Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>This past week, KT&amp;G Corporation (033780 KS) announced that it will cancel its entire treasury shares (9.5% of outstanding shares). </li>
<li>This share cancellation amount is nearly 1.7 trillion won (US$1.1 billion), representing one of the largest share cancellation amounts among Korean companies. </li>
<li>I am positive on the company's decision to cancel its entire treasury shares as it will result in higher ROE, higher ownership among existing shareholders, and higher EPS.  </li>
</ul>


This past week, KT&amp;G Corporation (033780 KS) announced that it will cancel its entire treasury shares (9.5% of outstanding shares). 
This share cancellation amount is nearly 1.7 trillion won (US$1.1 billion), representing one of the largest share cancellation amounts among Korean companies. 
I am positive on the company's decision to cancel its entire treasury shares as it will result in higher ROE, higher ownership among existing shareholders, and higher EPS.  


KT&G: Share Cancellation of 1.7 Trillion Won and a Potential Hike in Cigarette Prices in 2026

<ul>
<li>KT&amp;G announced a new shareholder return policy worth 2.8 trillion won (including dividend payout of 1.8 trillion won and treasury shares purchase/cancellation of 1.0 trillion won) over next three years.</li>
<li>In addition, the company plans to cancel about 7.5% of the company's existing treasury shares which represents about 142 billion won (1.2% of outstanding shares). </li>
<li>Although this 2.8 trillion won in shareholder return policy is large, the company could have announced even larger shareholder return policy, including cancellation of its entire treasury shares. </li>
</ul>


KT&amp;G announced a new shareholder return policy worth 2.8 trillion won (including dividend payout of 1.8 trillion won and treasury shares purchase/cancellation of 1.0 trillion won) over next three years.
In addition, the company plans to cancel about 7.5% of the company's existing treasury shares which represents about 142 billion won (1.2% of outstanding shares). 
Although this 2.8 trillion won in shareholder return policy is large, the company could have announced even larger shareholder return policy, including cancellation of its entire treasury shares. 


KT&G: A New Shareholder Return Policy Worth 2.8 Trillion Won Over Next 3 Years

Cross Asset Strategy

<ul>
<li>Now that Lee Jae-Myung has become new South Korean President, the uncertainty revolving who will lead South Korea in the next five years is now over.</li>
<li>In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the market for the remainder of 2025.</li>
<li>The four investment themes include Korean Holdcos/Quasi Holdcos, Korean Cultural Contents, Securities, and SK Group Companies.</li>
</ul>


Now that Lee Jae-Myung has become new South Korean President, the uncertainty revolving who will lead South Korea in the next five years is now over.
In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the market for the remainder of 2025.
The four investment themes include Korean Holdcos/Quasi Holdcos, Korean Cultural Contents, Securities, and SK Group Companies.


Lee Jae-Myung Becomes the New South Korean President - Four Investment Themes That Could Outperform

Equity Capital Markets

KT&G Corporation / Equity Capital Markets

<ul>
<li>On 14 October, FCP Capital sent a proposal to KT&amp;G to purchase Korea Ginseng Corp for 1.9 trillion won. </li>
<li>Although KT&amp;G stated that it has no intentions to sell Korea Ginseng Corp, this proposal highlights the ongoing pressure by FCP Capital to improve further value in KT&amp;G.</li>
<li>The 1.9 trillion won in proposed purchase price is higher than the 1.2 trillion won to 1.3 trillion won that KT&amp;G revealed as the intrinsic value of Korea Ginseng Corp.</li>
</ul>


On 14 October, FCP Capital sent a proposal to KT&amp;G to purchase Korea Ginseng Corp for 1.9 trillion won. 
Although KT&amp;G stated that it has no intentions to sell Korea Ginseng Corp, this proposal highlights the ongoing pressure by FCP Capital to improve further value in KT&amp;G.
The 1.9 trillion won in proposed purchase price is higher than the 1.2 trillion won to 1.3 trillion won that KT&amp;G revealed as the intrinsic value of Korea Ginseng Corp.


FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won

<ul>
<li>KT&amp;G announced that it will buy back 3.47 million shares (2.5% of outstanding shares) and cancel them. This would be the first share cancellation for KT&amp;G in 14 years. </li>
<li>If the company's DPS is 5,200 won for 2023 fiscal year, this would represent dividend yield of 6.2% at current prices.</li>
<li>Although we have a positive view on KT&amp;G's share buyback and cancellation of 3.47 million shares, the company could do much more to improve its shareholder returns to its shareholders. </li>
</ul>


KT&amp;G announced that it will buy back 3.47 million shares (2.5% of outstanding shares) and cancel them. This would be the first share cancellation for KT&amp;G in 14 years. 
If the company's DPS is 5,200 won for 2023 fiscal year, this would represent dividend yield of 6.2% at current prices.
Although we have a positive view on KT&amp;G's share buyback and cancellation of 3.47 million shares, the company could do much more to improve its shareholder returns to its shareholders. 


KT&G: First Shares Cancellation in 14 Years

South Korea

KT&G Corporation processes, produces, and sells cigarettes and other tobacco products.  The Company, through its subsidiaries, manufactures ginseng products such as red ginseng tea and herbal medicines.  KT&G is also involved in real estate development of its former factory sites.

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KT&G Corporation (033780 KS)

KT&G: A New Shareholder Return Policy Worth 2.8 Trillion Won Over Next 3 Years

Flashlight Capital Partners (FCP), a Singapore-based activist fund, is going activist on KT&G again. FCP started its activist proposals on KT&G...

Douglas Kim

Lee Jae-Myung Becomes the New South Korean President - Four Investment Themes That Could Outperform

In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the...

Douglas Kim

FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won

On 14 October, an activist fund Flashlight Capital Partners (FCP) sent a proposal to KT&G Corporation (033780 KS) to purchase Korea Ginseng Corp...

Douglas Kim

KT&G: First Shares Cancellation in 14 Years

KT&G announced that it will buy back 3.47 million shares (2.5% of outstanding shares) and cancel them. This would be the first share cancellation...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

KT&G: Share Cancellation of 1.7 Trillion Won and a Potential Hike in Cigarette Prices in 2026

KT&G Corporation announced that it will cancel its entire treasury shares (9.5% of outstanding shares) worth nearly 1.7 trillion won. A cigarette...

Douglas Kim

KT&G: A New Shareholder Return Policy Worth 2.8 Trillion Won Over Next 3 Years

Flashlight Capital Partners (FCP), a Singapore-based activist fund, is going activist on KT&G again. FCP started its activist proposals on KT&G...

Douglas Kim

Lee Jae-Myung Becomes the New South Korean President - Four Investment Themes That Could Outperform

In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the...

Douglas Kim

FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won

On 14 October, an activist fund Flashlight Capital Partners (FCP) sent a proposal to KT&G Corporation (033780 KS) to purchase Korea Ginseng Corp...

Douglas Kim

KT&G: First Shares Cancellation in 14 Years

KT&G announced that it will buy back 3.47 million shares (2.5% of outstanding shares) and cancel them. This would be the first share cancellation...

Douglas Kim