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South Korea Archives | Page 44 of 126 | Smartkarma

Aug 14
0

Daily Brief South Korea: SK Square , S.M.Entertainment Co, DB Hitek Co., Ltd. and more

By | Daily Briefs, South Korea

In today’s briefing:

  • SK Square: Updated NAV Valuation Post Recent Share Price Decline
  • SM Entertainment: Share Cancellation and the Launch of a New British Band – Dear Alice
  • DB Hitek: Buying a Golf Course Overshadows Corporate Value Up Efforts

SK Square: Updated NAV Valuation Post Recent Share Price Decline

By Douglas Kim

  • Our NAV analysis of SK Square suggests NAV of 15.6 trillion won or 115,605 won per share, representing 48% higher than current share price.
  • SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix. SK Square’s share price has declined by 27% since reaching its recent peak on 11 July. 
  • SK Square had excellent results in 2Q 2024, driven by improving results of its affiliates including SK Hynix. 

SM Entertainment: Share Cancellation and the Launch of a New British Band – Dear Alice

By Douglas Kim

  • In this insight, we discuss the recent share cancellation at S.M. Entertainment, valuations, and the launch of a new British boy band in August 2024. 
  • Dear Alice boy band will start its promotion with the broadcast of “Made in Korea: The K-Pop Experience” on BBC One and BBC iPlayer on 17 August.
  • We are cautiously positive on Dear Alice band. Unlike most aspiring boy bands, Dear Alice has a HUGE advantage of launching the band on the BBC through a TV show.

DB Hitek: Buying a Golf Course Overshadows Corporate Value Up Efforts

By Douglas Kim

  • DB Hitek’s investment in a golf course operating company is a poor investment, one that destroys shareholder value.
  • Most investors would rather have DB Hitek increase shareholder returns through share buybacks/cancellations and dividends as well as invest in its core semiconductor business rather then buy a golf course. 
  • Given DB Inc’s lack of cash, there is a growing possibility that it will use the proceeds from selling its DB World shares to increase its stake in DB Hitek. 

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Aug 13
0

Daily Brief South Korea: Macquarie Korea Infra Fund, Webzen Inc, BusinessOn Communication, CS Wind Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Macquarie Korea Infrastructure Fund: Rights Offering of About 500 Billion Won
  • KOSDAQ150 Adhoc Index Rebalance: Webzen to Replace Connectwave
  • Tender Offer of BusinessOn Communications by Skylake Equity Partners
  • CS Wind (112610): Excellent Q2

Macquarie Korea Infrastructure Fund: Rights Offering of About 500 Billion Won

By Douglas Kim

  • Macquarie Korea Infra Fund (088980 KS) announced that it is proceeding with a rights offering capital increase of 500 billion won, which represents about 9.4% of its current market cap. 
  • MKIF plans to use higher liquidity increase in the following main areas: Seoul East Underground Expressway – 215 billion won Acquisition of Hanam Data Center – 423 billion won
  • In the next 6-12 months, we believe MKIF has a solid chance of outperforming KOSPI (on combined capital gains/dividends basis). 

KOSDAQ150 Adhoc Index Rebalance: Webzen to Replace Connectwave

By Brian Freitas

Tender Offer of BusinessOn Communications by Skylake Equity Partners

By Douglas Kim

  • On 12 August, Skylake Equity Partners announced a tender offer of 6.58 million shares (28.9% stake) of BusinessOn Communication. The tender offer price is 15,849 won.
  • BusinessOn is one of the leading digital tax invoice software providers in Korea. It also provides digital contracts, market intelligence, banner advertising, and supply chain management services. 
  • Skylake plans to purchase all of the shares subscribed in this deal, regardless of the subscription rate. If the public offering target quantity is successful, Skylake plans to delist BusinessOn. 

CS Wind (112610): Excellent Q2

By Henry Soediarko

  • CS Wind Corp (112610 KS) is one of the biggest players in wind tower globally with a substantial presence in the US. 
  • Excellent Q2 24 operating numbers led to a sharp increase in the share price that is mainly driven by short covering. 
  • The revenue growth occurred without sacrificing profitability, a sign that the company is in the driving seat.

