Category

South Korea

Daily Brief South Korea: Korea Zinc, Sanil Electric and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Comparison of Korea Zinc’s M&A in 2024 Vs SM Entertainment’s M&A in 2023 in the 9th Inning
  • An Early Look at Potential Additions and Deletions to KOSPI200 in June 2025


A Comparison of Korea Zinc’s M&A in 2024 Vs SM Entertainment’s M&A in 2023 in the 9th Inning

By Douglas Kim

  • The EGM for Korea Zinc (010130 KS) is expected to be held on 23 January 2025. Accordingly, the shareholder registry is expected to be closed around 19 – 23 December. 
  • By better analyzing the timeline of the M&A of SM Entertainment, we may be able to get better clues to Korea Zinc’s price movement in the next several weeks. 
  • Notice the double top share price formation of SM Entertainment in 2023 versus the potential double top formation of Korea Zinc in 2024. These trading formations look eerily similar.

An Early Look at Potential Additions and Deletions to KOSPI200 in June 2025

By Douglas Kim

  • In this insight, we provide an early look at the potential additions and deletions to KOSPI200 rebalance in June 2025.
  • These seven potential inclusion candidates are up on average 8.9% from end of Sept 2024 to 2 December 2024 versus KOSPI which is down 5.4% in the same period. 
  • The potential additions include IPOs in 2024 such as HD Hyundai Marine Solution (443060 KS), Shift Up (462870 KS), and Sanil Electric (062040 KS). 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: Korean Air Lines and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korean Air Spearheading the Korean Airline Industry Consolidation


Korean Air Spearheading the Korean Airline Industry Consolidation

By Douglas Kim

  • Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears that this merger could finally occur.
  • There is now a higher probability of Korean Air and Asiana Airlines receiving the final merger approval from the United States Department of Justice. 
  • Combined with attractive valuations, better balance sheet, and improved profitability from the merged entity, we believe that Korean Air shares could continue to outperform KOSPI in the next 12 months. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: LS Marine Solution, LS Materials and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Ecopro BM’s KOSPI Move: Trade LS Marine Solution & Green Cross for the Real Play
  • End of Mandatory Lock-Up Periods for 52 Companies in Korea in December 2024


Ecopro BM’s KOSPI Move: Trade LS Marine Solution & Green Cross for the Real Play

By Sanghyun Park

  • Ecopro BM’s still hot trading volume might minimize passive impact. The real action is who replaces it in KOSDAQ 150 and which KOSPI 200 stock gets the boot.
  • LS Marine Solution joins KOSDAQ 150, while Green Cross Holdings gets the boot due to the lowest average daily market cap from May 1 to October 31.
  • KRX fast-tracks approvals for financially strong companies in 20 trading days. Ecopro BM likely qualifies, meaning approval could come before Christmas—ideal timing for entry.

End of Mandatory Lock-Up Periods for 52 Companies in Korea in December 2024

By Douglas Kim

  • We discuss the end of the mandatory lock-up periods for 52 stocks in Korea in December 2024, among which two are in KOSPI and 50 are in KOSDAQ.
  • Hese 52 stocks on average could be subject to further selling pressures in December and could underperform relative to the market.
  • The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in December are Jeju Air, LS Materials, and Toolgen.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: Korea Zinc, KB Financial and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Proxy Fight for Korea Zinc in January 2025
  • Korea Zinc Saga Turning into a Comedy Show: MBK’s Speculative Move & How It’s Shaping Our Trades
  • KB Financial – NPLs from KRW2.1tr to KRW3.1tr YoY Vs +6% Loans. Substandard Loans: Big Issue


A Proxy Fight for Korea Zinc in January 2025

By Douglas Kim

  • There is likely to be a proxy fight for the control of Korea Zinc (010130 KS) between MBK/Young Poong alliance and Chairman Choi/Bain Capital alliance in January 2025.
  • Young Poong Precision announced that it will acquire 39,254 shares of Korea Zinc. Post this purchase, Young Poong Precision will own a 2.11% stake in Korea Zinc (up from 1.92%).
  • FSS Governor Lee Bok-Hyun mentioned that the FSS is seriously reviewing a potential accounting issue related to environmental pollution at Young Poong.

Korea Zinc Saga Turning into a Comedy Show: MBK’s Speculative Move & How It’s Shaping Our Trades

By Sanghyun Park

  • Lee Bok-hyun, head of the Financial Supervisory Service, unexpectedly voiced concerns about MBK winning Korea Zinc’s management battle, catching everyone off guard.
  • The key question is how Michael ByungJu Kim will handle government pressure, with MBK possibly aligning with the opposition if the Democratic Party pushes for commercial law reform.
  • Korea Zinc now becomes a proxy war over governance reform. Watch MBK’s political stance, as it could drive the stock higher, especially if Michael teams up with the opposition.

