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.

Event-Driven

Samsung Fire & Marine Insuranc / Event-Driven

<ul>
<li>Based on last Friday's closing price, <strong>the three stocks with a 20D MA sigma below -1.0 are LG Electronics 1P, Samsung SDI 1P, and Samsung E-M 1P</strong>.</li>
<li>Among the preferred shares with a yearend dividend yield of 5% or higher based on the FnGuide consensus, <strong>Kumho Petro Chemical 1P</strong> has a dividend yield of close to 10%.</li>
<li>
<strong>Four prefs</strong> have a Pref/Ord dividend yield spread of more than 2%p among those with a yearend dividend yield of more than 5%.</li>
</ul>


Based on last Friday's closing price, the three stocks with a 20D MA sigma below -1.0 are LG Electronics 1P, Samsung SDI 1P, and Samsung E-M 1P.
Among the preferred shares with a yearend dividend yield of 5% or higher based on the FnGuide consensus, Kumho Petro Chemical 1P has a dividend yield of close to 10%.

Four prefs have a Pref/Ord dividend yield spread of more than 2%p among those with a yearend dividend yield of more than 5%.


<p>Samsung SDI's share price experienced sharp volatility yesterday. After the market closed on Wednesday, a local media outlet reported that Samsung SDI plans to spin out the battery business division. As a result, the share price of Samsung SDI fell more than 6% as soon as the market opened yesterday. Then, at 2:13 pm, Samsung SDI issued a public notice denying this report. So, the share price reduced the decline to some extent, but it ended with a drop of more than 3%.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/299/original/1.png?1631832824" class="editor-image img-responsive" data-smartkarma-image-id="230299"></figure></section><p><a href="https://engkind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptNo=20210916000166&amp;docno=&amp;formProcsCd=070&amp;language=english" target="_blank" rel="noopener">Below is the public notice filed by Samsung SDI to deny the spinout report (KRX KIND).</a></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/300/original/2.png?1631832874" class="editor-image img-responsive" data-smartkarma-image-id="230300"></figure></section><hr><div class="content-highlight"><p><strong>The local media that reported this is a newspaper called The Elec. Although it is not a first-tier press, it specializes in the local tech sector, and its articles are highly reliable.</strong></p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/301/original/3.png?1631833019" class="editor-image img-responsive" data-smartkarma-image-id="230301"></figure></section><p><a href="http://www.thelec.kr/news/articleView.html?idxno=14352" target="_blank" rel="noopener">Here is the link to the news article.</a> (English translation isn't available, but Google Translate will do the job nicely.)</p><p><strong>The main points of the article in this newspaper are as follows.</strong></p><div class="content-highlight"><ul>
<li><strong>Samsung SDI's key executives recently had a meeting to discuss the spin-off of the energy solution division responsible for the battery business. It is to attract investment in the battery business.</strong></li>
<li><strong>It is the first time within Samsung SDI that top management has discussed the spin-off of the battery business. However, a specific plan and schedule have not been decided yet.</strong></li>
<li><strong>Samsung SDI's management also discussed the sale of the electronic materials business, which accounts for about 20% of total sales, as another way to raise funds for investment.</strong></li>
</ul></div>

Samsung SDI's share price experienced sharp volatility yesterday. After the market closed on Wednesday, a local media outlet reported that Samsung SDI plans to spin out the battery business division. As a result, the share price of Samsung SDI fell more than 6% as soon as the market opened yesterday. Then, at 2:13 pm, Samsung SDI issued a public notice denying this report. So, the share price reduced the decline to some extent, but it ended with a drop of more than 3%.Below is the public notice filed by Samsung SDI to deny the spinout report (KRX KIND).The local media that reported this is a newspaper called The Elec. Although it is not a first-tier press, it specializes in the local tech sector, and its articles are highly reliable.Here is the link to the news article. (English translation isn't available, but Google Translate will do the job nicely.)The main points of the article in this newspaper are as follows.
Samsung SDI's key executives recently had a meeting to discuss the spin-off of the energy solution division responsible for the battery business. It is to attract investment in the battery business.
It is the first time within Samsung SDI that top management has discussed the spin-off of the battery business. However, a specific plan and schedule have not been decided yet.
Samsung SDI's management also discussed the sale of the electronic materials business, which accounts for about 20% of total sales, as another way to raise funds for investment.


