Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

The four major construction stocks in Korea <a href="https://www.smartkarma.com/entities/4292" target="_blank" data-smartkarma-citation="entities:4292">Hyundai Engineering &amp; Const</a>, <a href="https://www.smartkarma.com/entities/7699" target="_blank" data-smartkarma-citation="entities:7699">Hyundai Development Co Engg &amp; Cnstn</a>, <a href="https://www.smartkarma.com/entities/15916" target="_blank" data-smartkarma-citation="entities:15916">Gs Engineering &amp; Construct</a>, and <a href="https://www.smartkarma.com/entities/12333" target="_blank" data-smartkarma-citation="entities:12333">Daewoo Engineering &amp; Constr</a> share prices are on average down 10% from 13 April 2016 (in the same period KOSPI was up 0.3%) , post the election of the National Assembly members in Korea. We gave out a warning on 17 April 206 on these four Korean construction stocks <a href="https://www.smartkarma.com/insights/warning-on-korean-construction-stocks-ruling-saenuri-party-is-crushed-in-national-assembly-election" target="_blank" data-smartkarma-citation="insights:3422">Warning on Korean Construction Stocks: Ruling Saenuri Party Is Crushed in National Assembly</a>…

The four major construction stocks in Korea Hyundai Engineering &amp; Const, Hyundai Development Co Engg &amp; Cnstn, Gs Engineering &amp; Construct, and Daewoo Engineering &amp; Constr share prices are on average down 10% from 13 April 2016 (in the same period KOSPI was up 0.3%) , post the election of the National Assembly members in Korea. We gave out a warning on 17 April 206 on these four Korean construction stocks Warning on Korean Construction Stocks: Ruling Saenuri Party Is Crushed in National Assembly…

Close Out the Shorts on Korean Construction Stocks?

This is a follow-up to the warning on the Korean construction stocks which we issued more than a month ago. <a href="https://www.smartkarma.com/insights/warning-on-korean-construction-stocks-ruling-saenuri-party-is-crushed-in-national-assembly-election" target="_blank" data-smartkarma-citation="insights:3422">Warning on Korean Construction Stocks: Ruling Saenuri Party Is Crushed in National Assembly Election</a> We gave a strong warning on the four major construction stocks and they are down on average 7.2% from the end of the National Assembly Elections in Korea (about 5 weeks ago) to today, under performing KOSPI which is down 1.7% during the same period.  We continue to be bearish on the Korean…

This is a follow-up to the warning on the Korean construction stocks which we issued more than a month ago. Warning on Korean Construction Stocks: Ruling Saenuri Party Is Crushed in National Assembly Election We gave a strong warning on the four major construction stocks and they are down on average 7.2% from the end of the National Assembly Elections in Korea (about 5 weeks ago) to today, under performing KOSPI which is down 1.7% during the same period.  We continue to be bearish on the Korean…

Korean Construction Stocks - Household Debt Is the Achilles Heel

Event-Driven

In this insight, we discuss the details of the <a href="https://www.smartkarma.com/entities/korea-line-corp" target="_blank" data-smartkarma-citation="entities:12965:1" rel="noopener">Korea Line Corp (005880 KS)</a> (SM Korea Line) rights offering details and potential trading opportunities. It currently has a market cap of 843 billion won ($730 million). The rights offering price has been confirmed to be 2,490 won. Its current price is 3,365 won so the current price is 35% higher than the rights offering price. The new shares listing date is on June 30, 2021. <div class="content-highlight">
<h2>Conclusion</h2>
Overall, we have a positive view on the rights offering and post share price expectation after the new shares are listed. The global shipping market is clearly turning around and there are numerous evidences of <a href="https://www.hillebrand.com/media/publication/where-are-all-the-containers-the-global-shortage-explained" target="_blank" rel="noopener">shipping shortages</a> which should benefit companies such as SM Korea Lines.
It also appears that these shortages may be more longer lasting (several more quarters) before the supply/demand of the shipping services are more in balance. As such, we are bullish on this stock in the near term (3-6 months). Plus, we like the company's efforts to improve its balance sheet with the offering proceeds. 
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In this insight, we discuss the details of the Korea Line Corp (005880 KS) (SM Korea Line) rights offering details and potential trading opportunities. It currently has a market cap of 843 billion won ($730 million). The rights offering price has been confirmed to be 2,490 won. Its current price is 3,365 won so the current price is 35% higher than the rights offering price. The new shares listing date is on June 30, 2021. 
Conclusion
Overall, we have a positive view on the rights offering and post share price expectation after the new shares are listed. The global shipping market is clearly turning around and there are numerous evidences of shipping shortages which should benefit companies such as SM Korea Lines.
It also appears that these shortages may be more longer lasting (several more quarters) before the supply/demand of the shipping services are more in balance. As such, we are bullish on this stock in the near term (3-6 months). Plus, we like the company's efforts to improve its balance sheet with the offering proceeds. 