KB Financial – NPLs from KRW2.1tr to KRW3.1tr YoY Vs +6% Loans. Substandard Loans: Big Issue

By Daniel Tabbush

  • Headline NPL figures at KB Financial (105560 KS) are already of major concern rising by 49% in the past year to 3Q24
  • Granular loan classification data is of even greater concern, where substandard loans are up from KRW1,153bn to KRW1,715bn over the same period
  • This more benign bucket of NPLs well overshadows loss loans, can migration can mean a substantial rise in credit costs

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: Samsung KODEX 200 ETF, Ecopro BM , Kum Yang , Hyundai Motor and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Digging into the Year-End Divvy Arbitrage Game in Korea’s Market
  • Ecopro BM: Transfer of Listing from KOSDAQ to KOSPI Is Likely in 1Q 2025
  • Main Fact Checks on the Mix-Up Around Kum Yang’s Rights Offering Rollout
  • Hyundai Motor: Share Buyback of 1 Trillion Won and Trump’s Tariffs


Digging into the Year-End Divvy Arbitrage Game in Korea’s Market

By Sanghyun Park

  • For March KOSPI 200 futures, expect a 0.95% to 1% yield for spot-futures arbitrage, with contango depending on year-end ex-div trends and passive inflows.
  • Passive inflows into the value-up index in January and spillover effects into K200 futures, potentially fueling year-end contango due to overlap with KOSPI 200.
  • Prop trader dynamics are cooling off: Tax-driven buying in December, selling in January likely to ease, reducing the past backwardation. Without it, expect higher volatility in K200 futures.

Ecopro BM: Transfer of Listing from KOSDAQ to KOSPI Is Likely in 1Q 2025

By Douglas Kim

  • On 27 November, Ecopro BM (247540 KS) announced that it has filed an application for the transfer of listing from KOSDAQ to KOSPI. 
  • Ecopro BM is currently the second largest company in KOSDAQ. At the current market cap, Ecopro BM will be the 34th largest company in KOSPI (in terms of market cap).
  • Lofty valuation is one of the main reasons why we continue to be bearish on Ecopro BM which is trading at P/E of 134x and P/B of 9.4x in 2026.

Main Fact Checks on the Mix-Up Around Kum Yang’s Rights Offering Rollout

By Sanghyun Park

  • The FSS’s correction deadline still starts from October 17, giving Kum Yang until January 16 next year to get everything in order.
  • We should still be all over this, as the major shareholder likely won’t participate, flooding the market with stock rights and unsubscribed shares, creating a prime 25% discount opportunity.
  • Kum Yang needs even this 200-300 billion KRW, so cancellation seems unlikely. With the FSS deadline on January 16, they’ll likely submit the revised report mid to late next month.

Hyundai Motor: Share Buyback of 1 Trillion Won and Trump’s Tariffs

By Douglas Kim

  • On 27 November, Hyundai Motor (005380 KS) announced that it plans to buy back 1 trillion won worth of its shares (700 billion won to be cancelled).
  • Trump’s aggressive tariff policy has been one of the major factors negatively impacting Hyundai Motor’s share price in the past several months. 
  • Hyundai Motor’s valuation has become more attractive.  There are also other investments such as its stakes in Boston Dynamics and Hyundai Motor India that could be valued higher. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: Hyundai Motor Securities, Lotte Chilsung Beverage Co, MNC Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyundai Motor Securities Announces a Rights Offering Involving a 49% Shares Dilution
  • Lotte Chilsung Beverage – Its Land in Seochogu, Seoul Is More Than 3x Its Market Cap
  • MNC Solutions Pre-IPO – Thoughts on Valuation – Defensively, Would Ideally like a Further Discount


Hyundai Motor Securities Announces a Rights Offering Involving a 49% Shares Dilution

By Douglas Kim

  • Hyundai Motors Securities announced a rights offering worth nearly 200 billion won involving a 49% shares dilution. 
  • The amount of shares dilution is excessive which is likely to result in a share price weakness in Hyundai Motor Securities in the coming weeks.
  • The expected rights offering price for now is 6,640 won per share which is 24.5% discount to the closing price on 26 November.

Lotte Chilsung Beverage – Its Land in Seochogu, Seoul Is More Than 3x Its Market Cap

By Douglas Kim

  • Lotte Chilsung Beverage’s land in Seochogu, Seoul is estimated to be worth more than 3x its market cap. 
  • In the past several weeks, there have been increasing concerns about the overall debt pressures at the Lotte Group.
  • Lotte Group may be considering on selling some of its assets including Lotte Rental, Lotte Capital, and Lotte Chilsung Beverage’s Seochogu land. 