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Aug 12
0

Daily Brief South Korea: Hyundai Motor and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Flow Developments to Watch as the Release of the Value-Up Index Approaches

Flow Developments to Watch as the Release of the Value-Up Index Approaches

By Sanghyun Park

  • The plan is to select 20 large-cap companies from around 30 with value-up disclosures by late August, then gradually expand the index’s constituents.
  • Investors seeking both dividends and value-up benefits must buy stocks individually, as ETFs lack tax advantages, potentially triggering fund shifts from dividend ETFs to value-up stocks.
  • We can target stocks in dividend ETFs not making value-up disclosures, as they may face overhang risk during fund migration to the value-up index.

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Aug 11
0

Daily Brief South Korea: Kiswire Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea Small Cap Gem #30: Kiswire

Korea Small Cap Gem #30: Kiswire

By Douglas Kim

  • Kiswire Ltd (002240 KS) is the number one player for steel wire and rope products in Korea. More than 85% of its sales are generated overseas. 
  • The company has a consistent record of generating positive net profit. It is trading at low valuations (P/B of 0.3x and EV/EBITDA of 4.5x).
  • Its average net profit from 2021 to 2023 are much higher than previous three years from 2018 to 2020, which is a testament of increasing demand for its products globally. 

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Aug 10
0

Daily Brief South Korea: Celltrion Pharm, Fila Holdings and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Targeting Spreads by Leveraging the High Predictability of the Celltrion Merger
  • Block Deal Sale of About 98 Billion Won Worth of Acushnet Holdings by Fila Holdings

Targeting Spreads by Leveraging the High Predictability of the Celltrion Merger

By Sanghyun Park

  • Local market views Celltrion’s shareholder survey as the start of the merger process, with a decision expected from the boards within two to three months if there’s no major opposition.
  • Under Korean law, if Celltrion Pharm’s market cap is under one-tenth of Celltrion’s, the merger can proceed as a small-scale merger, allowing Celltrion to avoid shareholder approval and appraisal rights.
  • We should leverage the merger’s high predictability to proactively target merger swap and appraisal rights spreads and build a strategy in advance.

Block Deal Sale of About 98 Billion Won Worth of Acushnet Holdings by Fila Holdings

By Douglas Kim

  • Fila Holdings announced that its subsidiary Magnus Holdings plans to sell a 1.8% stake in Acushnet Holdings in a block deal sale worth about 98 billion won. 
  • Our NAV valuation of Fila Holdings suggests an implied value per share of 49,192 won, representing 18.2% upside from current levels. Fila Holdings’ 51.9% stake in Acushnet Holdings.
  • The block deal sale of Acushnet Holdings by Magnus Holdings is likely to have a positive impact on Fila Holdings as it could result in higher capital returns to shareholders.

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Aug 09
0

Daily Brief South Korea: POSCO Holdings, SK Innovation, Korea Zinc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
  • SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
  • Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry

By Sanghyun Park

  • Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
  • August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
  • With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.

SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On

By Douglas Kim

  • SK Innovation is considering on using its treasury shares to inject capital into its EV battery making subsidiary SK On. 
  • The appraisal rights exercise price is 111,943 won per share (15% higher than current price). Many minority shareholders are likely to exercise their appraisal rights in SK Innovation.
  • We remain Bearish on SK Innovation. We continue to be negative on the SK Innovation and SK E&S merger. Plus, we are concerned about the continued weakness at SK On. 

Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

By Douglas Kim

  • On 7 August, Korea Zinc (010130 KS) announced several impressive capital return plan that should help to increase shareholder value.
  • The separation of Korea Zinc between the Choi and Jang families has been in progress in the past several years. The exact timing of when this occurs remains uncertain. 
  • Our NAV Analysis of Young Poong is NAV per share of 470,065 won, representing a 52% upside from current levels. 

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Aug 08
0

Daily Brief South Korea: KT Corp, Celltrion Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Initial Thoughts on the K Bank IPO
  • Celltrion (068270 KS): 2Q24 Result- Biosimilar Sales Roar; Operating Profit Recovers Sequentially

Initial Thoughts on the K Bank IPO

By Douglas Kim

  • In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea. 
  • A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank. 
  • K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.

