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

<ul>
<li>Local hedge funds, mainly prop traders and PEs, drove the price action in LS Electric and Hyundai Rotem, and are now leading net buying in Samyang Foods and Hyundai Mipo.</li>
<li>Given the setup, it's likely Samyang Foods and HD Hyundai Mipo will follow a similar move until mid-January when screening starts, so we should stay aware of this backdrop.</li>
<li>This gives us a chance to capture upside. Plus, since Samyang Foods and Hyundai Mipo may pull back 30-40% post-screening, there’s also a solid opportunity during that dip.</li>
</ul>


Local hedge funds, mainly prop traders and PEs, drove the price action in LS Electric and Hyundai Rotem, and are now leading net buying in Samyang Foods and Hyundai Mipo.
Given the setup, it's likely Samyang Foods and HD Hyundai Mipo will follow a similar move until mid-January when screening starts, so we should stay aware of this backdrop.
This gives us a chance to capture upside. Plus, since Samyang Foods and Hyundai Mipo may pull back 30-40% post-screening, there’s also a solid opportunity during that dip.


LS Electric, Then Hyundai Rotem, Now Samyang Foods and Hyundai Mipo: Same Proactive Flow?

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>One of the key themes this year that has worked well has been Korean food &amp; beverage stocks that have significantly outperformed KOSPI. </li>
<li>Some of the best selling Korean foods (especially overseas) include Samyang Foods' instant noodles, CJ Seafood's seaweed products, and Wooyang's frozen gimbab. </li>
<li>We prefer a basket approach to investing in Korean F&amp;B stocks. A basket of top 10 F&amp;B stocks in Korea has outperformed the market YTD and this outperformance could continue.</li>
</ul>


One of the key themes this year that has worked well has been Korean food &amp; beverage stocks that have significantly outperformed KOSPI. 
Some of the best selling Korean foods (especially overseas) include Samyang Foods' instant noodles, CJ Seafood's seaweed products, and Wooyang's frozen gimbab. 
We prefer a basket approach to investing in Korean F&amp;B stocks. A basket of top 10 F&amp;B stocks in Korea has outperformed the market YTD and this outperformance could continue.


<ul>
<li>Our NAV analysis of Doosan Corp suggests an implied market cap of 3.9 trillion won or implied price per share of 235,039 won which is 17.2% lower than current price.</li>
<li>Given the lack of upside relative to its NAV, we have a Negative View of Doosan Corp. </li>
<li>Considering Doosan Group's repeated corporate governance concerns in the past decade, our holdco discount estimate of 50% is probably generous. </li>
</ul>


Our NAV analysis of Doosan Corp suggests an implied market cap of 3.9 trillion won or implied price per share of 235,039 won which is 17.2% lower than current price.
Given the lack of upside relative to its NAV, we have a Negative View of Doosan Corp. 
Considering Doosan Group's repeated corporate governance concerns in the past decade, our holdco discount estimate of 50% is probably generous. 


Doosan Corp - NAV Valuation Analysis Amid Index Rebalance Expectations

<ul>
<li>This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.</li>
<li>We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.</li>
<li>Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.</li>
</ul>


This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.
We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.
Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.


A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again

<ul>
<li>S&amp;P500 is up 27.7% YTD, outperforming KOSPI which is down 6.9% YTD. Global fund flow continues to pour into top quality US stocks such as Palantir, Tesla, and NVIDIA.</li>
<li>The top 20 best performing stocks in KOSPI 200 are up on average 106.8% YTD. However, the remaining 180 stocks in KOSPI 200 are down on average 9.2% YTD. </li>
<li>There is no large Palantir-like company that deals with AI/data analytics in Korea. However, large cap IT services and telcos in Korea are increasingly expanding their AI/data analytics related business.</li>
</ul>


S&amp;P500 is up 27.7% YTD, outperforming KOSPI which is down 6.9% YTD. Global fund flow continues to pour into top quality US stocks such as Palantir, Tesla, and NVIDIA.
The top 20 best performing stocks in KOSPI 200 are up on average 106.8% YTD. However, the remaining 180 stocks in KOSPI 200 are down on average 9.2% YTD. 
There is no large Palantir-like company that deals with AI/data analytics in Korea. However, large cap IT services and telcos in Korea are increasingly expanding their AI/data analytics related business.


A Comparison of KOSPI 200 and S&P 500 Companies Performances in 2024

South Korea

Samyang Foods Co., Ltd. manufactures instant and processed food products, such as noodles, snacks, cooking oil, and feed.  The Company also produces dairy goods including milk, cheese, and ice cream.

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Samyang Foods (003230 KS)

LS Electric, Then Hyundai Rotem, Now Samyang Foods and Hyundai Mipo: Same Proactive Flow?

LS Electric, then Hyundai Rotem, and now Samyang Foods and HD Hyundai Mipo—are they all driving the same proactive flow ahead of the Global Index's...

Sanghyun Park

Korean Food Goes Global

We prefer a basket approach to investing in Korean F&B stocks. A basket of top 10 F&B stocks in Korea has outperformed the market YTD and this...

Douglas Kim

Doosan Corp - NAV Valuation Analysis Amid Index Rebalance Expectations

Our NAV analysis of Doosan Corp suggests an implied market cap of 3.9 trillion won or implied price per share of 235,039 won which is 17.2% lower...

Douglas Kim

A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again

With the Lunar New Year holiday, Korea's 10-day Global Index rebalancing window starts tomorrow and ends on the 31st. On additions? Nothing...

Sanghyun Park

A Comparison of KOSPI 200 and S&P 500 Companies Performances in 2024

There is no large Palantir-like company that deals with AI/data analytics in Korea. However, large cap IT services and telcos in Korea are...

Douglas Kim

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