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>The subscription starts on January 19, so the pricing is January 16, three trading days earlier. The shorting restriction runs until January 16, which means the 16th is inclusive.</li>
<li>There was no arb spread opening during the last four trading days of the subscription rights trade period. Nonetheless, this event had some impact on Lotte Chemical's futures trading.</li>
<li>Considering this, the trade that can be considered at this point would be unhedged shorting. We target potential inflow to adjust the second issuing price downwardly and post-listing overhangs.</li>
</ul>


The subscription starts on January 19, so the pricing is January 16, three trading days earlier. The shorting restriction runs until January 16, which means the 16th is inclusive.
There was no arb spread opening during the last four trading days of the subscription rights trade period. Nonetheless, this event had some impact on Lotte Chemical's futures trading.
Considering this, the trade that can be considered at this point would be unhedged shorting. We target potential inflow to adjust the second issuing price downwardly and post-listing overhangs.


Lotte Chemical Offering: Schedule Clarifications & Trading Considerations

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>More than 20 trillion won (US$16 billion) worth of deals are up for M&amp;As in 2023.</li>
<li>However, due to high interest rates and differences on valuations among buyers and sellers, the M&amp;A market in Korea is likely to continue to be weak in 2023.</li>
<li>In this insight, we discuss 24 companies that are up for M&amp;As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.</li>
</ul>


More than 20 trillion won (US$16 billion) worth of deals are up for M&amp;As in 2023.
However, due to high interest rates and differences on valuations among buyers and sellers, the M&amp;A market in Korea is likely to continue to be weak in 2023.
In this insight, we discuss 24 companies that are up for M&amp;As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.


Korea M&A Outlook in 2023: What's for Sale?

<ul>
<li>This post will specifically examine arb trade opportunities during the subscription rights trading period, with the recent HLB and Lotte Chemical cases.</li>
<li>HLB gave an arb yield of 8%. As for Lotte Chemical, the size (₩1.1T) is much bigger, and it carries single-stock futures, a powerful incentive for arb traders.</li>
<li>Another thing for Lotte Chemical is that it is unclear whether the major shareholders will participate in the subscription, which can lead to a widening of our arb spread.</li>
</ul>


This post will specifically examine arb trade opportunities during the subscription rights trading period, with the recent HLB and Lotte Chemical cases.
HLB gave an arb yield of 8%. As for Lotte Chemical, the size (₩1.1T) is much bigger, and it carries single-stock futures, a powerful incentive for arb traders.
Another thing for Lotte Chemical is that it is unclear whether the major shareholders will participate in the subscription, which can lead to a widening of our arb spread.


A Guide to Arb Trade in Rights Offer: Feat. HLB & Lotte Chemical

<ul>
<li>Lotte Chemical offers 8.5M new shares, which is ₩1.1T based on the provisional price of ₩130,000. This is a capital increase rate of 24.8%.</li>
<li>This event has already been leaked in advance from early last week, so it isn't easy to expect a significant return from the short-selling approach immediately after the announcement.</li>
<li>Instead, we should pay attention to the KOSPI 200 passive inflow that occurs the day before the ex-date. It is estimated to be approximately 0.8x ADTV.</li>
</ul>


Lotte Chemical offers 8.5M new shares, which is ₩1.1T based on the provisional price of ₩130,000. This is a capital increase rate of 24.8%.
This event has already been leaked in advance from early last week, so it isn't easy to expect a significant return from the short-selling approach immediately after the announcement.
Instead, we should pay attention to the KOSPI 200 passive inflow that occurs the day before the ex-date. It is estimated to be approximately 0.8x ADTV.


Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

<ul>
<li>Numerous local media mentioned today that Lotte Chemical (011170 KS) is getting ready to announce a major rights offering to acquire Iljin Materials.</li>
<li>The size of the rights offering has not been finalized but the range of the rights offering could be about 1 trillion won to 2 trillion won.</li>
<li>There are additional concerns about Lotte Chem funding additional capital into Lotte E&amp;C, which could face more financial difficulties in the local construction sector.</li>
</ul>


Numerous local media mentioned today that Lotte Chemical (011170 KS) is getting ready to announce a major rights offering to acquire Iljin Materials.
The size of the rights offering has not been finalized but the range of the rights offering could be about 1 trillion won to 2 trillion won.
There are additional concerns about Lotte Chem funding additional capital into Lotte E&amp;C, which could face more financial difficulties in the local construction sector.


Lotte Chemical - Ready to Announce Rights Offering Close to 2 Trillion Won?

South Korea

Lotte Chemical Corporation manufactures a wide range of petrochemical products such as high density polyethylene, polypropylene, and ethylene glycol. The Company's products are used in manufacturing general housewares, pipes, films, fabrics, bottles, containers, and automotive parts.

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Lotte Chemical (011170 KS)

Lotte Chemical Offering: Schedule Clarifications & Trading Considerations

This post clarifies several confusions over the event schedule and examines and discusses trading considerations for hedged and unhedged trades.

Sanghyun Park

Korea M&A Outlook in 2023: What's for Sale?

In this insight, we discuss 24 companies that are up for M&As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.

Douglas Kim

A Guide to Arb Trade in Rights Offer: Feat. HLB & Lotte Chemical

This post guides the arb trade opportunities during the subscription rights trading period in a rights offer event in Korea by looking at the...

Sanghyun Park

Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

This post details Lotte Chemical's paid-in capital increase and discusses the trading angle targeting the KOSPI 200 passive inflow that occurs...

Sanghyun Park

Lotte Chemical - Ready to Announce Rights Offering Close to 2 Trillion Won?

Numerous local media mentioned today that Lotte Chemical (011170 KS) is getting ready to announce a major rights offering to acquire Iljin Materials.

Douglas Kim

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