Category

South Korea

Jul 14
0

Daily Brief South Korea: Sigong Tech, Sam Chun Dang Pharm and more

By | Daily Briefs, South Korea

In today’s briefing:

  • I-Scream Media IPO Preview
  • Sam Chun Dang Pharm (000250 KS): Positive Momentum to Continue

I-Scream Media IPO Preview

By Douglas Kim

  • I-Scream Media is getting ready to complete its IPO on KOSDAQ exchange in August. The IPO price range is from 32,000 won to 40,200 won. 
  • I-Scream Media is one of the the leading digital education platform companies in Korea. Its I-Scream S platform is used by more than 93% of elementary school classrooms in Korea.
  • Post IPO, Sigong Tech will have a 23.7% stake in I-Scream Media. Sigong Tech’s stake in I-Scream media (at high end of IPO value) is 157% of its market cap.

Sam Chun Dang Pharm (000250 KS): Positive Momentum to Continue

By Tina Banerjee

  • Sam Chun Dang Pharm (000250 KS) secured exclusive 10-year contract to supply Eylea biosimilar (SCD411) to nine European countries. The company will receive 55% of gross sales of the product.
  • Last month, the company placed 500K shares (~2% of issued capital) to Shinhan Investment Securities to raise KRW71.4B. Proceeds will be utilized to fund the company’s global clinical trial cost.
  • The company has started exporting generic glaucoma eye drop to the U.S. and expects to start exporting at least two more generic ophthalmic products in the U.S. this year.

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Jul 13
0

Daily Brief South Korea: Doosan Bobcat Inc, SK Innovation, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?
  • SK Innovation & SK E&S: Summary of the Controversy Surrounding the Merger Ratio
  • EQD | KOSPI 200 Sell-Off Could Accelerate This Week, But It’s A BUY

Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?

By Douglas Kim

  • On 11 July, the Doosan Group announced a major business structure reorganization, including the delisting of Doosan Bobcat Inc (241560 KS).
  • In our view (over the next 3-6 months), these transactions appear to be value-destroying for Doosan Bobcat and Doosan Enerbility minority shareholders but positive for Doosan Robotics shareholders.
  • Doosan Robotics plans to acquire the remaining 54% stake in Doosan Bobcat through a tender offer. Once Doosan Robotics fully owns Doosan Bobcat, its shares will be delisted.

SK Innovation & SK E&S: Summary of the Controversy Surrounding the Merger Ratio

By Sanghyun Park

  • Interest in this merger is emerging from an unexpected angle, especially regarding the merger ratio’s fairness. There’s a risk it could unfavorably affect SK Innovation’s stock price.
  • SK Innovation at ₩108,000/share; SK E&S at ₩290,000/share based on strong profits. SK plans ratios around 1.3x total value and 2.7x per share. SK Inc may reach mid-70% stake post-merger.
  • SK Innovation’s stock may face short-term decline. Securing shareholder approval, with SK Inc at 36%, overseas investors 22%, local institutions 15%, local retail 20%, and NPS 7%, poses challenges.

EQD | KOSPI 200 Sell-Off Could Accelerate This Week, But It’s A BUY

By Nico Rosti

  • The KOSPI 200 INDEX started a modest pullback and is entering a BUY area, but it could fall further this coming week, caution is advised.
  • The support levels to buy are between 383-371, this coming week.
  • Alternatively buy the Close, if the WEEKLY Close is negative, next Friday.

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Jul 12
0

Daily Brief South Korea: Doosan Robotics , Netmarble , JUNJIN Construction & Robot, Alteogen Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
  • Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat
  • Junjin Construction and Robot IPO Preview
  • Alteogen (196170 KS): Transitioning Toward Becoming Commercial Stage Biotech Company

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat

By Sanghyun Park

  • The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
  • The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
  • Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat

By Sanghyun Park

  • This block deal has an unusual PSR (price swap return) contract at ₩58,200, the July 10th closing price, likely preventing Netmarble’s typical stock price correction today.
  • In 2022, a similar-sized local PSR transaction involved Doosan Bobcat Inc, with 9.9 million shares and a PSR swap price of ₩37,500.
  • As for Doosan Bobcat, the stock initially dropped but rebounded near the PSR swap price, prompting local brokerages, focused on PSR fee income, to sell rather than realize capital gains.

