In today’s briefing:
- KOSPI 200 Rebalancing D-60: Names for Position Buildups
- Ecopro BM Offering: Deal Summary & Trading Dynamics
- MSCI Korea: Potential Inclusions & Exclusions in May 2022 Highlighted by Locals
- BNC Korea (256840 KS): Late Mover in COVID Pill; 2021 Operating Loss and Russia Exposure Add to Woe
KOSPI 200 Rebalancing D-60: Names for Position Buildups
- Since we are currently at a point of two months toward the KOSPI 200 rebalancing, we should start building up positions on stocks with a higher probability among the candidates.
- Six additions for position buildups: F&F (383220 KS), Meritz Fire (000060 KS), SD Biosensor (137310 KS), Iljin Hysolus (271940 KS), Hanil Cement (300720 KS), & K Car (381970 KS)
- Six deletions for position buildups: Nexen Tire (002350 KS), Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Sk Discovery (006120 KS), Bukwang Pharmaceutical (003000 KS), & Poongsan Corp (103140 KS)
Ecopro BM Offering: Deal Summary & Trading Dynamics
- Ecopro BM announced a ₩0.5T rights offer: 1.6M new ordinary shares at a preliminary offering price of ₩310,300. In addition, there will also be a 1-to-3 bonus share issuance.
- In outright Long trading aiming for a 20% discount, one thing to keep in mind is bonus issues. Post-bonus issue price correction will likely be more substantial this time.
- We should aim at outright shorting as moving into the bonus issue ex-rights date while watching Ecopro’s share price upward trend and volatility during this event.
MSCI Korea: Potential Inclusions & Exclusions in May 2022 Highlighted by Locals
- Hyundai Heavy Industries and KT Corp are two stocks in Korea that are most heavily emphasized as potential inclusion candidates in the MSCI rebalance in May by the local media.
- Greater volatility on these names is likely as we get closer to the MSCI rebalance and there could be reduced outperformance on these names as we approach 13 May.
- Stocks that are expected to be excluded in the MSCI Korea index including Green Cross Corp, Alteogen, and SK Chemicals have experienced sharp decline in their prices in recent months.
BNC Korea (256840 KS): Late Mover in COVID Pill; 2021 Operating Loss and Russia Exposure Add to Woe
- BNC Korea (256840 KS), with its partnered COVID-19 pill will be a late entrant in the space, as two more COVID-19 pills are already approved in South Korea.
- The company reported operating loss of KRW11 billion in 2021 and 99% of its export comes from Russia and CIS countries.
- Since my bearish note published on the company in October 2021, shares have declined 50%. I am still not upbeat on the growth prospect of the company.
Before it’s here, it’s on Smartkarma