Time to Short Samsung SDI on Inevitable ECO of Battery Unit or Massive Rights Offer

<p>Last Friday, Samsung SDI's share price rose 3.69% to ₩674,000. On the other hand, LG Chem fell 1.56% from the previous day, and SK Innovation fell 1.6%.</p><p>A report released by a local brokerage on Friday morning appears to have had an impact on Samsung SDI's Friday stock price. Kiwoom Securities said that Samsung SDI's EV battery business would turn to the black by expanding supply to major European automakers.</p><p>However, I believe that expectations for 2Q earnings have already been reflected in the price before Friday. After the stock price was corrected due to Morgan Stanley's sell-off report at the end of May, the stock rebounded sharply on the back of 2Q earnings improvement and the possibility of capacity expansion in the US.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/962/original/Screen+Shot+2021-06-19+at+1.01.28+AM.png?1624078954" class="editor-image img-responsive" data-smartkarma-image-id="213962"></figure></section><div class="content-caption">(Samsung SDI 3-month chart)</div><p>In fact, Kiwoom Securities' annual operating profit estimate of ₩1,095.5B is in line with the market consensus, compiled by FnGuide based on the 19 local brokerages covering Samsung SDI.</p><table class="table table-striped">
<colgroup>
<col width="70">
<col width="70">
<col width="70">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"Samsung SDI Co Ltd"}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-53]C[-4]">Street consensus</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":44366}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"m\". \"d","3":1}' data-sheets-formula="=today()">2021. 6. 19</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":2,"2":"T-1M"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-1M</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":2,"2":"T-3M"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-3M</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":2,"2":"T-6M"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-6M</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":2,"2":"T-1Y"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>T-1Y</td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"Sales"}'>Sales</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":13880}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,880.0B</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":13864.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,864.2B</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":13813.5}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,813.5B</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":14205}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩14,205.0B</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":13343.4}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩13,343.4B</td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"OP"}'><strong>OP</strong></td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":1098.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10"><strong>₩1,098.2B</strong></td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":1092.3}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10"><strong>₩1,092.3B</strong></td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":1127.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10"><strong>₩1,127.2B</strong></td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":1199.6}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10"><strong>₩1,199.6B</strong></td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":1011.9}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10"><strong>₩1,011.9B</strong></td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"NP to controlling stake"}'>NP to controlling stake</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":1020.3}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩1,020.3B</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":994}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩994.0B</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":999.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩999.8B</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":991.6}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩991.6B</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":886.3}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=R[34]C[0]/10">₩886.3B</td>
</tr>
<tr>
<td style="width: 128.608px;" data-sheets-value='{"1":2,"2":"12M forward PER"}'>12M forward PER</td>
<td style="text-align: right; width: 97.4716px;" data-sheets-value='{"1":3,"3":41.06}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">41.06x</td>
<td style="text-align: right; width: 95.4688px;" data-sheets-value='{"1":3,"3":40}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">40.00x</td>
<td style="text-align: right; width: 108.523px;" data-sheets-value='{"1":3,"3":43.93}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">43.93x</td>
<td style="text-align: right; width: 106.506px;" data-sheets-value='{"1":3,"3":40.32}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">40.32x</td>
<td style="text-align: right; width: 84.4602px;" data-sheets-value='{"1":3,"3":38.34}' data-sheets-numberformat='{"1":2,"2":"#,##0.00x","3":1}' data-sheets-formula="=R[34]C[0]">38.34x</td>
</tr>
<tr><td colspan="6" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: FnGuide"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Source: FnGuide</td></tr>
</tbody>
</table><p>Then, the reason why only Samsung SDI's share price rose on Friday must have been that the market saw a new momentum other than 2Q earnings or US investment. It is believed that it was a British media report that Samsung SDI could build a battery plant in the UK. According to British media, the British government discusses plans to build an electric vehicle battery plant with six companies, including Samsung SDI.</p><p>This British investment included not only Samsung SDI but also LG Energy Solutions. However, the reason why Samsung SDI's stock price has reacted more sensitively is that new investments in major markets such as the US have been delayed recently. In other words, the market came to think that Samsung SDI would be more active in new investment in the UK than other companies.</p><p>However, Samsung SDI denies the report regarding the UK investment. Samsung SDI is already operating a battery plant in Hungary. Samsung SDI is receiving enormous support from the Hungarian government, including corporate tax reductions. At the beginning of this year, Samsung SDI also invested close to ₩1T to expand its plant in Hungary. Unless the UK government provides as much tax support as the Hungarian government does, it is unreasonable to make additional investments in new countries like the UK.</p><p><strong>Therefore, Samsung SDI's investment in the UK should be viewed as temporary market noise.</strong></p>

