Category

South Korea

Apr 03
0

Daily Brief South Korea: SK Square , HD Hyundai Marine Solution , KT Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • SK Square: Higher NAV Driven by Its Holding in SK Hynix
  • HD Hyundai Marine Solutions IPO: Valuation Insights
  • Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

SK Square: Higher NAV Driven by Its Holding in SK Hynix

By Douglas Kim

  • SK Square owns a 20.07% stake in SK Hynix which is now worth 27.2 trillion won. SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix.
  • SK Square has benefited from increased capital allocation to low P/B stocks in Korea due to the Corporate Value Up program. SK Square is trading at P/B of 0.7x. 
  • Amid the tremendous demand for Nvidia’s AI related chips, this has also benefited several Korean companies including SK Hynix and SK Square. 

HD Hyundai Marine Solutions IPO: Valuation Insights

By Arun George

Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

By Douglas Kim

  • Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%. 
  • Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT. 
  • Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.

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Apr 02
0

Daily Brief South Korea: HYBE , Amorepacific Corp, HDC Hyundai Development Co-Engineering & Construction and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KRX Imposes a 20% Cap on Weight Ceiling in Sector ETFs with Few Constituents
  • Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2024
  • Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2024

KRX Imposes a 20% Cap on Weight Ceiling in Sector ETFs with Few Constituents

By Sanghyun Park

  • KRX limits individual stock weight to 20% in ETFs with few constituents. KRX confirms working on it, with an official announcement expected soon.
  • Excludes index ETFs like KOSPI 200. KRX hasn’t finalized criteria for constituent number but expected to involve fewer than 30 stocks.
  • This could open new passive trading opportunities. Sector ETF cap at 30%, large AUM ones offer noteworthy trading potential.

Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2024

By Douglas Kim

  • In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 2Q 2024.
  • Although the discount on the preferred shares versus the common shares has been gradually narrowing in the past decade, this discount increased from end of 2021 to 1 April 2024.
  • On a longer timeframe (3-4 years), we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2024

By Douglas Kim

  • In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 2Q 2024.
  • Of the 38 pair trades, 26 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.  
  • These pairs could generate trading opportunities in terms of their pricing gaps closing reversal. [CJ Corp vs CJ Cheiljedang & Hanjin KAL Corp vs Korean Air Lines].

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Apr 01
0

Daily Brief South Korea: HD Hyundai Marine Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • HD Hyundai Marine Solutions IPO: The Investment Case

HD Hyundai Marine Solutions IPO: The Investment Case

By Arun George

  • HD Hyundai Marine Solution (443060 KS), the ship after-service subsidiary of HD Hyundai (267250 KS), aims to raise up to US$550 million.   
  • The international book-building will run from 8 to 22 April, while the domestic book will open from 16 to 22 April. Pricing will be announced on 24 April.
  • The investment case rests on solid top-line growth, a healthy order book, rising margins, cash generation, and modest leverage.

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Mar 31
0

Daily Brief South Korea: Samsung C&T and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Samsung C&T: Why Is Lee Seo-Hyun Returning as the President?

Samsung C&T: Why Is Lee Seo-Hyun Returning as the President?

By Douglas Kim

  • On 29 March, it was reported that Lee Seo-Hyun has been appointed as the President of Samsung C&T (028260 KS), returning to the company after more than five years.
  • Lee Seo-Hyun is the third child of the late Samsung Chairman Lee Kun-Hee. She will be in charge of the overall strategic planning of Samsung C&T.
  • Many investors will likely to question this move, since they may question her ability to make strategic decisions that are in the best interests of all the minority investors. 

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Mar 30
0

Daily Brief South Korea: Samsung C&T, Angel Robotics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics
  • End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024

Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics

By Sanghyun Park

  • Today, Lee Seo-hyun returned as the top executive at Samsung C&T, which officially announced her as the head of its Strategic Planning Division.
  • Her return to Samsung C&T might not just be a simple comeback – it could be seen as a setup for some big changes within the company.
  • Considering Samsung C&T’s Value-up Momentum, aligning with Lee Seo-hyun’s return, we must position for potential price impact, focusing on portfolio streamlining.