Junjin Construction and Robot IPO Preview

By Douglas Kim

  • Junjin Construction & Robot is getting ready to complete its IPO in KOSPI in August. The IPO price range is from 13,800 won to 15,700 won. 
  • The IPO offering is from 42.5 billion won to 48.3 billion won. The book building for the institutional investors is from 30 July to 5 August. 
  • The integration of robotics into construction processes is a cornerstone of Junjin’s operations. Its main product is the concrete pump vehicle which pumps cement or concrete at a construction site.

Alteogen (196170 KS): Transitioning Toward Becoming Commercial Stage Biotech Company

By Tina Banerjee

  • Alteogen Inc (196170 KS) received approval for first product, Tergase, a recombinant human hyaluronidase liquid product, in Korea. Tergase increases penetration during intramuscular or subcutaneous injection and local anesthesia.
  • With excellent safety profile compared to existing animal-derived hyaluronidase products, Tergase stands to emerge as a promising alternative in the global hyaluronidase market estimated to be $1B in near future.
  • Alteogen’s subsidiary, Altos Biologics submitted marketing authorization approval to the European Medicines Agency for Eylea biosimilar. Approval is expected by next year.

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Jul 11
0

Daily Brief South Korea: Shift Up, Shinsung Tongsang, Doosan Enerbility and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Trading Strategy of Shift Up on the First Day of IPO
  • Shinsung Tongsang (005390 KS)’s Cheeky Delisting Offer
  • Doosan Enerbility: A Key Beneficiary of Potential Nuclear Power Projects Win in the Czech Republic

Trading Strategy of Shift Up on the First Day of IPO

By Douglas Kim

  • In this insight, we discuss a trading strategy for Shift Up which starts trading on 11 July. Shift Up is one of the most anticipated IPOs in Korea this year.
  • Our base case (6 months – 1 year) target price of Shift Up is 95,510 won, which is 59% higher than the IPO price.
  • We recommend investors to take some profits (about 50% of invested capital) if the share price shoots higher by 100% or more from the IPO price on the first day.

Shinsung Tongsang (005390 KS)’s Cheeky Delisting Offer

By David Blennerhassett

  • Last month, apparel play Shinsung Tongsang (005390 KS) announced a Tender Offer from Canaan Co for 22.02% of shares out, at ₩2,300/share, a 15.84% premium to undisturbed.
  • Canaan Co. and related parties hold a combined stake of 77.68%, which increases to 99.7% IF the Offer is successful. Canaan needs 95% to force delisting. 
  • Shinsung’s share price has languished over the past 12 months or so, despite improving market share and earnings. Getting to 95% might be a stretch. In need of a bump?

Doosan Enerbility: A Key Beneficiary of Potential Nuclear Power Projects Win in the Czech Republic

By Douglas Kim

  • The Czech Republic government is in the final stages of selecting companies to build four nuclear power plants which could cost nearly US$30 billion.
  • A Korean consortium including KHNP, Doosan Enerbility, KEPCO E&C, and Daewoo E&C is competing mainly against EDF, a French government owned electric utility company. 
  • If the KHNP consortium is able to win this new order, Doosan Enerbility will be a key beneficiary as it will supply the nuclear reactors and steam generators.

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Jul 10
0

Daily Brief South Korea: Korea Stock Exchange Kospi Index, LS Marine Solution, Hyundai Motor India , Posco Future M, Sanil Electric, Shift Up and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Details of Block Deal Pre-Disclosure Rule Disclosed: Cancellation Risk from 30% Price Correction
  • Insiders Buying and Selling Prior To Mandatory Block Deal Pre-Announcement Requirement in Korea
  • India Car Sales Slow: Can Hyundai Keep Its No. 2 Spot Amidst Fierce Competition?
  • KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It
  • Sanil Electric IPO – Stars Aligned with High Growth and Strong Sentiment
  • Shift Up IPO Trading – Strong Demand for Quality Asset but It Has Slipped Out of the Top Games

Details of Block Deal Pre-Disclosure Rule Disclosed: Cancellation Risk from 30% Price Correction

By Sanghyun Park

  • Today’s press release unveils details on new flow trading events in Korea’s local market from the second half of this year, highlighting two key points.
  • Firstly, the disclosure rule starts with block deals from August 23rd. Secondly, a 30% or greater stock price correction on disclosure day may cancel the transaction plan.
  • This highlights the need to consider cancellation risks in pre-disclosure positions and design setups with consideration for the potential for reverse flows as stock prices approach 30% corrections.

