In today’s briefing:
- SK Stocks’ Main Narrative: SK Telecom Exit & SK Inc Eyeing SK Square
- KOSPI Size Indices: When Active Met Passive
- A Hostile M&A Fight for T’Way Air
- Hana Micron: Split into Hana Semiconductor Holdings and Hana Micron
- EQD | Kospi Index Options Weekly (January 13 – 17): Heavy Call Volume on Thursday’s Gain.
SK Stocks’ Main Narrative: SK Telecom Exit & SK Inc Eyeing SK Square
- SK Inc plans to use SK Hynix as a dividend machine, boosting payouts to ₩3 trillion, and if it absorbs SK Square, it could pocket ₩600 billion—doubling SK Telecom’s dividends.
- SK Inc will likely use ₩5 trillion from the SK Telecom deal for a tender offer, boosting its stake in SK Square to 60-70% before merging to minimize dilution.
- The SK Telecom deal and potential SK Square tender offer could be the main narrative driving SK Group stocks this year, making SK Square a key momentum play.
KOSPI Size Indices: When Active Met Passive
- The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
- Over halfway through the review period, we forecast 39 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
- Three potential downward migrations were deleted from a global index in November. Now, four more potential downward migrations could be deleted from the same global index in February.
A Hostile M&A Fight for T’Way Air
- An M&A fight for T’Way Air has officially erupted as Daemyung Sono Group sent a letter to the current management requesting several management improvement measures including resignation of existing management.
- Currently, T’Way Air’s largest shareholders are T’Way Holdings and Yelimdang which combined have 30.07% stake in T’Way Air. Daemyung Sono is the second largest shareholder with a 26.77% stake.
- From Daemyung Sono Chairman Seo Jun-Hyeok perspective, entering the aviation industry is attractive because it can create synergy with existing hotels and resort businesses.
Hana Micron: Split into Hana Semiconductor Holdings and Hana Micron
- Hana Micron Inc (067310 KS) announced its plan to split into Hana Semiconductor Holdings and Hana Micron (a newly established company).
- Existing shareholders will receive shares of the two companies in equal proportions according to the split ratio which is 32.5% for Hana Semiconductor Holdings and 67.5% for Hana Micron.
- We remain negative on Hana Micron. The valuation of the company remains stretched. In addition, there are increasing concerns about the company’s new plan to split into two different companies.
EQD | Kospi Index Options Weekly (January 13 – 17): Heavy Call Volume on Thursday’s Gain.
- Kospi rebounds from weak performance at the start the week to finish essentially unchanged.
- 1M implied vol came off 2.3 points and is now at the 22nd percentile over the past year.
- Thursday’s 1.44% gain saw overwhelming Call activity with 3.6 Calls trading for every Put.
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