Category

South Korea

Jan 20
0

Daily Brief South Korea: Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • FSS’s Short Selling Guidelines: Breaking Down the Key Violation Cases and What They Mean

FSS’s Short Selling Guidelines: Breaking Down the Key Violation Cases and What They Mean

By Sanghyun Park

  • The issue with borrowing agreements is that contracts with conditions set later or changeable terms don’t count, creating uncertainty on how this will play out in practice.
  • Many borrowing agreements depend on recall timing for ownership recognition, even within the same day, creating confusion in practice.
  • Repayment period limits don’t apply to internal desk-to-desk trades within the same firm. Other than those, no new updates today on reporting requirements, T+2 reporting window, or lending limits.

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Jan 19
0

Daily Brief South Korea: LS Electric and more

By | Daily Briefs, South Korea

In today’s briefing:

  • LS Electric: Increasing Supplies for Distribution Board Components to Elon Musk’s XAI Data Centers

LS Electric: Increasing Supplies for Distribution Board Components to Elon Musk’s XAI Data Centers

By Douglas Kim

  • LS Electric, one of the major power equipment providers in Korea, became a new supplier of distribution board components to Elon Musk’s xAI data centers in Memphis, Tennessee.
  • Some of the major electric utilities and other companies in the US have been reluctant to use electrical equipment products from China due to quality and security concerns.
  • Therefore, leading Korean companies such as LS Electric have been beneficiary of receiving more orders from the major US electrical utilities and other major companies in the US. 

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Jan 18
0

Daily Brief South Korea: LG CNS, Samsung Electronics, Hanwha Ocean and more

By | Daily Briefs, South Korea

In today’s briefing:

  • LG CNS IPO Book Building Results Analysis
  • EQD | Samsung Electronics – How to Position Amid a Plethora of Catalysts
  • Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)
  • Samsung Electronics: Revamping Executive Compensation to Include Stocks – Benchmarking TSMC

LG CNS IPO Book Building Results Analysis

By Douglas Kim

  • LG CNS reported a successful IPO book building results analysis. The IPO price has been finalized at 61,900 won per share (high end of the IPO price range).
  • The demand ratio from the institutional investors was 114 to 1. At the IPO price of 61,900 won, the expected market cap will be 6 trillion won. 
  • According to our valuation analysis, it suggests a base case target price of 76,383 won per share, which represents a 23% upside from the IPO price of 61,900 won.

EQD | Samsung Electronics – How to Position Amid a Plethora of Catalysts

By John Ley

  • Samsung Electronics stock has been an underperformer outright and also relative to Kospi200 as an overhang of catalysts has weighed on performance.
  • Implied vols are at the 88th percentile over the last 3 years and are at the top of their range relative to Kospi200.
  • We recommend 4 different ways to position in front of these catalysts and the large stock buy-back that was announced in November. 

Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)

By Sanghyun Park

  • KEXIM ignoring this premium could be a breach of duty, making Hanwha Ocean a prime short play. With 20% of shares, past cases suggest a 5-10% pullback.
  • This play’s tougher than HMM’s. Without step-ups, timing the conversion is tricky. Early redemption’s unlikely, so the focus is on when KEXIM pulls the trigger on the conversion.
  • No hints from KEXIM on the CB conversion yet, so loading up aggressively could be risky. We’ll likely need to wait for a signal from KEXIM before jumping in.

Samsung Electronics: Revamping Executive Compensation to Include Stocks – Benchmarking TSMC

By Douglas Kim

  • Samsung Electronics announced that it will revamp its executive compensation system to include treasury shares as incentives. Samsung has benchmarked TSMC in terms of paying treasury shares to its employees.
  • Samsung Electronics’ decision to revamp its executive compensation system to include treasury shares as incentives aligns the interests of the shareholders along with the company’s management.
  • Now that Samsung Electronics has incorporated stock based incentive system, it is likely that other Korean companies that could follow suit. 

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Jan 17
0

Daily Brief South Korea: Hyundai Motor, Coway Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Key Info We Need to Know About Boosting Predictability of Dividend Record Dates in Korea
  • Align Partners Goes Activist on Coway

Key Info We Need to Know About Boosting Predictability of Dividend Record Dates in Korea

By Sanghyun Park

  • Major banks, Hyundai Motor, POSCO Holdings, and companies like HMM, which updated their articles, will likely set dividend record dates pre-AGM in the mid-to-late February window.
  • Track backwardation in March futures for mispricings. Companies will likely follow last year’s playbook: AGM in mid-to-late March, record date 3–4 weeks prior, announcement 2 weeks ahead.
  • Opportunity lies in the March futures basis spread between February contract and record date announcement. Watch those for potential dividend hikes and futures mispricing ahead.