Last Friday, Samsung SDI's share price rose 3.69% to ₩674,000. On the other hand, LG Chem fell 1.56% from the previous day, and SK Innovation fell 1.6%.A report released by a local brokerage on Friday morning appears to have had an impact on Samsung SDI's Friday stock price. Kiwoom Securities said that Samsung SDI's EV battery business would turn to the black by expanding supply to major European automakers.However, I believe that expectations for 2Q earnings have already been reflected in the price before Friday. After the stock price was corrected due to Morgan Stanley's sell-off report at the end of May, the stock rebounded sharply on the back of 2Q earnings improvement and the possibility of capacity expansion in the US.(Samsung SDI 3-month chart)In fact, Kiwoom Securities' annual operating profit estimate of ₩1,095.5B is in line with the market consensus, compiled by FnGuide based on the 19 local brokerages covering Samsung SDI.










Street consensus
2021. 6. 19
T-1M
T-3M
T-6M
T-1Y


Sales
₩13,880.0B
₩13,864.2B
₩13,813.5B
₩14,205.0B
₩13,343.4B


OP
₩1,098.2B
₩1,092.3B
₩1,127.2B
₩1,199.6B
₩1,011.9B


NP to controlling stake
₩1,020.3B
₩994.0B
₩999.8B
₩991.6B
₩886.3B


12M forward PER
41.06x
40.00x
43.93x
40.32x
38.34x

Source: FnGuide

Then, the reason why only Samsung SDI's share price rose on Friday must have been that the market saw a new momentum other than 2Q earnings or US investment. It is believed that it was a British media report that Samsung SDI could build a battery plant in the UK. According to British media, the British government discusses plans to build an electric vehicle battery plant with six companies, including Samsung SDI.This British investment included not only Samsung SDI but also LG Energy Solutions. However, the reason why Samsung SDI's stock price has reacted more sensitively is that new investments in major markets such as the US have been delayed recently. In other words, the market came to think that Samsung SDI would be more active in new investment in the UK than other companies.However, Samsung SDI denies the report regarding the UK investment. Samsung SDI is already operating a battery plant in Hungary. Samsung SDI is receiving enormous support from the Hungarian government, including corporate tax reductions. At the beginning of this year, Samsung SDI also invested close to ₩1T to expand its plant in Hungary. Unless the UK government provides as much tax support as the Hungarian government does, it is unreasonable to make additional investments in new countries like the UK.Therefore, Samsung SDI's investment in the UK should be viewed as temporary market noise.

Samsung SDI Ord's Price Gain on a Market Noise Last Friday: Two Pair Trades Worth Considering

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>Over the last week, Korean preferred shares have outperformed the ordinary shares by a huge margin. On most stocks, the narrowing discount was accompanied by a huge jump in volume on the preferred shares.</p><p>Is this the beginning of a trend where the discount on the preferred shares continues to narrow, or does this present an opportunity to sell out of the preferred shares and buy the ordinary shares? We recommend buying preferred shares that are trading at discounts of greater than 40% and near the wider end of their 2 year range, while switching out of preferred shares that are trading at discounts of less than 20% and are nearer to their tightest discounts over the last 2 years.</p><p>With the ban on short selling, implementation of a pure arbitrage strategy is difficult and would depend on long sell availability. However, the strategy can be implemented in names that have relatively liquid single stock futures.</p>

Over the last week, Korean preferred shares have outperformed the ordinary shares by a huge margin. On most stocks, the narrowing discount was accompanied by a huge jump in volume on the preferred shares.Is this the beginning of a trend where the discount on the preferred shares continues to narrow, or does this present an opportunity to sell out of the preferred shares and buy the ordinary shares? We recommend buying preferred shares that are trading at discounts of greater than 40% and near the wider end of their 2 year range, while switching out of preferred shares that are trading at discounts of less than 20% and are nearer to their tightest discounts over the last 2 years.With the ban on short selling, implementation of a pure arbitrage strategy is difficult and would depend on long sell availability. However, the strategy can be implemented in names that have relatively liquid single stock futures.