End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024

By Douglas Kim

  • We discuss the end of the mandatory lock-up periods for 46 stocks in Korea in April 2024, among which 6 are in KOSPI and 40 are in KOSDAQ.
  • These 46 stocks on average could be subject to further selling pressures in April 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 April include APR, Angel Robotics, and Samhyun. 

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Mar 29
0

Daily Brief South Korea: HD Hyundai Marine Solution , Kum Yang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation
  • HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures
  • Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation

By Sanghyun Park

  • Valuation controversy arises from comparing HD Hyundai Marine Solution, a ship AS specialist, with diverse global companies, leading to a target market cap of ₩5T.
  • HD KSOE’s inclusion worsens the valuation controversy. Applying HD KSOE’s last year PER without adjusting for a significant one-off profit seems to inflate HD Hyundai Marine Solution’s PER.
  • Currently, major local IPO funds see HD Hyundai Marine’s valuation nearing ₩4T as excessive, despite the industry’s revival and potential growth in eco-friendly ship conversions, impacting the upcoming bookbuilding process.

HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures

By Ethan Aw

  • HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
  • HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship. 
  • In this note, we talk about the company’s historical performance.

Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

By Douglas Kim

  • On 28 March, the external auditor of Kum Yang (Samil PriceWaterhouseCoopers) raised warnings about the viability of Kum Yang as a going concern. 
  • The auditor also mentioned increasing probability of Chairman Ryu of Kum Yang potentially selling a portion of his shares to raise further capital.
  • It is RARE for an auditor to raise concerns about a company’s viability of the entity as a going concern. This is likely to negatively impact Kum Yang’s share price. 

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Mar 28
0

Daily Brief South Korea: Alteogen Inc, Lotte Tour Development Co, Ltd. and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Alteogen: Block Deal Sale of About 3% of Shares
  • Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity

Alteogen: Block Deal Sale of About 3% of Shares

By Douglas Kim

  • On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale. 
  • The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won. 
  • This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity

By Douglas Kim

  • Lotte Tour Development announced that it will conduct a major asset revaluation which could positively impact its share price. 
  • The company’s assets will increase to 2.39 trillion won and equity will increase to 569.3 billion won (up more than 8x) at end of 1Q 2024 due to asset revaluation.
  • As a result of the asset revaluation, the company’s balance sheet will improve significantly and this likely result in many investors taking another look at the company for potential investments. 

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Mar 27
0

Daily Brief South Korea: Shinhan Financial, Hana Tour Service, Hanmi Science, WCP and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large
  • Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas
  • HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment
  • Hanmi Science: NPS Sides With Mother (Chairwoman) And Daughter
  • Hana Tour Service: Major Shareholders Including IMM PE Likely to Sell Their Shares
  • W-Scope IPO Lock-Up – Part of the Parent’s Stake Will Be Freed, but It’s Been Adding Instead

Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large

By Sumeet Singh

  • BNP Paribas (BNP FP) is looking to raise around US$680m via selling 3.5% of its stake in Shinhan Financial (055550 KS).
  • This will be the fourth selldown for the stock since the start of the year. It will also be the largest one of the lot, so far.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas

By Douglas Kim

  • After the market close on 26 March, it was announced that BNP Paribas plans to sell its 3.6% stake in Shinhan Financial in a block deal sale 18.7 million shares). 
  • The block deal sale is estimated to be about 900 billion won, which would represent one of the largest block deal sales in Korea in the past several years.
  • We have a Negative view on the Shinhan Financial Group block deal and we would not subscribe to it due to three major reasons. 

HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment

By Sanghyun Park

  • HanaTour seeks new ownership after 4 years under IMM PE. Despite COVID-19 setbacks, successful restructuring attracts attention from online travel and investment giants.
  • Market rumors hint at Yanolja and Hotels.com interest, possibly intensifying acquisition competition, leading to a higher price premium. IMM’s 16.68% stake may value at ₩250B, a 35% premium.
  • Last year’s mandatory tender offer for 50%+1 share awaits legislation. Unlikely to affect HanaTour sale. Nonetheless, potential acquirers may buy additional shares, suggesting further premium formation in share price.

Hanmi Science: NPS Sides With Mother (Chairwoman) And Daughter

By Douglas Kim

  • After the market close on 26 March, it was reported that NPS has decided it will side with Chairwoman Young-Sook Song (mother) and her daughter Ju-Hyun Lim. 
  • As a result, Chairwoman Young-Sook Song (mother) and Ju-Hyun Lim have secured 40.86% of the shares, which is slightly higher than the ownership of her two sons (38.4%). 
  • In the near term, this battle for the control of the company could have a positive impact on Hanmi Science’s share price. 

Hana Tour Service: Major Shareholders Including IMM PE Likely to Sell Their Shares

By Douglas Kim

  • Hana Tour Service (039130 KS), the number one travel platform in Korea,  announced that IMM PE (controlling shareholder of the company) is planning to sell its controlling stake. 
  • The total stake in the company that is up for sale could rise to 27.78%, including stakes held by Hana Tour founder Park Sang-hwan and co-founder Kwon Hee-seok. 
  • Potential buyers of the controlling stake in Hana Tour include Yanolja, Hotels.com, Booking.com, and Trip.com.

W-Scope IPO Lock-Up – Part of the Parent’s Stake Will Be Freed, but It’s Been Adding Instead

By Sumeet Singh

  • WCP raised around US$314m via selling a mix of primary and secondary shares in its Korean IPO. The lockup on some of its parent’s stake will expire soon.
  • WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

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Mar 26
0

Daily Brief South Korea: HD Hyundai , SillaJen Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • HD Hyundai Marine Solution IPO Preview
  • SillaJen Rights Offering Worth 34% of Outstanding Shares

HD Hyundai Marine Solution IPO Preview

By Douglas Kim

  • HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024. 
  • The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won. 
  • A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

SillaJen Rights Offering Worth 34% of Outstanding Shares

By Douglas Kim

  • On 22 March, SillaJen Inc (215600 KS) announced that it will conduct a rights offering worth about 129 billion won for R&D and financials improvement.  
  • The rights offering size is 34.5 million shares, representing 34% of total outstanding shares. The expected rights offering price is 3,750 won which is 26% lower than current price. 
  • We would not subscribe to this rights offering and we remain negative on the company.

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Mar 23
0

Daily Brief South Korea: HLB Life Science, C&C International Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won
  • Special Changes in KOSDAQ 150: Deletion (CanariaBio) + Addition  (C&C International)

HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won

By Douglas Kim

  • On 21 March, HLB Life Science announced a rights offering capital raise worth 150 billion won. 
  • The expected rights offering price is 13,630 won (32% lower than current price of 19,930 won)  and there are 11 million shares in this rights offering (10% of outstanding shares). 
  • HLB Inc (028300 KS) is the largest controlling shareholder of HLB Life Science (067630 KS) with an 18.7% stake in the company.

Special Changes in KOSDAQ 150: Deletion (CanariaBio) + Addition  (C&C International)

By Douglas Kim

  • On 22 March, the Korea Exchange announced special changes to KOSDAQ 150. CanariaBio will be excluded from KOSDAQ 150 and it will be replaced by C&C International.
  • Canaria Bio was designated as “administrative issue” and “investment attention issue” on 22 March 2024, which resulted in KRX deciding to remove this stock from KOSDAQ 150 on 26 March.
  • We believe that this inclusion of C&C International in KOSDAQ 150 is likely to further positively impact its share price.

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