Daily Brief South Korea: Korea Electric Power, Hanwha Solutions, SillaJen Inc and more

In today’s briefing:

ESG Analysis of Korea’s Sole Electricity Supplier: Korea Electric Power Corporation (KEPCO 015760)
A Detailed Summary of Hanwha Solutions Demerger & Tender Offer
SillaJen Inc (215600 KS): Baselia Deal Enriches Pipeline; Stock Trading Resumption Decision Soon

ESG Analysis of Korea’s Sole Electricity Supplier: Korea Electric Power Corporation (KEPCO 015760)

Environmental: KEPCO’s power transmission tower construction is destroying ecosystems and posing a climate risk in various areas, which is also why the coal mine development project in Australia was suspended.
Social : 58% of KEPCO’s suppliers were found to be illegal subcontractors leading to controversy over work environment issues. Also, the construction of power transmission towers sparked serious community conflicts.
Governance : Despite KEPCO’s large deficit, the company’s moral risk and poor risk management issues, such as corruption and excessive wages of employers, continue to surface.

There is no unlocking of treasury shares, so a flow betting on dramatic value accretion will not occur. For tendering, the proration risk appears to be relatively high.
Passive trackers will sell at the close on February 24 and repurchase (likely only for Solutions) at the close on March 31. The flow size would be around 5.5x ADTV.
ECO risk wouldn’t be a concern as the new rule will grant appraisal/preemptive rights to the existing shareholders. Also, Hanwha hinted at the possibility of choosing private placement over ECO.

SillaJen Inc (215600 KS) has developed a differentiated pipeline of oncolytic vaccinia immunotherapy. Its lead drug candidate Pexa-Vec is in phase 2 clinical trial for renal cell carcinoma.
SillaJen has acquired a first-in-class anti-cancer drug candidate BAL0891 from Basilea for upfront payment of $14 million. The company’s cash position is capable to fund the acquisition and R&D expenses.
Korean Stock Exchange is expected to announce its decision on SillaJen stock trading resumption by October 12.

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