Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage.</li>
<li>In general, more holdcos/quasi-holdcos have been outperforming the opcos in the past year, as compared to the previous years as more investors seek value-oriented, deep NAV discount stocks.</li>
<li>We highlight 26 pair trades that involve Korean holdcos and opcos.</li>
</ul>


In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage.
In general, more holdcos/quasi-holdcos have been outperforming the opcos in the past year, as compared to the previous years as more investors seek value-oriented, deep NAV discount stocks.
We highlight 26 pair trades that involve Korean holdcos and opcos.


Korean Holdcos Vs Opcos Gap Spreads Opportunities Amid Market Carnage

Event-Driven

<ul>
<li>On 7 September, Poongsan Corp announced a physical division spin-off of its defense business unit. This is likely to have a negative impact on the existing shareholders of Poongsan Corp.</li>
<li>Its proposal to spin off the defense business comes at a bad time when investors are very cautious about companies trying to spin off valuable businesses into a separate entity.</li>
<li>Poongsan's spin-off is excluded from the need to include stock purchase rights.</li>
</ul>


On 7 September, Poongsan Corp announced a physical division spin-off of its defense business unit. This is likely to have a negative impact on the existing shareholders of Poongsan Corp.
Its proposal to spin off the defense business comes at a bad time when investors are very cautious about companies trying to spin off valuable businesses into a separate entity.
Poongsan's spin-off is excluded from the need to include stock purchase rights.


Poongsan Corp: Spin-Off of Defense Business Is Negative for Existing Minority Shareholders

Equity Capital Markets

<ul>
<li>HPSP (403870 KS) announced its IPO book building results. The IPO price has been determined at 25,000 won, which is at the high end of the IPO price range.</li>
<li>There were 1,577 institutions that were involved in the IPO survey and the demand ratio was 1,511 to 1. The IPO offering amount is 75 billion won.</li>
<li>Our base case valuation of HPSP is target price of 38,228 won per share, which represents 53% higher than the high end of the IPO price range of 25,000 won.</li>
</ul>


HPSP (403870 KS) announced its IPO book building results. The IPO price has been determined at 25,000 won, which is at the high end of the IPO price range.
There were 1,577 institutions that were involved in the IPO survey and the demand ratio was 1,511 to 1. The IPO offering amount is 75 billion won.
Our base case valuation of HPSP is target price of 38,228 won per share, which represents 53% higher than the high end of the IPO price range of 25,000 won.


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>There are 7 adds and 7 deletes for the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> rebalance to be implemented at the close on 9 June.</li>
<li>There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.</li>
<li>The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.</li>
</ul>


There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.


KOSPI200 Index Rebalance: Float Changes, Flows & Trades

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<ul>
<li>
SD Biosensor leads the addition group with an estimated inflow of 4.59x ADTV. SK Discovery and Yungjin Pharmaceutical have the most substantial outflow at 7.23x and 6.07x ADTVs, respectively.</li>
<li>For short-covering, CJ CGV stands out the most at this point. Its short interest is 4.57% of SO, and the short interest has increased the most of late.</li>
<li>For short resumption, two names stand out: Meritz Fire and Hana Tour.</li>
</ul>



SD Biosensor leads the addition group with an estimated inflow of 4.59x ADTV. SK Discovery and Yungjin Pharmaceutical have the most substantial outflow at 7.23x and 6.07x ADTVs, respectively.
For short-covering, CJ CGV stands out the most at this point. Its short interest is 4.57% of SO, and the short interest has increased the most of late.
For short resumption, two names stand out: Meritz Fire and Hana Tour.


KOSPI 200 Rebalancing: Noteworthy Names for Passive, Shorting, & Short Covering Flows

South Korea

Poongsan Corporation manufactures non-ferrous metal and defense-related products.  The Company also makes coin blanks, cans, stainless steel strips, lead frame alloys, tin plated strips, bars, and rods & wires.  It also produces precision products such as lead frames for semiconductors, machinery, and dies & gauges.

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Poongsan Corp (103140 KS)

Korean Holdcos Vs Opcos Gap Spreads Opportunities Amid Market Carnage

In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage. We highlight 26 pair trades...

Douglas Kim

Poongsan Corp: Spin-Off of Defense Business Is Negative for Existing Minority Shareholders

On 7 September, Poongsan Corp announced a physical division spin-off of its defense business unit. This is likely to have a negative impact on the...

Douglas Kim

HPSP IPO Book Building Results Analysis

HPSP (403870 KS) announced its IPO book building results. The IPO price has been determined at 25,000 won, which is at the high end of the IPO...

Douglas Kim

KOSPI200 Index Rebalance: Float Changes, Flows & Trades

There are significant flows and impact on some stocks that have float changes at the upcoming KOSPI2 rebalance. With over 5 days ADV to buy,...

Brian Freitas

KOSPI 200 Rebalancing: Noteworthy Names for Passive, Shorting, & Short Covering Flows

This post supplies the estimated flow data of passive, shorting, and short-covering trades for the additions and deletions at June's upcoming KOSPI...

Sanghyun Park

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