MNC Solutions Pre-IPO – Thoughts on Valuation – Defensively, Would Ideally like a Further Discount

By Clarence Chu

  • MNC Solution (MNC KS) is looking to raise US$200m in its Korea IPO.
  • MNC Solutions (MNC) supplies high-precision control components for maritime and aviation weaponry, and travel devices for stabilization to the defense industry.
  • In our previous note, we looked at the firm’s past performance and undertook a peer comparison. In this note, we discuss our thoughts on valuation.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: Korea Zinc, Eoflow, Binggrae Co Ltd, MNC Solution, SK Biopharmaceuticals and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Figuring Out the Right Entry Point to Go Outright Short on Korea Zinc
  • Eoflow: European Court Dismisses Injunction Filed by Insulet
  • Binggrae: Split into Two Companies and A Cancellation of 10% of Outstanding Shares
  • MNC Solutions Pre-IPO Peer Comparison – Tiny Player Outgrowing Peers
  • SK Biopharmaceuticals (326030 KS): Sequential Profit Decline in 3Q; Long-Term Growth Prospect Intact


Figuring Out the Right Entry Point to Go Outright Short on Korea Zinc

By Sanghyun Park

  • The 5% voting gap between Choi and MBK leaves NPS and sideline minority players as key swing factors, with NPS’s stake potentially closing the gap for Choi.
  • If NPS sold half its stake in the tenders, it’s down to 4%, not enough to close the gap, likely giving MBK the win and triggering a post-meeting price drop.
  • The key to our outright short is NPS’s January 10 disclosure, with market chatter suggesting NPS has likely sold about half its holdings in the two tenders.

Eoflow: European Court Dismisses Injunction Filed by Insulet

By Douglas Kim

  • A European Court dismissed the injunction application filed by Insulet for overseas intellectual property rights infringement which would allow Eoflow to start selling its EoPatch products in Europe. 
  • Eoflow is trying to complete a rights offering in December 2024. The expected rights offering price is 4,235 won (27% lower than current price). 
  • Although results of the main lawsuit in the US remain undecided, with the UPC’s decision in favor of Eoflow, the legal sentiment on this case is in favor of Eoflow.

Binggrae: Split into Two Companies and A Cancellation of 10% of Outstanding Shares

By Douglas Kim

  • In the past week, Binggrae (005180 KS) announced that it plans to split into a holding company and an operating company in May 2025.
  • As part of this company reorganization, Binggrae announced that it plans to cancel all of its treasury shares (1 million common shares, representing 10.2% of total common shares outstanding).
  • We are positive on Binggrae due to cheap valuations (1.6x EV/EBITDA in 2025), steady growth in sales and profits, and 10% share cancellation. 

MNC Solutions Pre-IPO Peer Comparison – Tiny Player Outgrowing Peers

By Clarence Chu

  • MNC Solution (MNC KS) is looking to raise US$200m in its upcoming Korea IPO.
  • MNC Solutions (MNC) supplies high-precision control components for maritime and aviation weaponry, and travel devices for stabilization to the defense industry.
  • In our previous note, we looked at the firm’s past performance. In this note, we undertake a peer comparison.

SK Biopharmaceuticals (326030 KS): Sequential Profit Decline in 3Q; Long-Term Growth Prospect Intact

By Tina Banerjee

  • SK Biopharmaceuticals (326030 KS) announced 3Q24 result, with record high U.S. revenue and four consecutive quarters of profit. Slower U.S. growth and sequential decline in operating profit remained key negatives.
  • Xcopri continued its rapid growth in the U.S. SKBP expects to achieve the higher end of 2024 U.S. sales guidance of $300–320M, indicating 4Q24 revenue of $91M, 9% QoQ.
  • Through operating leverage, the company is on track to achieve first annual profit. We think the reaction to 3Q24 result is overdone, with limited downside expected.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: Dongwon Industries, Samsung Electronics Pref Shares, SK Square , LG Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI200 Dec24 Rebal: 4 ADDs, 5 DELs, Big ADV on Small Stocks
  • Dividend Tax Cut Decision Scheduled for 25th, Next Monday: Watch Sammy Prefs
  • SK Square: A Solid Corporate Value Up Plan Likely to Lead to Continued Outperformance
  • LG Corp: Key Highlights from Its Corporate Value-Up Plan and Updated NAV Valuation


KOSPI200 Dec24 Rebal: 4 ADDs, 5 DELs, Big ADV on Small Stocks

By Travis Lundy

  • The December 2024 index review results for the KOSPI Indices were announced after the close on Thursday 21st November 2024.
  • There will be four ADDs and five DELs for KOSPI 200 during the December 2024 index rebal event. 
  • We predicted 8 out of 9 changes correctly. We missed one of the DELs and we expected a couple extra changes which did not materialize.