Align Partners Goes Activist on Coway

By Douglas Kim

  • After the market close on 16 January, it was reported that Align Partners started to go activist on Coway Co Ltd (021240 KS).
  • Align Partners sent a public letter to Coway demanding improvements to shareholder returns and measures to enhance the independence of the board of directors.
  • The combination of higher shareholder returns, low valuations, and Align Partners putting further activist pressure are likely to lead to continued outperformance of Coway relative to KOSPI this year. 

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Jan 16
0

Daily Brief South Korea: Hyundai Motor India and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyundai Motor India: Anchor Investor Lock-In Period Ends Today

Hyundai Motor India: Anchor Investor Lock-In Period Ends Today

By Devi Subhakesan

  • Lock up expiry today of 21.2 million shares held by Hyundai Motor India (HYUNDAI IN)‘s anchor investors. This could improve free float to 17.5% with rest held by the parent.
  • Hyundai India Management is positive about its CY2025 outlook and expects to grow by similar numbers or more in 2025 as it did in 2024. 
  • Creta Electric’s launch is scheduled on Jan 17th; Hyundai hopes to replicate the growth and excitement seen with its original Creta model.

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Jan 15
0

Daily Brief South Korea: Miwon Commercial, Samsung Electronics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX H1 SSF Reshuffle: Play Setup from Last Round’s Learning Curve
  • Samsung Electronics’ Key Inflection Point: Lee Jae-Yong’s Final Appeal Ruling on February 3
  • Samsung Electronics: Trading Strategy Post Another Inheritance Tax Sale

KRX H1 SSF Reshuffle: Play Setup from Last Round’s Learning Curve

By Sanghyun Park

  • Last time, price action showed up a week early, suggesting market makers are getting ahead, likely due to learning effects.
  • This round’s a letdown—no KOSDAQ names and fewer plays. Still, lower-volume KOSPI names showed solid price action correlation in the last reshuffle.
  • This round, focus on low-volume KOSPI names, enter 5 days before the listing, and exit just before it drops, using the learning curve from the last reshuffle.

Samsung Electronics’ Key Inflection Point: Lee Jae-Yong’s Final Appeal Ruling on February 3

By Sanghyun Park

  • Some speculate Samsung might delay the value-up announcement until after the February 3 ruling, using it strategically to influence the verdict and align with the appeal’s outcome.
  • Market chatter even surrounds Samsung’s HBM test delays with NVIDIA, with some linking it to Lee Jae-yong’s February 3 appeal ruling—though it seems more like speculative conspiracy.
  • If Lee Jae-yong wins his appeal on February 3, it could trigger key events like value-up disclosure and HBM pass, significantly impacting Samsung’s short-term price action and positions.

Samsung Electronics: Trading Strategy Post Another Inheritance Tax Sale

By Douglas Kim

  • In the past several years, one of the biggest risk factors on Samsung Electronics and other Samsung Group affiliates has been the huge inheritance tax payments by the Lee family.
  • Despite the weak share price performances of the four major Samsung Group affiliates, their consolidated equity increased by 31.4% on average from end of 2019 to end of 3Q 2024.
  • Once Lee family pays off the fifth installment in 2025, the market could look upon this situation more favorably due to reduced overhang associated with additional future inheritance tax payments.

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Jan 14
0

Daily Brief South Korea: HMM Co., Ltd., Medy Tox Inc, Doosan Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • HMM’s Shaping up to Be a Solid Pick for Classic Dividend Arbitrage Plays
  • Dongbang Medical IPO Preview
  • Doosan Corp – NAV Valuation Analysis Amid Index Rebalance Expectations

HMM’s Shaping up to Be a Solid Pick for Classic Dividend Arbitrage Plays

By Sanghyun Park

  • To stay in the Value-up index by June, HMM needs to maintain high ROE, but with 2023’s dip and a 2024 estimate around mid-10%, they’ll be borderline in the rankings.
  • Local markets expect HMM’s dividend payout to range from 840 KRW to mid-1,000 KRW, with a yield of 4.5% to 8%, while futures show mild backwardation in February and March.
  • HMM may finalize the dividend and announce the record date by late January, with the record date likely in mid to late February.

