Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Cross Asset Strategy

<ul>
<li>There are some major surprises (both inclusions and exclusions) in the Korea Value Up index. </li>
<li>In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&amp;T and LG Corp) are surprising exclusions in the index.</li>
<li>There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).</li>
</ul>


There are some major surprises (both inclusions and exclusions) in the Korea Value Up index. 
In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&amp;T and LG Corp) are surprising exclusions in the index.
There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).


Korea Value Up Index - Surprising Inclusions and Exclusions

Event-Driven

<ul>
<li>Last week, PharmaResearch announced that it has approved a corporate spin-off, to separate the existing company into two distinct entities including PharmaResearch Holdings (surviving entity) and PharmaResearch (newly created entity).</li>
<li>PharmaResearch spin-off is a textbook case study of destroying shareholder value. Minority shareholders should oppose this deal. </li>
<li>The spin-off ratio is based on a pure net asset basis, not taking into consideration the future earnings and cash flow streams of the company's most important product line Rejuran.</li>
</ul>


Last week, PharmaResearch announced that it has approved a corporate spin-off, to separate the existing company into two distinct entities including PharmaResearch Holdings (surviving entity) and PharmaResearch (newly created entity).
PharmaResearch spin-off is a textbook case study of destroying shareholder value. Minority shareholders should oppose this deal. 
The spin-off ratio is based on a pure net asset basis, not taking into consideration the future earnings and cash flow streams of the company's most important product line Rejuran.


PharmaResearch Spin-Off: A Textbook Case Study of Destroying Shareholder Value

<ul>
<li>KOSDAQ has been on fire in the past week. KOSDAQ is up 20% in the past one week, outperforming KOSPI which is up 5.4% in the same period.</li>
<li>One of the key reasons why KOSDAQ has been on fire is mainly due to expectation of the Korean government encouraging capital inflow into the KOSDAQ listed companies.</li>
<li>Korean government will encourage investment in the KOSDAQ by incorporating the KOSDAQ index into the evaluation criteria for the management of pension funds' assets, which amount to 1,400 trillion won.</li>
</ul>


KOSDAQ has been on fire in the past week. KOSDAQ is up 20% in the past one week, outperforming KOSPI which is up 5.4% in the same period.
One of the key reasons why KOSDAQ has been on fire is mainly due to expectation of the Korean government encouraging capital inflow into the KOSDAQ listed companies.
Korean government will encourage investment in the KOSDAQ by incorporating the KOSDAQ index into the evaluation criteria for the management of pension funds' assets, which amount to 1,400 trillion won.


KOSDAQ in on Fire! Korean Government Encourages Investment in KOSDAQ Companies by Pension Funds

<ul>
<li>In 2025, the NPS could purchase significant amounts of Korean stocks (at least 25 trillion won) which could act as support in the domestic stock market. </li>
<li>At the end of September 2024, NPS's domestic stock portfolio was 12.7% of its total assets, a 2.2% lower than NPS's domestic stocks target at the end of 2025 (14.9%).</li>
<li>The top five net purchases by the NPS and local pension funds of Korean stocks in the past one month include Samsung Electronics, Kakao, SK Innovation, Hyundai Motor, and SEMCO.</li>
</ul>


In 2025, the NPS could purchase significant amounts of Korean stocks (at least 25 trillion won) which could act as support in the domestic stock market. 
At the end of September 2024, NPS's domestic stock portfolio was 12.7% of its total assets, a 2.2% lower than NPS's domestic stocks target at the end of 2025 (14.9%).
The top five net purchases by the NPS and local pension funds of Korean stocks in the past one month include Samsung Electronics, Kakao, SK Innovation, Hyundai Motor, and SEMCO.


NPS: Portfolio Rebalance Could Lead to Buying At Least 25 Trillion Won in Korean Stocks in 2025

Asia Pac ECM and Index Rebal, DZT Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in foreign holdings of KRX stocks as of Feb 20th. The aggregated holding was USD1,264.5bn.</li>
<li>We estimate that foreign flows to be outflows of USD1,095mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.</li>
<li>We highlight changes of foreign holdings in Samsung Electronics, Samsung Elec (PREF), Samsung SDI, MIRAE ASSET SEC, Hanwha Ocean.</li>
</ul>


We analyzed the changes in foreign holdings of KRX stocks as of Feb 20th. The aggregated holding was USD1,264.5bn.
We estimate that foreign flows to be outflows of USD1,095mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
We highlight changes of foreign holdings in Samsung Electronics, Samsung Elec (PREF), Samsung SDI, MIRAE ASSET SEC, Hanwha Ocean.


KRX Foreign Holding Weekly (Feb 20th): Samsung Electronics, Samsung Elec (PREF), Samsung SDI

South Korea

PharmaResearch Co., Ltd. operates as a marine biopharmaceuticals company. The Company manufactures and sells botulinum toxin formulations and other products. PharmaResearch also produces and sells medical equipment and cosmetics.

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PharmaResearch (214450 KS)

Korea Value Up Index - Surprising Inclusions and Exclusions

There are many surprising inclusions and exclusions in the Korea Value Up Index. We provide 30 companies that are surprising inclusions and 10...

Douglas Kim

PharmaResearch Spin-Off: A Textbook Case Study of Destroying Shareholder Value

PharmaResearch spin-off is a textbook case study of destroying shareholder value. Minority shareholders should oppose this deal.

Douglas Kim

KOSDAQ in on Fire! Korean Government Encourages Investment in KOSDAQ Companies by Pension Funds

Korean government will encourage investment in KOSDAQ by incorporating the KOSDAQ index into the evaluation criteria for the management of pension...

Douglas Kim

NPS: Portfolio Rebalance Could Lead to Buying At Least 25 Trillion Won in Korean Stocks in 2025

In 2025, the NPS could purchase significant amounts of Korean stocks (at least 25 trillion won) which could act as support in the domestic stock...

Douglas Kim

KRX Foreign Holding Weekly (Feb 20th): Samsung Electronics, Samsung Elec (PREF), Samsung SDI

We analyzed KRX foreign holding data for the past week and highlighted foreign holding changes in Samsung Electronics, Samsung Elec (PREF), Samsung...

Ke Yan, CFA, FRM

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