Daily BriefsSouth Korea

Daily Brief South Korea: Hancom Inc, SK Telecom, LX Semicon, Orion Corp and more

In today’s briefing:

  • KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)
  • MSCI Korea Flow Trading for August 31st
  • LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading
  • A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change
  • Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam

KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)

By Brian Freitas


MSCI Korea Flow Trading for August 31st

By Sanghyun Park

  • MSCI Korea’s August QIR features one deletion: SK Telecom. But Woori Financial, HYBE, and LG Energy will also present a notable impact as they face float rate changes.
  • We should consider executing flow trading on these names, even SKT, towards the effective date as much as possible, as the flow magnitude wouldn’t be enough to act proactively.
  • It’s been witnessed that SK Telecom’s recall and liquidation of short positions have been made preemptively this time, minimizing the risk of price distortion on the effective date.

LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading

By Sanghyun Park

  • LX Semicon announced that its board approved KOSPI migration on August 17. This migration requires shareholder approval, and a shareholder meeting will be scheduled for September 23.
  • The outflow of KOSDAQ 150 is estimated to be -1.37x ADTV. A passive impact of this magnitude should cause a price movement of at least 3%p.
  • But LX Semicon’s GICS sector won’t change after the KOSPI migration. We should refrain from trading with expectations for the possibility of KOSPI 200 inclusion at this point.

A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change

By Sanghyun Park

  • Vidente is a KOSDAQ 150 constituent. If designated as an administrative issue, it will be removed on the third trading day after the effective date of designation.
  • Hancom gets to replace Vidente, and rebalancing trading occurs at the close of August 19th. Hancom’s passive inflow should be 4.70x ADTV.
  • It seems that proactive long positions have already been built up significantly from today. So, we should consider getting out of the position earlier than usual towards Friday’s close.

Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam

By Douglas Kim

  • Despite unfavorable business environment such as global inflation, Orion was able to generate excellent progress in sales and profit growth in countries including China, Vietnam, and Russia in 2Q 2022.
  • Orion had sales of 263.2 billion won (up 19.6% YoY) and operating profit of 35.7 billion won (up 170.3% YoY) in China. 
  • Due to a combination of attractive valuations and improving fundamentals along with restrictions of snacks imports from Taiwan to China, we continue to believe Orion’s shares could outperform the market.

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