Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>This article discusses the potential inclusions and exclusions of KOSPI 200 rebalance in December 2022 (especially those that are highlighted by the locals). </li>
<li>Stocks that are expected to be included in the KOSPI 200 index include Samyang Foods (003230 KS) and Lotte Confectionery (280360 KS). </li>
<li>Stocks that are expected to be excluded in the KOSPI 200 index include Samyang Holdings (000070 KS) and Boryung Pharmaceutical (003850 KS).</li>
</ul>


This article discusses the potential inclusions and exclusions of KOSPI 200 rebalance in December 2022 (especially those that are highlighted by the locals). 
Stocks that are expected to be included in the KOSPI 200 index include Samyang Foods (003230 KS) and Lotte Confectionery (280360 KS). 
Stocks that are expected to be excluded in the KOSPI 200 index include Samyang Holdings (000070 KS) and Boryung Pharmaceutical (003850 KS).


KOSPI 200 Rebalance in December Highlighted by Locals

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>In addition to Lotte Confectionery, Samyang Foods is also in the inclusion zone. As for deletions, Samyang Holdings and Boryung are the most likely deletes at this point.</li>
<li>Samyang Foods and Boryung have a small passive impact but have way more liquidity than Lotte and Samyang Holdings. We should approach them differently depending on the target trading window.</li>
<li>Samyang Foods is in a tight situation, and Boryung's fate depends on Samyang Foods. But given the recent price trends, Samyang Foods appears to have a good shot.</li>
</ul>


In addition to Lotte Confectionery, Samyang Foods is also in the inclusion zone. As for deletions, Samyang Holdings and Boryung are the most likely deletes at this point.
Samyang Foods and Boryung have a small passive impact but have way more liquidity than Lotte and Samyang Holdings. We should approach them differently depending on the target trading window.
Samyang Foods is in a tight situation, and Boryung's fate depends on Samyang Foods. But given the recent price trends, Samyang Foods appears to have a good shot.


KOSPI 200 Rebalancing: Recent Changes in the Race

<ul>
<li>The value accretion that will occur by unlocking treasury shares will be more significant than Hyundai Dept. The treasury shares account for 10.64%, compared with 6.61% for Hyundai Dept.</li>
<li>Neither Holdco nor Opco will likely remain in the KOSPI 200 after relisting. So we cannot expect PASSIVE inflow at the time of relisting.</li>
<li>A tender will likely follow. However, neither is available for shorting. So, we should use Opco's overheated price adjustment as an exit timing for our positions aimed at value accretion.</li>
</ul>


The value accretion that will occur by unlocking treasury shares will be more significant than Hyundai Dept. The treasury shares account for 10.64%, compared with 6.61% for Hyundai Dept.
Neither Holdco nor Opco will likely remain in the KOSPI 200 after relisting. So we cannot expect PASSIVE inflow at the time of relisting.
A tender will likely follow. However, neither is available for shorting. So, we should use Opco's overheated price adjustment as an exit timing for our positions aimed at value accretion.


Trading Angles of Hyundai Green Food Demerger, with Potential Tender & Hive-Off

<ul>
<li>This is an equity spinoff where the existing shareholders receive shares in the spun-off company. But this creates two LISTED companies. In such a case, there won't be appraisal rights.</li>
<li>PASSIVE's selling flow towards the trade suspension tends to be offset by ACTIVE's buying flow aiming for value accretion. So, developing a timely entry/exit between these opposing flows is critical.</li>
<li>Holdco's 30% rule dynamic generally, in relative terms, leads to an increase in the value of Opco's stake and a decline in the value of Holdco's stake.</li>
</ul>


This is an equity spinoff where the existing shareholders receive shares in the spun-off company. But this creates two LISTED companies. In such a case, there won't be appraisal rights.
PASSIVE's selling flow towards the trade suspension tends to be offset by ACTIVE's buying flow aiming for value accretion. So, developing a timely entry/exit between these opposing flows is critical.
Holdco's 30% rule dynamic generally, in relative terms, leads to an increase in the value of Opco's stake and a decline in the value of Holdco's stake.


A Walkthrough of Hyundai Department Store Demerger Event

<ul>
<li>Although not many, there are strong candidates for a safe play aimed at constituent change. Inclusion: <strong>Lotte Confectionery</strong> &amp; Exclusion: <strong>Samyang Holdings</strong>
</li>
<li>Lotte Confectionery's average daily market cap must fall by more than 30% to be pushed out of the borderline. Samyang Holdings's market cap gap to the second-lowest one is 17%.</li>
<li>The trading volume of these two is so small that a significant passive impact (relative to DTV) will likely occur. We should consider a little more aggressive approach, timing-wise.</li>
</ul>


Although not many, there are strong candidates for a safe play aimed at constituent change. Inclusion: Lotte Confectionery &amp; Exclusion: Samyang Holdings

Lotte Confectionery's average daily market cap must fall by more than 30% to be pushed out of the borderline. Samyang Holdings's market cap gap to the second-lowest one is 17%.
The trading volume of these two is so small that a significant passive impact (relative to DTV) will likely occur. We should consider a little more aggressive approach, timing-wise.


South Korea

Samyang Holdings Corp manufactures a wide range of food, such as sugar, cooking oil, wheat flour, and livestock feed.  The Company also operates trading business and produces industrial fibers and chemical products, such as engineering plastics, PET bottles and ion exchange resin.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Samyang Holdings (000070 KS)

KOSPI 200 Rebalance in December Highlighted by Locals

This article discusses the potential inclusions and exclusions of KOSPI 200 rebalance in December 2022 (especially those that are highlighted by...

Douglas Kim

KOSPI 200 Rebalancing: Recent Changes in the Race

This post investigates the recent changes in the upcoming rebalancing of the KOSPI 200 and discusses the resulting passive impacts and trading...

Sanghyun Park

Trading Angles of Hyundai Green Food Demerger, with Potential Tender & Hive-Off

This post is a deep-dive investigation into the Hyundai Green Food demerger event, with a potential tender offer and hive-off that will likely...

Sanghyun Park

A Walkthrough of Hyundai Department Store Demerger Event

This post is a detailed walkthrough of the Hyundai Department Store demerger, officially announced last Friday. It includes the demerger process...

Sanghyun Park

KOSPI 200 December Rebalancing Safe Play

This post examines the KOSPI 200 rebalancing situation in December and discusses the names suitable for a safe play at this point.

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)