Daily Brief South Korea: Hanwha Corporation, Korean Air Lines and more

In today’s briefing:

Hanwha’s Surprise Gift Disclosure: Three Major Takeaways
Fat Inheritance Taxes for Hanwha Group Chairman Kim’s Three Sons Post Receiving Hanwha Corp Shares
Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2025

Hanwha’s Surprise Gift Disclosure: Three Major Takeaways

The chances of a Hanwha Corp-Hanwha Energy merger just dropped significantly. With the brothers now owning 43%, the merger’s effectively off.
The three brothers face a KRW 200B gift tax bill and need liquidity. They’ll raise cash via Hanwha Energy’s IPO, with the youngest brother set to sell a 10% stake.
Hanwha Corp will likely fund its Hanwha Aerospace rights issue through a rights offering, using KRW 1.3 trillion from Hanwha Energy, after shutting down merger rumors.

Hanwha Group Chairman Kim Seung-youn (born in 1952) made a major move to give 11.32% of his shares in Hanwha Corporation (000880 KS) to his three sons.
It is estimated that the three sons will need to pay nearly 222 billion won in inheritance taxes associated with receiving additional stakes in Hanwha Corp.
Because the three sons need to pay for the high amounts of inheritance taxes, Hanwha Corp is likely to raise the dividend payout in the next several years.

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 2Q 2025.
Among the 38 holdcos/opcos, there have been several pairs that have resulted in significant price ratio divergence which could provide trading opportunities in terms of their pricing gaps closing reversal.
Given the resumption in short selling in Korea, there is going to be a lot more interest in pair trades in Korea, especially among the major Korean holdcos/opcos.

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