Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>In this insight, we provide an updated valuation analysis of SK Square (402340 KS) amid a potential sale of 11st to Alibaba (ADR) (BABA US).</li>
<li>Our NAV analysis of SK Square suggests NAV of 9.2 trillion won or NAV per share of 65,069 won, representing a 55% upside from current levels.</li>
<li>If SK Square is able to sell its stake in 11st to Alibaba, the capital inflow from the sale could be used to raise dividends and complete more share buybacks. </li>
</ul>


In this insight, we provide an updated valuation analysis of SK Square (402340 KS) amid a potential sale of 11st to Alibaba (ADR) (BABA US).
Our NAV analysis of SK Square suggests NAV of 9.2 trillion won or NAV per share of 65,069 won, representing a 55% upside from current levels.
If SK Square is able to sell its stake in 11st to Alibaba, the capital inflow from the sale could be used to raise dividends and complete more share buybacks. 


SK Square: Updated NAV Analysis Amid Potential Sale of 11st to Alibaba

<ul>
<li>Maeil Business Daily reported that Alibaba Group Holding (9988 HK) is considering on acquiring a controlling stake in 11st, which is a leading e-commerce platform owned by SK Square</li>
<li>In 2018, 11st was valued at 2.7 trillion won by financial investors. However, the current valuation of 11st is estimated to have declined to about 1 trillion won (US$760 million).</li>
<li>We estimate that the probability of Alibaba acquiring 11st is about 60-70%. </li>
</ul>


Maeil Business Daily reported that Alibaba Group Holding (9988 HK) is considering on acquiring a controlling stake in 11st, which is a leading e-commerce platform owned by SK Square
In 2018, 11st was valued at 2.7 trillion won by financial investors. However, the current valuation of 11st is estimated to have declined to about 1 trillion won (US$760 million).
We estimate that the probability of Alibaba acquiring 11st is about 60-70%. 


Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

<ul>
<li>The most noteworthy developments include Samsung Electronics being newly added to the Semicon sector, while SK Square has been removed.</li>
<li>We must be mindful of the potential concentration of shorting flow on SK Square as most names expected to experience negative flows do not fall under the KS200/KQ150 membership.</li>
<li>Our strategic approach can take three directions: 1. aim at only those receiving positive flows, 2. heavy shorting SK Square, and 3. long-short the four with the most flow size.</li>
</ul>


The most noteworthy developments include Samsung Electronics being newly added to the Semicon sector, while SK Square has been removed.
We must be mindful of the potential concentration of shorting flow on SK Square as most names expected to experience negative flows do not fall under the KS200/KQ150 membership.
Our strategic approach can take three directions: 1. aim at only those receiving positive flows, 2. heavy shorting SK Square, and 3. long-short the four with the most flow size.


KRX Sector Index Series Rebalancing: Heavy Shorting on SK Square Is Anticipated

<ul>
<li>One noteworthy aspect is SK Square's strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.</li>
<li>Given SK's aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.</li>
<li>We may consider positioning to capitalize on SK Square's potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.</li>
</ul>


One noteworthy aspect is SK Square's strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.
Given SK's aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.
We may consider positioning to capitalize on SK Square's potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.


Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors

Equity Bottom-Up

<ul>
<li>In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.</li>
<li>Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.</li>
<li>We highlight 38 pair trades that involve Korean holdcos and opcos.</li>
</ul>


In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.
Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.
We highlight 38 pair trades that involve Korean holdcos and opcos.


Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023

South Korea

SK Square Co., Ltd. operates as an investment company. The Company invests in semiconductors, information and communications technologies, and other industries. SK Square conducts businesses in South Korea.

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SK Square (402340 KS)

SK Square: Updated NAV Analysis Amid Potential Sale of 11st to Alibaba

If SK Square is able to sell its stake in 11st to Alibaba, the capital inflow from the sale could be used to raise dividends and complete more...

Douglas Kim

SK Square: Will Alibaba Acquire 11st?

Maeil Business Daily reported that Alibaba Group Holding (9988 HK) is considering on acquiring a controlling stake in 11st, which is a leading e...

Douglas Kim

KRX Sector Index Series Rebalancing: Heavy Shorting on SK Square Is Anticipated

This post highlights KRX Sector Index Series rebalancing and explores three trading approaches, with a focus on SK Square, ahead of the September...

Sanghyun Park

Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors

This post examines shorting situation to capitalize on SK Square's potential block deal for its Krafton stake, aligning with the schedule for...

Sanghyun Park

Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023

In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023. We highlight 38 pair trades that...

Douglas Kim

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