Celltrion (068270 KS): 2Q24 Result- Biosimilar Sales Roar; Operating Profit Recovers Sequentially

By Tina Banerjee

  • Celltrion Inc (068270 KS) posted revenue of KRW875B in 2Q24, driven by balanced growth in both the existing core and new biosimilar products.
  • Operating profit ‘temporarily’ declined 60% YoY due to the ongoing impact of the merger. However, operating profit improved by a massive 371% sequentially.
  • Celltrion maintains its 2024 revenue target of KRW3.5T (+60% YoY). The improvement in sales and operating profit in the second half of the year is expected to become increasingly evident.

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Aug 07
0

Daily Brief South Korea: Doosan Bobcat Inc, SK Innovation, SK Telecom and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Doosan Group Revises Merger Report and Increasing Probability of Merger Getting Cancelled
  • The Unusual Flow Trading Development Caused by SK Innovation’s Appraisal Rights Premium
  • SK Telecom: A Blue-Chip Defensive Stock That Could Outperform KOSPI Amid Market Turmoil

Doosan Group Revises Merger Report and Increasing Probability of Merger Getting Cancelled

By Douglas Kim

  • On 6 August, the Doosan Group announced a revised merger report. Despite some changes in the merger report, there was no change the merger ratios. 
  • Many minority shareholders of Doosan Enerbility and Doosan Bobcat are likely to oppose this merger. The net result is an increasing probability that this merger gets cancelled, in our view.
  • Doosan Enerbility has set aside about 600 billion won for exercise of appraisal rights and if it exceeds this amount, the merger may be cancelled. 

The Unusual Flow Trading Development Caused by SK Innovation’s Appraisal Rights Premium

By Sanghyun Park

  • Exceeding the ceiling doesn’t cancel the merger; SK Innovation can still proceed. With their decision confirmed, focus should shift to appraisal rights flows rather than cancellation risk.
  • We should focus on flow trading given the notable exercise size and potential for unprecedented market activity if institutions, including the NPS, exercise their rights due to the juicy premium.
  • The large exercise size and SK Innovation’s KOSPI large-cap status may create unique flow trading opportunities, with potential repurchases after new shares list.

SK Telecom: A Blue-Chip Defensive Stock That Could Outperform KOSPI Amid Market Turmoil

By Douglas Kim

  • Amid recent market turmoil, we believe that SK Telecom could be a solid blue-chip, defensive Korean stock that could outperform the market in the next 6-12 months.
  • SK Telecom reported better than expected profits in 2Q 2024. The company’s sales were 0.5% higher than the consensus and its operating profit was 3.9% higher than the consensus estimates.
  • SK Telecom’s shareholder return policy is to return at least 50% of adjusted profit for the year on a consolidated basis.

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Aug 06
0

Daily Brief South Korea: Youlchon Chemical and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Potential Additions and Deletions to KOSPI 200 in December 2024 Amid Market Downturn

Potential Additions and Deletions to KOSPI 200 in December 2024 Amid Market Downturn

By Douglas Kim

  • We discuss the potential additions and deletions to KOSPI 200 in December 2024 amid big declines in share prices of many stocks in KOSPI in the past week.
  • The eight potential additions are up on average 8.5% from end of 2023. The eight potential deletion candidates are down on average 39.1% YTD.
  • The average market cap of the seven potential additions is 1.9 trillion won. The average market cap of the seven potential deletion candidates is 0.6 trillion won.

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Aug 05
0

Daily Brief South Korea: Samsung Electronics Pref Shares, KT&G Corporation and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing
  • KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears

Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing

By Sanghyun Park

  • Local traders see interest rate cuts and value-up disclosures as key for timing Samsung Electronics 1P discount narrowing.
  • Samsung’s only realistic value-up goal beyond 50% FCF return is improving ROE, likely through a pref-skewed buyback or cancellation program.
  • If Samsung announces a value-up plan during the Bank of Korea’s rate cuts, local traders expect the 1P discount to reverse, targeting October-November for position entry.

KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears

By Douglas Kim

  • In this insight, we provide an update of KT&G Corporation (033780 KS) which is a strong candidate for outperformance amid increased signs of market fears. 
  • We continue to believe that there is an increasing probability of cigarette price hikes in Korea in 2H24. Last time that KT&G hiked its cigarette prices was in January 2015.
  • The company’s shareholder return policy is to provide cash dividends of 1.8 trillion won and share buyback/cancellations worth 1 trillion won from 2024 to 2026. 

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