BNK Financial (138930)</a>, <a href="https://www.smartkarma.com/entities/woori-financial-group-inc" target="_blank" data-smartkarma-citation="entities:27995:1" rel="noopener">Woori Financial (316140)</a>, <a href="https://www.smartkarma.com/entities/dl-e-c-co-ltd" target="_blank" data-smartkarma-citation="entities:31375:1" rel="noopener">DL E&amp;C (375500)</a>, <a href="https://www.smartkarma.com/entities/lx-semicon-co-ltd" target="_blank" data-smartkarma-citation="entities:20670:1" rel="noopener">LX Semicon (108320)</a>, <a href="https://www.smartkarma.com/entities/kb-financial-group-inc" target="_blank" data-smartkarma-citation="entities:718:1" rel="noopener">KB Financial (105560 KS)</a>, and <a href="https://www.smartkarma.com/entities/hdc-hyundai-development-co-engineering-construction" target="_blank" data-smartkarma-citation="entities:27397:1" rel="noopener">HDC Hyundai Development (294870)</a>.        </li>
</ul>


We'd better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.
For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.
They are Hyosung TNC (298020), HD Hyundai (267250), BNK Financial (138930), Woori Financial (316140), DL E&amp;C (375500), LX Semicon (108320), KB Financial (105560 KS), and HDC Hyundai Development (294870).        


Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate

<ul>
<li>
 Kakao managed to stay out of the relegation zone. Instead, Kia was pushed to the borderline. But POSCO failed to up its float rate, so Kia stayed in.</li>
<li>Besides that, LG Energy Solution and Celltrion made it to the index, replacing KB Financial and Shinhan Financial.</li>
<li>These passive flows appears to be of sufficient magnitude to cause a substantial price impact on T-1 Effectiveness. But it should also be approached with a fairly short window.</li>
</ul>



 Kakao managed to stay out of the relegation zone. Instead, Kia was pushed to the borderline. But POSCO failed to up its float rate, so Kia stayed in.
Besides that, LG Energy Solution and Celltrion made it to the index, replacing KB Financial and Shinhan Financial.
These passive flows appears to be of sufficient magnitude to cause a substantial price impact on T-1 Effectiveness. But it should also be approached with a fairly short window.


TIGER Top 10 Rebalancing: Four Names to Trade on T-1 Effective

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Six of the seven South Korean banks screen favourably on valuation versus returns metrics to September 2022; we add Hana Financial, to our buy rating on KB Financial</li>
<li>Hana has undemanding valuations, and improving pre-provision and post-provision returns,  it also has sound core capital ratio of close to 13%</li>
<li>We remain neutral on digital bank KakaoBank where we are deterred by high cost of risk metrics relative to its peers; we continue to seek positive catalysts on this name</li>
</ul>


Six of the seven South Korean banks screen favourably on valuation versus returns metrics to September 2022; we add Hana Financial, to our buy rating on KB Financial
Hana has undemanding valuations, and improving pre-provision and post-provision returns,  it also has sound core capital ratio of close to 13%
We remain neutral on digital bank KakaoBank where we are deterred by high cost of risk metrics relative to its peers; we continue to seek positive catalysts on this name


South Korean Banks Screener; Hana Financial in the Positive Spotlight

South Korea

KB Financial Group Inc. (the "Company"), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfer with the former shareholders of its subsidiaries including Kookmin Bank in order to provide management services and financing to associated companies. The headquarters are located at Seoul, Korea

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KB Financial (105560 KS)

Align Partners Goes Activist on Seven Banking Group Companies in Korea

On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.

Douglas Kim

Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

This post screens targetable names on KOSPI for dividend arbitrage based on relatively reliable DPS estimates and current basis widening.

Sanghyun Park

Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate

This post discusses the yearend dividend play on Korean stocks with a high dividend yield and a high borrow rate on a decreasing trend.

Sanghyun Park

TIGER Top 10 Rebalancing: Four Names to Trade on T-1 Effective

This post screens four names to trade at the TIGER Top 10 ETF rebalancing in December based on FnGuide's latest float rates, and discusses trading...

Sanghyun Park

South Korean Banks Screener; Hana Financial in the Positive Spotlight

Among South Korean banks, we add Hana Financial to our buy rating on KB Financial; Hana has cheap valuations, and improving pre-provision and post...

Victor Galliano

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