Insiders Buying and Selling Prior To Mandatory Block Deal Pre-Announcement Requirement in Korea

By Douglas Kim

  • In this insight, we discuss recent, active insiders buying and selling their shares prior to the mandatory block deal pre-announcement requirement starting 24 July in Korea.
  • The three companies that announced insiders selling (July) are down on average 3% YTD. However, the three companies that announced insiders buying (July) are up on average 74% YTD. 
  • LS Cable has been consistently increasing its ownership of LS Marine Solution, up from 46% stake as of 27 May 2024 to 56.14% as of 8 July 2024.

India Car Sales Slow: Can Hyundai Keep Its No. 2 Spot Amidst Fierce Competition?

By Devi Subhakesan

  • Hyundai Motor India (HMIL) saw a market share loss in India Passenger Vehicles sales reported for June 2024 and 1QFY2025, impacted by intensified competition in the SUV segment.
  • Mahindra & Mahindra, and Toyota Kirloskar India gained market share in 1QFY2025 led by upgraded model launches in the SUV segment, traditionally a strong category for HMIL.
  • HMIL’s declining market share, if not reversed soon, could challenge optimistic growth projections and valuation multiples for its upcoming IPO.

KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It

By Brian Freitas

Sanil Electric IPO – Stars Aligned with High Growth and Strong Sentiment

By Ethan Aw

  • Sanil Electric (062040 KS) is looking to raise up to US$165m in its Korean IPO.
  • Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
  • In our previous notes, we talked about the company’s historical performance. In this note, we undertake a quick peer comparison and share our thoughts on valuation.

Shift Up IPO Trading – Strong Demand for Quality Asset but It Has Slipped Out of the Top Games

By Sumeet Singh

  • Shift Up (462870 KS) raised around US$320m in its South Korean IPO, after pricing at the top.
  • Shift Up is a South Korean games developer, which as released three games so far for the global markets.
  • We have looked at the company’s performance and valuation in our earlier notes. In this note, we talk about the trading dynamics.

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Jul 08
0

Daily Brief South Korea: Clio Cosmetics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSDAQ150 Index Rebalance Preview: For Now, A Dozen Changes in December

KOSDAQ150 Index Rebalance Preview: For Now, A Dozen Changes in December

By Brian Freitas

  • With just over a third of the review period complete, there could be 12 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
  • Even with 12 potential changes, there is sector balance with over half the changes in the Information Technology sector. Passive trading impact varies from 0.04-4.1x ADV.
  • The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the year with a big move higher since mid-May.

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Jul 07
0

Daily Brief South Korea: Shift Up and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Shift Up IPO: Final Allocation Results, Lockup Release Schedule, & Index Float Rates

Shift Up IPO: Final Allocation Results, Lockup Release Schedule, & Index Float Rates

By Sanghyun Park

  • Notably, local hedge funds receive significant allocation, nearly 10%, unusual for KOSPI IPOs this size, differing from HD Hyundai Marine Solution.
  • KOSPI 200’s initial float rate is 14%, rising to 58% in six months. MSCI starts at 8%, reaching 12% in six months and 25% in a year.
  • Differences from HD Hyundai Marine Solution include high short-term strategies among institutions. Unlike before, local pension funds receive substantial allocation, potentially affecting stock price post-listing.

