Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Samsung Heavy's Unusual Preannouncement of Rights Offer: Pave the Path for Massive Arb Trades?

Samsung Heavy Situation: Discussing 3 Key Issues at This Point

Samsung Heavy Industries Passive Flow Trade on Relisting, August 10

Event-Driven

After the market close today, <a href="https://www.smartkarma.com/entities/samsung-heavy-industries" target="_blank" data-smartkarma-citation="entities:4:1" rel="noopener">Samsung Heavy Industries (010140 KS)</a> announced that it will conduct a capital reduction plan followed by rights offering issue worth 1 trillion won. The capital reduction will involve a reduction in par value (5 to 1). The rights offering will be worth 1 trillion won, representing 22% of Samsung Heavy Industries (SHI)'s market cap of 4.5 trillion won.We believe that this rights offering by Samsung Heavy Industries will act as an overhang on its share price as many investors fear that this offering will lead to further shares dilution. In addition, the company also had an operating loss of 506.8 billion won in 1Q 2021, which was much worse than the consensus estimate of an operating loss of 49.3 billion won in this period.Rising materials costs including steel has resulted in higher than expected total operating costs for Samsung Heavy Industries.

After the market close today, Samsung Heavy Industries (010140 KS) announced that it will conduct a capital reduction plan followed by rights offering issue worth 1 trillion won. The capital reduction will involve a reduction in par value (5 to 1). The rights offering will be worth 1 trillion won, representing 22% of Samsung Heavy Industries (SHI)'s market cap of 4.5 trillion won.We believe that this rights offering by Samsung Heavy Industries will act as an overhang on its share price as many investors fear that this offering will lead to further shares dilution. In addition, the company also had an operating loss of 506.8 billion won in 1Q 2021, which was much worse than the consensus estimate of an operating loss of 49.3 billion won in this period.Rising materials costs including steel has resulted in higher than expected total operating costs for Samsung Heavy Industries.

Samsung Heavy Industries: A Capital Reduction Followed by 1 Trillion Won in Rights Offering