Dividend Tax Cut Decision Scheduled for 25th, Next Monday: Watch Sammy Prefs

By Sanghyun Park

  • The opposition’s pushing a Commercial Act amendment, and to gain ruling party support, they might strategically ease up on the dividend tax issue—classic quid pro quo.
  • The Samsung family’s collateral risk eased with a 10 trillion won buyback, but local markets are still cautious. Local traders now eye another 10 trillion won shareholder return.
  • The timing of the special dividend and tax deadlines may cause mismatches, but we should watch for earlier price moves in Samsung Electronics preferred shares.

SK Square: A Solid Corporate Value Up Plan Likely to Lead to Continued Outperformance

By Douglas Kim

  • SK Square (402340 KS) announced a solid corporate value up plan pushing up its share price by 8.8% to 87,500 won on 22 November.
  • Major highlights of the corporate value up plan included cancellation of 200 billion won of treasury shares, higher ROE target, and achieve 1x PBR ratio (nearly double the current ratio).
  • Our NAV analysis of SK Square suggests NAV of 15.2 trillion won or 112,822 won per share, representing 29% higher than current share price.

LG Corp: Key Highlights from Its Corporate Value-Up Plan and Updated NAV Valuation

By Douglas Kim

  • In this insight, we provide the major highlights of the solid Corporate Value Up plan announced by LG Corp on 22 November. 
  • The key highlights include about 500 billion won worth of share cancellation by 2026, improved dividend policy, and higher ROE target.
  • Our base case NAV valuation analysis of LG Corp suggests implied NAV of 16.1 trillion won or NAV per share of 102,426 won, which is 33.4% higher than current price.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: Shinsung Delta Tech, Hyosung Heavy Industries Corp, Sunic System Ltd., LG Energy Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI 200 & KOSDAQ 150 December Rejig Lineup
  • KOSPI200 Index Rebalance: Adds in Line; Couple of Deletes Are Surprises
  • KOSDAQ150 Index Rebalance: 8 Changes a Side; Fadu Appears to Be a 4 Letter Word
  • LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon


KOSPI 200 & KOSDAQ 150 December Rejig Lineup

By Sanghyun Park

  • KOSPI 200 & KOSDAQ 150 Dec reshuffle looks set—official lineup drops post-close today.
  • Passive flows for KOSPI 200 and KOSDAQ 150 are estimated at 40T KRW and 3.5T KRW, based on typical flow sizes until the effective date.
  • These predictions combine my sim results with reliable local intel. The accuracy’s solid enough to start pulling the trigger on trades.

KOSPI200 Index Rebalance: Adds in Line; Couple of Deletes Are Surprises

By Brian Freitas

  • There will be 4 additions and 5 deletions for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the next rebalance to be implemented at the close on 12 December.
  • The 4 adds are exactly in line with our forecast but a couple of the deletions are surprises. Those two names were close deletes though.
  • The are some large shorts on a few deletes and there could be covering over the next few weeks as borrows are recalled and as the stocks drop.

KOSDAQ150 Index Rebalance: 8 Changes a Side; Fadu Appears to Be a 4 Letter Word

By Brian Freitas

  • There will be 8 additions and 8 deletions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the next rebalance to be implemented at the close on 12 December.
  • Most of the inclusions were forecast but there is a lot of variance among the list of deletions… index committee knows best!
  • Fadu (440110 KS) was ignored for yet another rebalance, while Snh Inc (051980 KS) has also not been included in the index.

LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon

By Sanghyun Park

  • The local market’s buzzing that LG Chem could face a 200-300 billion KRW tax hit from Pillar Two next year, with LGES ramping up U.S. production.
  • LG Chem may be reconsidering its plan to sell 2% of its LGES stake, dropping ownership below 80%, shifting the tax burden to LGES instead of itself.
  • Flagging this now—LG Chem’s tax burden looms. Consider shorting LGES or a long-short with LG Chem, plus prep for the 2T KRW block deal with the pre-disclosure process.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief South Korea: KT&G Corporation and more

By | Daily Briefs, South Korea

In today’s briefing:

  • ₩200B Gov-Run Value-Up Fund Starts Buying Tomorrow, with Another ₩300B Set for Year-End


₩200B Gov-Run Value-Up Fund Starts Buying Tomorrow, with Another ₩300B Set for Year-End

By Sanghyun Park

  • The larger-than-expected Value-Up fund will drive passive flows surpassing the KRX 300 in both size and speed.
  • Value-Up ETFs’ AUM is ₩636.5B, with retail dominating. Major institutions, like pensions, are on standby, but passive flows could hit ₩1.5T post-Dec 20 rebalancing.
  • Single-Stock setups may not fit, but for alpha-seeking Value-Up strategies, focus on names with higher passive impact from the boosted AUM.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars