In today’s briefing:
- Hunting for Outsized Moves in Off-The-Radar Korean Sector ETFs: SOL Shipbuilding & PLUS K-Defense
- DN Solutions IPO Valuation Analysis
- DN Solutions Pre-IPO – The Positives – Growing Market Share
Hunting for Outsized Moves in Off-The-Radar Korean Sector ETFs: SOL Shipbuilding & PLUS K-Defense
- March 5 price action overshot passive impact. Theme-trade momentum, one-way institutional flows, and ETF rebalancing (~10% turnover) juiced the move—Hanwha Ocean -5.41%, Samsung Heavy +5.34%, HD KSOE +6.58%.
- June’s rebalance gets spicier—another ETF, ARIRANG K-Defense ETF (449450 KS), also runs the same 20% reversion on June 13, doubling the flow impact and setting up amplified price action.
- Key 20% reversion hits: Hanwha Ocean (SOL Shipbuilding) & Hanwha Aerospace (PLUS K-Defense). ~5%p passive outflows (~0.1x DTV) expected, with Hanwha Ocean facing double impact from both ETFs.
DN Solutions IPO Valuation Analysis
- Our base case valuation of DN Solutions suggests target price of 90,167 won per share, which is 1% higher than the high end of the IPO price range.
- Our base case valuation is based on 17.9x P/E using our estimated net profit of 317.9 billion won for DN Solutions in 2025.
- Given the lack of upside, we have a Negative View of this IPO. DN Solutions has higher operating margin and ROE but lower revenue growth than its comps.
DN Solutions Pre-IPO – The Positives – Growing Market Share
- DN Solutions (298440 KS) (DNS) aims to raise around US$1.1bn in its Korea IPO via selling a mix of primary and secondary shares.
- DNS is engaged in the manufacture and sale of machine tools and the business of automation solutions and services related thereto.
- In this note, we talk about the company’s past performance.
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