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.

Equity Capital Markets

<ul>
<li>Kumyang's major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.</li>
<li>Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.</li>
<li>Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang's stock futures have solid liquidity, making it a prime arb trading setup.</li>
</ul>


Kumyang's major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.
Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.
Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang's stock futures have solid liquidity, making it a prime arb trading setup.


Kumyang's Capital Raise Drop: Breaking It Down from an Arb Trading Play

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>Kum Yang announced a rights offering capital raise of 450 billion won which will be used for facility investments and debt repayment. </li>
<li>The estimated rights offering price is 38,950 won, which is 31% lower than current price (56,500 won). </li>
<li>We remain negative on Kum Yang. Despite the sharply lower rights offering price relative to current price, we would avoid the rights offering. </li>
</ul>


Kum Yang announced a rights offering capital raise of 450 billion won which will be used for facility investments and debt repayment. 
The estimated rights offering price is 38,950 won, which is 31% lower than current price (56,500 won). 
We remain negative on Kum Yang. Despite the sharply lower rights offering price relative to current price, we would avoid the rights offering. 


Kum Yang: Rights Offering Capital Raise of 450 Billion Won

<ul>
<li>The cutoff market cap is around ₩3.6T, and Hyundai Rotem is the only stock that screens into the inclusion zone.</li>
<li>Hyundai Rotem might see a repeat of LS Electric’s pattern: heavy chasing towards screening and a big dive at the decision. Watch for aggressive momentum trades starting late September.</li>
<li>The stock with the lowest full market cap, Kum Yang, is at risk, but Celltrion Pharm is close behind. KT Corp’s exclusion might save Kum Yang or Celltrion Pharm.</li>
</ul>


The cutoff market cap is around ₩3.6T, and Hyundai Rotem is the only stock that screens into the inclusion zone.
Hyundai Rotem might see a repeat of LS Electric’s pattern: heavy chasing towards screening and a big dive at the decision. Watch for aggressive momentum trades starting late September.
The stock with the lowest full market cap, Kum Yang, is at risk, but Celltrion Pharm is close behind. KT Corp’s exclusion might save Kum Yang or Celltrion Pharm.


Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat

<ul>
<li>In the past week, there were numerous local news accounts about a rights offering of nearly 800 billion won by Kum Yang. This has not been confirmed by the company. </li>
<li>Although Kum Yang has not committed to a rights offering, there is a high probability of such capital raise in 4Q24 which is likely to dilute existing shareholders. </li>
<li>Kum Yang remains a highly speculative stock. The management has lost so much credibility in the past year. We would stay away from it as far as possible. </li>
</ul>


In the past week, there were numerous local news accounts about a rights offering of nearly 800 billion won by Kum Yang. This has not been confirmed by the company. 
Although Kum Yang has not committed to a rights offering, there is a high probability of such capital raise in 4Q24 which is likely to dilute existing shareholders. 
Kum Yang remains a highly speculative stock. The management has lost so much credibility in the past year. We would stay away from it as far as possible. 


Kum Yang: A Major Capital Raise Possible in 4Q24 Which Is Likely to Dilute Existing Shareholders

<ul>
<li>The arbitrage is clear: it's the difference between stock rights/subscription costs and short hedge price. Kumyang's high market interest and volatility amplify this, suggesting unusual trading angles.</li>
<li>Kumyang's futures also show extreme volatility, likely causing excessive backwardation around the ex-rights date and stock rights window, affecting futures-based short hedge positions.</li>
<li>This opens up the possibility that, depending on entry points, our futures-based short hedge position might temporarily enter an unusual profitable zone relative to the stock rights and subscription costs.</li>
</ul>


The arbitrage is clear: it's the difference between stock rights/subscription costs and short hedge price. Kumyang's high market interest and volatility amplify this, suggesting unusual trading angles.
Kumyang's futures also show extreme volatility, likely causing excessive backwardation around the ex-rights date and stock rights window, affecting futures-based short hedge positions.
This opens up the possibility that, depending on entry points, our futures-based short hedge position might temporarily enter an unusual profitable zone relative to the stock rights and subscription costs.


Finding Unusual Arbitrage Angles in Kumyang's Effectively Pre-Announced Capital Increase

South Korea

Kum Yang Co., Ltd. specializes in manufacturing blowing agents to foam rubber products and polymers.  The Company also produces other basic fine chemicals, such as sulphur products.

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Kum Yang (001570 KS)

Kumyang's Capital Raise Drop: Breaking It Down from an Arb Trading Play

This post breaks down Kumyang’s rights issue, officially accounced yesterday, and dives into it from an arb trading play.

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Kum Yang: Rights Offering Capital Raise of 450 Billion Won

Kum Yang announced a rights offering capital raise of 450 billion won. The estimated rights offering price is 38,950 won, which is 31% lower than...

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Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat

In the November review of the Global Index Korea Standard, Hyundai Rotem is the only stock that screens in. This post explores whether Hyundai...

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Kum Yang: A Major Capital Raise Possible in 4Q24 Which Is Likely to Dilute Existing Shareholders

Kum Yang remains a highly speculative stock. The management has lost so much credibility in the past year. We would stay away from it as far as...

Douglas Kim

Finding Unusual Arbitrage Angles in Kumyang's Effectively Pre-Announced Capital Increase

This post explores the potential for unusual trading opportunities that go beyond typical levels in Kumyang's massive capital increase event, which...

Sanghyun Park

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