Daily Brief South Korea: LOTTE Corporation, HYBE , Samsung Electronics and more

In today’s briefing:

Treasury Cancellation Bill Latest: 10% Holding Cap for Existing Ones — Targets Screened in Excel
A Pair Trade Between SM Entertainment (Long) Vs HYBE (Short)
Samsung 2Q25: It’s Even Worse than the Official Leak

Treasury Cancellation Bill Latest: 10% Holding Cap for Existing Ones — Targets Screened in Excel

Market focus is now on retroactive impact — existing treasury holdings above 10% must be canceled within a year, flipping earlier expectations that they’d be exempt.
DP’s fast-tracking the bill, targeting a September vote and mid-October go-live, with this Commercial Act tweak topping their legislative priority list.
Excel below shows 230 stocks above the 10% treasury cap, including 35 large-caps — prime candidates for momentum trades as the mandatory buyback burn bill gains steam.

In this insight, we discuss a pair trade between SM Entertainment Co (041510 KS) (long) vs HYBE (352820 KS) (short).
There is an increasing probability that HYBE’s founder Bang Si-hyuk could face some jail time in which case there could be some vacuum of management leadership at HYBE.
Despite its recent outperformance, SM Entertainment’s valuation is much more attractive than HYBE (SM is trading at 9.6x EV/EBITDA vs 18.5x for HYBE in 2026).

1st July the Korean media was “pre-announcing” 2Q25 operating profit to be “weaker than expected”, declining “by more than 15% from the first quarter” to KRW mid-5 trillion range.
Samsung official announcement is worse: operating profit KRW 4.6tn, down -56% YoY and -31% QoQ. This suggests a lower margins mix (less HBM, higher Foundry losses) and more Opex.
Last week, Consensus was expecting 2Q OP KRW 6.7tn, now down to 6.1tn. The reported 4.6tn is a nasty miss that implies that Consensus is way too high for 2H25.

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