Korea/Asia, Events, IPOs/Douglas Research Advisory

Douglas Kim

Event-Driven

<ul>
<li>SKC Co Ltd (011790 KS) announced on 29 April that it plans to change into an intermediate holding company.</li>
<li>We believe that the formation of an intermediate holding company structure could have a negative impact on SKC's share price. </li>
<li>This is because some investors may be concerned that SKC may try to complete IPOs of some of its valuable subsidiaries including SKCFT Holdings without adequate protection for SKC shareholders.</li>
</ul>


SKC Co Ltd (011790 KS) announced on 29 April that it plans to change into an intermediate holding company.
We believe that the formation of an intermediate holding company structure could have a negative impact on SKC's share price. 
This is because some investors may be concerned that SKC may try to complete IPOs of some of its valuable subsidiaries including SKCFT Holdings without adequate protection for SKC shareholders.


SKC Co: Formation of an Intermediate Holding Company

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>On Friday morning, <a href="https://www.smartkarma.com/entities/sk-discovery-co-ltd" target="_blank" data-smartkarma-citation="entities:5181:1" rel="noopener">Sk Discovery (006120 KS)</a>, current owner/controller of 36.56% of <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" data-smartkarma-citation="entities:26190:1" rel="noopener">Sk Chemicals Co Ltd/New (285130 KS)</a> announced an opportunistic Partial Offer to buy 5.22% more at KRW 108,800/share.</li>
<li>The stated purpose in the <a href="https://kind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptno=20220902000019&amp;docno=&amp;viewerhost=&amp;viewerport=" target="_blank" rel="noopener">Tender Offer Announcement</a> is "Stability of Management Rights." This will get SK Discovery to 41.77%, permitting consolidation of SK Chemicals.</li>
<li>
<em><strong>The real reason?</strong></em>SK Chemicals shares are trading at less than one-third the value of the <a href="https://www.smartkarma.com/entities/sk-bioscience-co-ltd" target="_blank" data-smartkarma-citation="entities:31484:1" rel="noopener">SK Bioscience (302440 KS)</a> shares they hold (with net cash and others free).</li>
</ul>


On Friday morning, Sk Discovery (006120 KS), current owner/controller of 36.56% of Sk Chemicals Co Ltd/New (285130 KS) announced an opportunistic Partial Offer to buy 5.22% more at KRW 108,800/share.
The stated purpose in the Tender Offer Announcement is "Stability of Management Rights." This will get SK Discovery to 41.77%, permitting consolidation of SK Chemicals.

The real reason?SK Chemicals shares are trading at less than one-third the value of the SK Bioscience (302440 KS) shares they hold (with net cash and others free).


SK Discovery Launches Opportunistic Partial Tender on SK Chemicals To Buy SK Bio CHEAP

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

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

<ul>
<li>This is a cash offer. So, there is no stock swap arbitrage here. To participate in this tender, we must buy SK Chemicals shares by the 19th.</li>
<li>We have proration risk. Discovery will buy on a pro-rata basis if exceeding the target volume. So, we could be at a loss.</li>
<li>This is an over-the-counter transaction. So both STT and CGT apply. The STT rate is 0.43% of the tendered amount and we have a 22% CGT rate for the profit.</li>
</ul>


This is a cash offer. So, there is no stock swap arbitrage here. To participate in this tender, we must buy SK Chemicals shares by the 19th.
We have proration risk. Discovery will buy on a pro-rata basis if exceeding the target volume. So, we could be at a loss.
This is an over-the-counter transaction. So both STT and CGT apply. The STT rate is 0.43% of the tendered amount and we have a 22% CGT rate for the profit.


SK Chemicals Cash Offer: Complete Details

<ul>
<li>As expected, most of the KOSPI 200 deletions, except for Bukwang Pharm, significantly outperformed the KOSPI index today.</li>
<li>Those that fit the pattern shown in the last rebalancing are CJ CGV and Bukwang. The problem, however, is that they have potential events triggering their price to fall.</li>
<li>So, I suggest paying attention to Yungjin Pharm and SK Discovery, which also have a sizable level of short interest and are expected to have stable short-coverings by end-June.</li>
</ul>


As expected, most of the KOSPI 200 deletions, except for Bukwang Pharm, significantly outperformed the KOSPI index today.
Those that fit the pattern shown in the last rebalancing are CJ CGV and Bukwang. The problem, however, is that they have potential events triggering their price to fall.
So, I suggest paying attention to Yungjin Pharm and SK Discovery, which also have a sizable level of short interest and are expected to have stable short-coverings by end-June.


Short-Covering Trend of KOSPI 200 Deletions by Month-End

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.

<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

South Korea

SK Discovery Co.,Ltd. wholesales and distributes natural gas. The Company wholesales and distributes propylene, propane, and other natural gas SK Discovery markets its products throughout South Korea.

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Sk Discovery (006120 KS)

SKC Co: Formation of an Intermediate Holding Company

This insight provides additional details of SKC which has announced highly aggressive investment plans to expand its rechargeable batteries and...

Douglas Kim

SK Discovery Launches Opportunistic Partial Tender on SK Chemicals To Buy SK Bio CHEAP

SK Discovery has launched an opportunistic Offer to buy 5.2% of SK Chem to go >40+%. A small premium to recent but only a 12-week high... ish......

Travis Lundy

SK Chemicals Cash Offer: Complete Details

This post provides complete details about SK Discovery's cash offer to the shareholders of SK Chemicals and discusses trading angles on this event.

Sanghyun Park

Short-Covering Trend of KOSPI 200 Deletions by Month-End

This post investigates the pattern shown in the last KOSPI 200 rebalancing for short-covering on the deletions and applies it to this rebalancing...

Sanghyun Park

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

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