Dongbang Medical IPO Preview

By Douglas Kim

  • Dongbang Medical is getting ready to complete its IPO in Korea in February 2025. The IPO price range is from 9,000 won to 10,500 won. 
  • According to the bankers’ valuation, the expected market cap of the comps ranges from 191 billion won to 223 billion won.
  • Dongbang Medical specializes in the manufacturing and distribution of acupuncture needles, various cosmetic devices, and other medical devices. 

Doosan Corp – NAV Valuation Analysis Amid Index Rebalance Expectations

By Douglas Kim

  • 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. 

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Jan 13
0

Daily Brief South Korea: Jusung Engineering, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly
  • EQD | Kospi Index Options Weekly –  January 06 – 10

FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly

By Brian Freitas

  • Early in the review period, we forecast 3 changes for the FnGuide Semiconductor Top10 Index at the April rebalance.
  • Based on the passive assets tracking the index, there will be between 0.6-1.6x ADV to buy in the adds and between 2-4.7x ADV to sell in the deletes.
  • The forecast adds have outperformed the forecast deletes by a wide margin over the short-term and the medium-term. There could be more prior to the end of the review period.

EQD | Kospi Index Options Weekly –  January 06 – 10

By John Ley

  • Strong price action, Kospi rising 2.32% on Monday and finishing the week up 3.24%
  • Implied vol was virtually unchanged and historic vols came down in the move higher.
  • Kospi tends to have its largest monthly average absolute price change during January.

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Jan 11
0

Daily Brief South Korea: Samsung KODEX Autos ETF, E Mart Inc, Hyundai Motor Securities and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing
  • Chung Yong-Jin Will Receive 10% of E Mart Shares from His Mum to Become the Controlling Shareholder
  • Hyundai Motor Securities: FSS Approves A 200 Billion Won Capital Raise + Rising Real Estate PF Risk

KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing

By Sanghyun Park

  • KRX confirmed no immediate changes on KRX Semicon and KRX Autos. The universe will switch from BMI to TMI large and mid-caps, with constituent updates happening in the September rebalancing.
  • TMI rebalances quarterly, while KRX Semicon and Autos rebalance annually in September. KRX confirmed these indices will use the September TMI rebalancing results.
  • TMI rebalances quarterly, likely releasing results before KRX Sector Indices, giving a window to predict shifts in KRX Semicon and Autos stocks and position ahead of the sector rebalancing.

Chung Yong-Jin Will Receive 10% of E Mart Shares from His Mum to Become the Controlling Shareholder

By Douglas Kim

  • E Mart’s Chairman Chung Yong-Jin will receive the entire 10% shares of E Mart held by his mum Lee Myung-Hee.
  • After this transaction, Chung Yong-Jin will become the largest shareholder in E Mart with a 28.6% stake in the company.
  • This is likely to positively impact E Mart. In Korea, when the final major ownership stake is transferred, there is often a positive boost to the share price.

Hyundai Motor Securities: FSS Approves A 200 Billion Won Capital Raise + Rising Real Estate PF Risk

By Douglas Kim

  • On 10 January, it was reported that Hyundai Motor Securities (001500 KS)’s 200 billion won capital increase plan passed the Financial Supervisory Service’s review.
  • Based on the recent revised report to the FSS, Hyundai Motor Securities disclosed that there is a risk of loss in domestic real estate PF and overseas real estate investment.
  • The company’s decision to proceed with the capital raise is likely to weaken its share price to below its expected rights offering price of 6,640 won in the coming weeks.

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Jan 10
0

Daily Brief South Korea: Dongwon Industries, Shift Up and more

By | Daily Briefs, South Korea

In today’s briefing:

  • [Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible
  • Shift Up IPO Lockup – US$1.2bn Lockup Release of Strategic, Employees and IPO Investors

[Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible

By Travis Lundy

  • KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
  • In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2025.
  • We expect six ADDs and six DELs for the KOSPI 200 index during this index rebal event based on the latest available data.

Shift Up IPO Lockup – US$1.2bn Lockup Release of Strategic, Employees and IPO Investors

By Sumeet Singh

  • Shift Up (462870 KS) raised around US$320m in its South Korean IPO, after pricing at the top. Around US$1.2bn worth of shares will be released from their lockup soon.
  • Shift Up is a South Korean games developer, which as released three games so far for the global markets.
  • In this note, we will talk about the lockup dynamics and possible placement.

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