In today’s briefing:
- HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits
- SK Telecom’s Block Deal Sale of 10.8 Million Shares of Kakao Corp
- Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (Starting 28 April 2025)
- JD Logistics Enters South Korea: Accelerated by Tariff War Between China and the US?
HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits
- We go long on HLB LS, short on HLB Inc, and close the short once HLB LS converts. If the deal falls through, there’s potential for extra profits.
- The view that the merger’s worse for HLB LS is gaining support, making it likely the spread could go negative, though there’s risk, the chances are pretty high.
- The 4% spread is the floor for arb profit, and cancellation risk could add extra gains. This angle deserves serious consideration right now.
SK Telecom’s Block Deal Sale of 10.8 Million Shares of Kakao Corp
- Prior to market open on 25 April, SK Telecom announced that it plans to sell 10.8 million shares of Kakao, representing 2.4% of outstanding shares in a block deal sale.
- The sale of Kakao Corp shares and using the proceeds to further acquire shares in SK Broadband and invest in AI businesses is a solid move by SK Telecom.
- We believe that this trading down gap of Kakao Corp is likely to be covered soon in the next several days/weeks so it represents a short term buying opportunity.
Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (Starting 28 April 2025)
- In this insight, we provide the top 10 stocks picks and key catalysts in the Korean stock market for the two weeks starting 28 April.
- Our top 10 picks in Korea were up on average 5.1% (from 11 to 25 April), outperforming KOSPI which is up 4.7% in the same period.
- Our top 10 picks in this bi-weekly include Hanwha Systems, Hyundai Elevator, HD Hyundai, Hyundai Rotem, SK Telecom, Samyang Foods, KT&G, Posco, SK Inc, and Korea Investment Holdings.
JD Logistics Enters South Korea: Accelerated by Tariff War Between China and the US?
- In the past week, one of the biggest stories in the Korean e-commerce/logistics market has been the entrance of JD Logistics into the South Korean market.
- We believe that the ongoing tariff war between the US and China is likely to have accelerated this move by JD Logistics to find new markets for its products.
- If JD.com/JD Logistics decide to expand aggressively in Korea, the major Korean e-commerce players (such as Coupang (CPNG US), Naver Corp (035420 KS), Gmarket, and 11st) may be negatively impacted.
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