Korea Preferred Shares - An Eventful Week & Trade Ideas

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<p><a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:409:1">Amazon.com Inc (AMZN US)</a><a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:15273:1">Microsoft Corp (MSFT US)</a><a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:191:1">Samsung Electronics (005930 KS)</a><a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd-56fbe460-3e52-45a8-ad22-f3fcba52df02" target="_blank" rel="noopener" data-smartkarma-citation="entities:28851:1">Samsung SDI Co Ltd (006405 KS)</a><a href="https://www.smartkarma.com/entities/larsen-toubro-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:2499:1">Larsen &amp; Toubro (LT IN)</a><a href="https://www.smartkarma.com/entities/icici-bank-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:547:1">ICICI Bank Ltd (ICICIBC IN)</a><a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" rel="noopener" data-smartkarma-citation="entities:558:1">HDFC Bank (HDFCB IN)</a> are covered in this webcast.</p><p>We outline buy support levels into weakness where we like working into some long exposure as we transition out of shorts in major markets. Quality names more often than not lead a low in key indices.</p><p>Rally resistance points are outlined for a rise in April that may very well succumb to fresh weakness in May.</p><p>Korea - Stocks like SEC and SDI should bottom ahead of the KOSPI and telegraph a low in Korea. </p><p>Big tech in the US has not seen the final bout of capitulation selling that is normally seen to market a low in late March. Amazon and Microsoft have yet to dig into good RSI oversold territory and our support levels reflect this.</p><p>India has seen an overshoot and some quality names are worth picking up on weakness into late March.</p>

Amazon.com Inc (AMZN US)Microsoft Corp (MSFT US)Samsung Electronics (005930 KS)Samsung SDI Co Ltd (006405 KS)Larsen &amp; Toubro (LT IN)ICICI Bank Ltd (ICICIBC IN)HDFC Bank (HDFCB IN) are covered in this webcast.We outline buy support levels into weakness where we like working into some long exposure as we transition out of shorts in major markets. Quality names more often than not lead a low in key indices.Rally resistance points are outlined for a rise in April that may very well succumb to fresh weakness in May.Korea - Stocks like SEC and SDI should bottom ahead of the KOSPI and telegraph a low in Korea. Big tech in the US has not seen the final bout of capitulation selling that is normally seen to market a low in late March. Amazon and Microsoft have yet to dig into good RSI oversold territory and our support levels reflect this.India has seen an overshoot and some quality names are worth picking up on weakness into late March.

South Korea

Samsung SDI Co., Ltd. specializes in developing Lithium Ion Battery (LIB) technology. The Company also manufactures cathode ray tubes (CRTs) for televisions and computer monitors. Samsung SDI also produces liquid crystal display (LCD) components and rechargeable batteries for cellular phones, personal digital assistants (PDAs), Energy Storage Systems and solar panels.

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Samsung SDI Co Ltd (006405 KS)

Korea Prefs Yearend Dividend Plays

This post examines and discusses various dividend plays for Korea's preferred shares based on their expected dividend yields as we advance towards...

Sanghyun Park

Time to Short Samsung SDI on Inevitable ECO of Battery Unit or Massive Rights Offer

This post discusses the situation of Samsung SDI requiring either spinoff of the battery unit or a massive capital increase. So, the time has come...

Sanghyun Park

Samsung SDI Ord's Price Gain on a Market Noise Last Friday: Two Pair Trades Worth Considering

Samsung SDI's share price rose 3.69% on an unsubstantiated market noise. Here are two pair trades worth considering to capitalize on the current...

Sanghyun Park

Korea Preferred Shares - An Eventful Week & Trade Ideas

Over the last week, Korean preferred shares have outperformed the ordinary shares by a huge margin. On most stocks, the narrowing discount was...

Brian Freitas

Stocks to Work into on March Weakness

Amazon.com Inc (AMZN US)Microsoft Corp (MSFT US)Samsung Electronics (005930 KS)Samsung SDI Co Ltd (006405 KS)Larsen & Toubro (LT IN)ICICI Bank...

Thomas Schroeder

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