In today’s briefing:
- Next Target After Hanwha for Regime Change Momentum Play: SK Inc’s Share Cancellation
- Hanwha Ocean Placement – Recent Run-Up, Results Make It Tricky
- Hanwha Ocean (042660 KS) Placement: Index Implications; Stock Appears Wildly Overvalued
- KDB’s Hanwha Ocean Block Deal: Worth Taking a Swing
- Indirect Beneficiaries of the Smash Hit Movie “King of Kings” In the Korean Stock Market
- LG CNS: Better Than Expected Results in 1Q 2025 Led by Cloud & AI Unit
Next Target After Hanwha for Regime Change Momentum Play: SK Inc’s Share Cancellation
- Local traders are betting SK Inc will preemptively announce a treasury share cancellation before the June election, positioning it as the center of the regime change momentum play.
- From a trading perspective, SK Inc could rally as a “buyback stock” and offer NAV gap trading opportunities.
- Another option could be an event-driven hedge strategy: go long on SK and short index futures post-election. If Lee Jae-myung wins, SK could outperform, but the broader market may drop.
Hanwha Ocean Placement – Recent Run-Up, Results Make It Tricky
- Korea Development Bank (KDB) plans to raise around US$740m via selling around 5%+ stake in Hanwha Ocean (042660 KS).
- HO’s shares have nearly tripled since the start of the year, and the company reported its results today.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
Hanwha Ocean (042660 KS) Placement: Index Implications; Stock Appears Wildly Overvalued
- Korea Development Bank is looking to sell 13m shares of Hanwha Ocean (042660 KS). That is US$740m at the top end of the marketed range and 4x ADV.
- Following the sale, Korea Development Bank will still own over 15% of the company and that will be an overhang for the stock. Plus the stock appears wildly overvalued.
- There will be limited buying from passive trackers at the time of the placement with bigger passive flows coming through in June and August.
KDB’s Hanwha Ocean Block Deal: Worth Taking a Swing
- KDB sells 4.3% of total shares, offloading about one fifth of its holdings. The price range was 81,265–81,710 won, at an 8.51–9.00% discount, totaling 1.056–1.062 trillion won.
- With more float and passive buying (KOSPI 200) potential, plus shipbuilding momentum, the stock’s pullback likely won’t exceed today’s discount — it might be worth taking a swing.
- There’s buzz KDB might sell its HMM stake through block trades, like Hanwha Ocean. However, with HMM’s cash reserves, a tender offer seems more likely to drive stock action instead.
Indirect Beneficiaries of the Smash Hit Movie “King of Kings” In the Korean Stock Market
- In this insight, we discuss the indirect beneficiaries of the global hit movie “King of Kings” in the Korean stock market.
- The King of Kings is a 3D animation movie produced by a Korean company called Mofac Studio (unlisted). This film made $45mn in N. American box office in 10 days.
- Dexter Studios, Wysiwyg Studios, and GiantStep (listed competitors to Mofac Studios) are up on average 17% in the past one month.
LG CNS: Better Than Expected Results in 1Q 2025 Led by Cloud & AI Unit
- LG CNS reported better than expected results in 1Q 2025 with sales of 1.2 trillion won (up 13.2% YoY) and operating profit of 78.9 billion won (up 144.3% YoY).
- The company’s sales, operating profit, and net profit were 5.5%, 16.5%, and 36.4% better than the consensus estimates, respectively in 1Q 2025.
- The company’s Cloud & AI unit had sales of 717.3 billion won (up 30.1% YoY) in 1Q 2025.
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