Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>After the market close today, Meritz Financial Group (MFG) made one of the biggest announcements in the history of the group.</li>
<li>It announced that Meritz Fire &amp; Marine Insurance and Meritz Securities will become fully owned subsidiaries of Meritz Financial Group. Meritz F&amp;M Insurance and Meritz Securities will also be delisted.</li>
<li>MFG is making a real positive change through the share swaps among the three companies. This will likely have the biggest positive impact will be on MFG. </li>
</ul>


After the market close today, Meritz Financial Group (MFG) made one of the biggest announcements in the history of the group.
It announced that Meritz Fire &amp; Marine Insurance and Meritz Securities will become fully owned subsidiaries of Meritz Financial Group. Meritz F&amp;M Insurance and Meritz Securities will also be delisted.
MFG is making a real positive change through the share swaps among the three companies. This will likely have the biggest positive impact will be on MFG. 


Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance

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>From a trading perspective, rather than short-term short squeezing, we need to consider a position setup that aims for passive outflow that occurs on the effective date of SO adjustment.</li>
<li>The KOSPI 200 passive fund will do this adjustment trading (selling Meritz Securities) at the close of the previous day of the Changed Listing Day, estimated at 0.25-0.30x ADTV.</li>
<li>The KRX will likely announce the Changed Listing Date early next week.</li>
</ul>


From a trading perspective, rather than short-term short squeezing, we need to consider a position setup that aims for passive outflow that occurs on the effective date of SO adjustment.
The KOSPI 200 passive fund will do this adjustment trading (selling Meritz Securities) at the close of the previous day of the Changed Listing Day, estimated at 0.25-0.30x ADTV.
The KRX will likely announce the Changed Listing Date early next week.


A Shorting Setup on Meritz Securities for K200's Immediate SO Adjustment Due to Share Cancellation

<ul>
<li>In this insight, we discuss another 100 billion won worth of treasury shares cancellation just announced by Meritz Securities (008560 KS). </li>
<li>This share cancellation could potentially offset the recent controversies surrounding the FSS investigating the Meritz Asset Management CEO John Lee.</li>
<li>After the market close today, Meritz Securities announced that it plans to cancel 20.08 million treasury shares worth 100 billion won, representing 3% of outstanding shares. </li>
</ul>


In this insight, we discuss another 100 billion won worth of treasury shares cancellation just announced by Meritz Securities (008560 KS). 
This share cancellation could potentially offset the recent controversies surrounding the FSS investigating the Meritz Asset Management CEO John Lee.
After the market close today, Meritz Securities announced that it plans to cancel 20.08 million treasury shares worth 100 billion won, representing 3% of outstanding shares. 


Meritz Securities: Another Major Treasury Shares Cancellation

<ul>
<li>I screened those local buybacks in Korea with a market cap of +₩300B. I further selected those whose buyback volume exceeds 0.5% of SO and buyback completion is below 50%.</li>
<li>I then narrowed them down to those whose buybacks will likely be completed within 30 trading days with a daily buyback x ADTV of 0.15x or higher.</li>
<li>As a result, I obtained nine names: Hwasung Industrial, SK Chemicals, Meritz Securities, Huons Global, Daishin Securities, E-Mart, Meritz Financial Group, Meritz Fire, &amp; Hwaseung Industries
</li>
</ul>


I screened those local buybacks in Korea with a market cap of +₩300B. I further selected those whose buyback volume exceeds 0.5% of SO and buyback completion is below 50%.
I then narrowed them down to those whose buybacks will likely be completed within 30 trading days with a daily buyback x ADTV of 0.15x or higher.
As a result, I obtained nine names: Hwasung Industrial, SK Chemicals, Meritz Securities, Huons Global, Daishin Securities, E-Mart, Meritz Financial Group, Meritz Fire, &amp; Hwaseung Industries



KOSPI/KOSDAQ Buybacks in Progress: Those with High Daily Flow Screened

Equity Bottom-Up

<ul>
<li>On 17 January 2022, we recommended going long on Korea Investment Holdings and going short on Meritz Financial Group. </li>
<li>We would close out this pair trade as it has returned 12% (net gains), as of 3 February. </li>
<li>We now see a better pair trade of going long Korea Investment Holdings &amp; short Meritz Securities. </li>
</ul>


On 17 January 2022, we recommended going long on Korea Investment Holdings and going short on Meritz Financial Group. 
We would close out this pair trade as it has returned 12% (net gains), as of 3 February. 
We now see a better pair trade of going long Korea Investment Holdings &amp; short Meritz Securities. 


Close Out the Pair Trade of KIH & MFG and Initiate a New Pair Trade Between KIH & Meritz Securities

South Korea

Meritz Securities Co., Ltd. provides brokerage, underwriting, and securities dealing services in South Korea.  The Company also offers mutual funds, bonds, certificate of deposits (CD), corporate finance, online trading, and related services.

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Meritz Securities (008560 KS)

Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance

Meritz Financial Group (MFG) is making a real positive change through the share swaps among the three Meritz companies. This will likely have the...

Douglas Kim

Meritz Securities: Another Major Treasury Shares Cancellation

We discuss another major treasury shares cancellation by Meritz Securities and how this could potentially offset the recent controversies of the...

Douglas Kim

KOSPI/KOSDAQ Buybacks in Progress: Those with High Daily Flow Screened

This post details share buybacks in progress among the KOSPI/KOSDAQ stocks and screens those with a high daily flow (+0.15x ADTV).

Sanghyun Park

Close Out the Pair Trade of KIH & MFG and Initiate a New Pair Trade Between KIH & Meritz Securities

On 17 January 2022, we recommended going long on Korea Investment Holdings and going short on Meritz Financial Group. We would close out this pair...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance

Meritz Financial Group (MFG) is making a real positive change through the share swaps among the three Meritz companies. This will likely have the...

Douglas Kim

A Shorting Setup on Meritz Securities for K200's Immediate SO Adjustment Due to Share Cancellation

This post examines a shorting opportunity on Meritz Securities, whose SO will have an immediate downward adjustment by the KOSPI 200 due to the...

Sanghyun Park

Meritz Securities: Another Major Treasury Shares Cancellation

We discuss another major treasury shares cancellation by Meritz Securities and how this could potentially offset the recent controversies of the...

Douglas Kim

KOSPI/KOSDAQ Buybacks in Progress: Those with High Daily Flow Screened

This post details share buybacks in progress among the KOSPI/KOSDAQ stocks and screens those with a high daily flow (+0.15x ADTV).

Sanghyun Park

Close Out the Pair Trade of KIH & MFG and Initiate a New Pair Trade Between KIH & Meritz Securities

On 17 January 2022, we recommended going long on Korea Investment Holdings and going short on Meritz Financial Group. We would close out this pair...

Douglas Kim