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Jul 06
0

Daily Brief South Korea: Hanwha Corporation, Korea Stock Exchange Kospi Index and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment
  • Impact of Kim Byung-Hwan’s Appointment as Korea FSC Chairman on Value-Up Policy
  • Hanwha Energy Launches Tender Offer of 180 Billion Won Worth of Hanwha Corp

Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment

By Sanghyun Park

  • Hanwha Energy, wholly owned by the Hanwha Group’s owning family, announced a tender offer for an 8% stake in Hanwha Corp at ₩30,000. The tender period is until July 24.
  • Hanwha Energy will buy all shares if tendered less than planned, otherwise pro-rata. Payment in cash eliminates cancellation risk but poses allocation risk.
  • Approximately 10-15% of shares are likely to be the potential ceiling for tendering, minimizing allocation risk for the 8% target. A widening spread of 2-3% could offer arbitrage opportunities.

Impact of Kim Byung-Hwan’s Appointment as Korea FSC Chairman on Value-Up Policy

By Sanghyun Park

  • Kim Byung-hwan addressed criticism of weak incentives in tax support for the value-up policy, emphasizing boosting dividends. His background suggests effective advocacy for tax reforms in his new role.
  • He prioritized abolishing the FIIT in the National Assembly, citing its hindrance to capital market liquidity and investment promotion, indicating a robust approach to the value-up policy.
  • Kim’s appointment as FSC Chairman signals the government’s commitment to advancing the value-up policy. He emphasizes boosting dividends and aligning tax policies accordingly, shaping trading strategies toward dividend-expanding companies.

Hanwha Energy Launches Tender Offer of 180 Billion Won Worth of Hanwha Corp

By Douglas Kim

  • On 5 July, Hanwha Energy announced a tender offer of 8% stake in Hanwha Corporation (000880 KS) worth 180 billion won.
  • The tender offer price is 30,000 won. Hanwha Energy will launch a tender offer for up to 6 million shares of Hanwha Corp, representing 8% of outstanding shares. 
  • Hanwha Corp’s 34% stake in Hanwha Aerospace which is worth 4.2 trillion won. (191% of Hanwha Corp’s market cap). 

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Jul 05
0

Daily Brief South Korea: Korea Stock Exchange KOSPI 200, Sanil Electric, Hanwha Aerospace and more

By | Daily Briefs, South Korea

In today’s briefing:

  • A Practical Guide to Create A Workable Electronic File for KOSPI 200 Rebalancing Simulation
  • Sanil Electric IPO: Valuation Insights
  • What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?

A Practical Guide to Create A Workable Electronic File for KOSPI 200 Rebalancing Simulation

By Sanghyun Park

  • Predicting KOSPI 200 rebalancing is straightforward, focusing on quantitative screening rather than qualitative factors, unlike other indices.
  • Accurate simulation of KOSPI 200 requires daily data on shares, volume, and prices for six months, typically sourced from KOSCOM due to limitations in free data access.
  • I plan to share a practical KOSPI 200 simulation file with Smartkarma readers, leveraging freely available data from Google Finance.

Sanil Electric IPO: Valuation Insights

By Arun George

What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?

By Douglas Kim

  • On 4 July, NPS disclosed the details of the ownership changes for 112 listed companies in Korea, of which 87 were listed in KOSPI and 25 in KOSDAQ. 
  • In 2Q 2024, the NPS reduced its investments in defense and military stocks and increased investments in cosmetics, shipbuilding, and food companies in Korea.
  • NPS reduced its capital allocation to the military & defense sector. NPS reduced its stake in LIG Nex1 (-2.32%), Poongsan Corp (-2.24%), and Hanwha Aerospace (-1.02%). 

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Jul 04
0

Daily Brief South Korea: Paradise Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Paradise: Expansion into High End Hotel Likely to Destroy Shareholder Value

Paradise: Expansion into High End Hotel Likely to Destroy Shareholder Value

By Douglas Kim

  • On 2 July, Paradise Co Ltd (034230 KS) announced that it will construct a new high end luxury hotel in Seoul spending about 500 billion won to 550 billion won. 
  • We believe that this construction of the new luxury hotel will have a negative impact on shares of Paradise. 
  • Rather than investing a large sum of money to build a new hotel, many investors would rather have preferred Paradise to increase share buybacks and dividends. 

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