SM Korea Line Rights Offering & Trading Opportunities

Lead Analyst, Credit Research, Drewry Maritime Financial Research

Konstantinos Oikonomopoulos

Lead Analyst, Credit Research

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Credit

Strong profitability thanks to an improved market, NOL's contribution and Ocean Alliance network efficiencies  Record revenues in FY17: Top line surged by 32% y/y at the end of the year at USD 21bn of which USD 5.9bn were contributed by NOL. On a stand-alone basis and in order to compare accurately performance (NOL consolidation since June 2016), CMA CGM’s sales grew by circa 14% on FY17 revenue of USD 15.2bn vs USD 13.4bn a year before. The consolidated group benefitted from a 21% surge y/y…

Strong profitability thanks to an improved market, NOL's contribution and Ocean Alliance network efficiencies  Record revenues in FY17: Top line surged by 32% y/y at the end of the year at USD 21bn of which USD 5.9bn were contributed by NOL. On a stand-alone basis and in order to compare accurately performance (NOL consolidation since June 2016), CMA CGM’s sales grew by circa 14% on FY17 revenue of USD 15.2bn vs USD 13.4bn a year before. The consolidated group benefitted from a 21% surge y/y…

Container Shipping - Can CMA CGMs Bonds Withstand the Selling Pressure from the Broader Bond Market?

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

Orient Overseas (International) / Equity Bottom-Up

In our comments on the global container shipping segment, we have until recently argued that players on the supply side -- liner operators and other container ship owners -- have not taken the painful steps needed to bring excess supply in line with weakened demand in the near-term, and that the benefits of consolidation weren't likely to be seen for at least another year or two. In the last few weeks, however, we have seen evidence that ship owners are finally biting the bullet and reducing…

In our comments on the global container shipping segment, we have until recently argued that players on the supply side -- liner operators and other container ship owners -- have not taken the painful steps needed to bring excess supply in line with weakened demand in the near-term, and that the benefits of consolidation weren't likely to be seen for at least another year or two. In the last few weeks, however, we have seen evidence that ship owners are finally biting the bullet and reducing…

Container Shipping: Demand Weak, But Supply Side Taking Needed Steps; Hanjin Sold; Focus On OOIL

South Korea

Korea Line Corporation (KLC) owns and operates a fleet of vessels that carry bulk cargo, such as iron core, coal, hot coils, and liquefied natural gas (LNG). The Company provides exclusive lines for Pohang Iron & Steel, Korea Gas, and Korea Electric under long term contracts.  KLC also offers tramp services, and transports grain, sugar, logs, minerals, and steel products.

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Korea Line Corp (005880 KS)

Close Out the Shorts on Korean Construction Stocks?

The four major construction stocks in Korea Hyundai Engineering & Const, Hyundai Development Co Engg & Cnstn, Gs Engineering &...

Douglas Kim

Korean Construction Stocks - Household Debt Is the Achilles Heel

This is a follow-up to the warning on the Korean construction stocks which we issued more than a month ago. Warning on Korean Construction Stocks:...

Douglas Kim

SM Korea Line Rights Offering & Trading Opportunities

In this insight, we discuss the details of the Korea Line Corp (005880 KS) (SM Korea Line) rights offering details. The new shares listing date is...

Douglas Kim

Container Shipping - Can CMA CGMs Bonds Withstand the Selling Pressure from the Broader Bond Market?

Strong profitability thanks to an improved market, NOL's contribution and Ocean Alliance network efficiencies Record revenues in FY17: Top line...

Drewry Maritime Financial Research

Container Shipping: Demand Weak, But Supply Side Taking Needed Steps; Hanjin Sold; Focus On OOIL

In our comments on the global container shipping segment, we have until recently argued that players on the supply side -- liner operators and...

Daniel Hellberg

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