Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

SKT IR Confirmation of Post-Spinoff Dividend Policy & Capability of Doing It Based on FCF

SK Telecom Spinoff Financials Confusions & Explanations

SKT Foreign Room Now at 6.77%: Potential Passive Flow Impact & Pair Position with LG U+

SK Telecom's Foreign Room Below 9% with Cancellation Effective May 13, Halving MSCI Index Weight

SK Telecom Foreign Room Momentum with Pre-Announced Spinoff Factor

SK Telecom Announcement: Split Ratio, Stock Split, Financials, Subsidiaries, & ADR Treatment

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<p>We now have the spinoff details, meaning that we can now reasonably estimate each spinoff company's valuation.</p><p>SK Investment is relatively easy to estimate as it is a pure holding company without any meaningful operating operation. At the usual 50% local holding company discount to NAV, SK Investment's valuation should be slightly higher than ₩12T.</p><table class="table table-striped">
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"SK Investment NAV"}'>SK Investment NAV</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"Stake %"}'>Stake %</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":2,"2":"Value"}'>Value</td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Note"}'>Note</td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"SK Hynix Inc"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>SK Hynix Inc</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"000660"}' data-sheets-formula='="000660"'>000660</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.201}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.10%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":18510.552133672503}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩18,510.6B</strong></td>
<td rowspan="4" style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Market value"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><div><strong>Market value at the current share price</strong></div></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"NanoenTek Inc"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>NanoenTek Inc</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"039860"}' data-sheets-formula='="039860"'>039860</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.284}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>28.40%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":60.1202392572}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩60.1B</strong></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Dream Us Co"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Dream Us Co</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"060570"}' data-sheets-formula='="060570"'>060570</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.418}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>41.80%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":143.31751875738001}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩143.3B</strong></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Incross Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>Incross Co Ltd</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"216050"}' data-sheets-formula='="216050"'>216050</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.346}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>34.60%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":152.2054083732}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula='=googlefinance(R[0]C[-2], "shares")*googlefinance(R[0]C[-2], "price")/1000000000*R[0]C[-1]'><strong>₩152.2B</strong></td>
</tr>
<tr><td colspan="5" style="width: 726.008px;"><div></div></td></tr>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.803}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>80.30%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":2208.25}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩2,208.3B</strong></td>
<td rowspan="5" style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Based on the most recent private placement"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><div><strong>Based on the most recent private placement</strong></div></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"T-Map Mobility"}'>T-Map Mobility</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.663}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>66.30%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":928.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩928.2B</strong></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"ADT Caps"}'>ADT Caps</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.626}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>62.60%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":813.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩813.8B</strong></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Contents Wavve"}'>Contents Wavve</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.364}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>36.40%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":436.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩436.8B</strong></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"One Store"}'>One Store</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":3,"3":0.475}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>47.50%</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":427.5}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[0]C[2]*R[0]C[-1]"><strong>₩427.5B</strong></td>
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<tr><td colspan="5" style="width: 726.008px;"><div></div></td></tr>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Others, including SK Planet"}'>Others, including SK Planet</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"Unlisted"}'>Unlisted</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":683.1}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=60.3+100.5+94.1+5.6+17.8+404.8"><strong>₩683.1B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"Book value"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>Book value</strong></td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Net cash"}'><strong>Net cash</strong></td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":387.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩387.8B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
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<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":"Total"}'>Total</td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":24751.64530006028}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=sum(R[-11]C[0]:R[-1]C[0])"><strong>₩24,751.6B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr>
<td style="width: 167.756px;" data-sheets-value='{"1":2,"2":" - At a 50% discount to NAV"}'><strong>- At a 50% discount to NAV</strong></td>
<td style="text-align: right; width: 114.545px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 119.56px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right; width: 111.534px;" data-sheets-value='{"1":3,"3":12375.82265003014}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[-1]C[0]*0.5"><strong>₩12,375.8B</strong></td>
<td style="text-align: right; width: 128.636px;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
</tr>
<tr><td colspan="5" style="width: 726.008px;" data-sheets-value='{"1":2,"2":"Source: SK Telecom &amp; KRX"}'>Source: SK Telecom &amp; KRX</td></tr>
</tbody>
</table>

We now have the spinoff details, meaning that we can now reasonably estimate each spinoff company's valuation.SK Investment is relatively easy to estimate as it is a pure holding company without any meaningful operating operation. At the usual 50% local holding company discount to NAV, SK Investment's valuation should be slightly higher than ₩12T.









SK Investment NAV
Type
Stake %
Value
Note


SK Hynix Inc
000660
20.10%
₩18,510.6B
Market value at the current share price


NanoenTek Inc
039860
28.40%
₩60.1B


Dream Us Co
060570
41.80%
₩143.3B


Incross Co Ltd
216050
34.60%
₩152.2B



11st Street
Unlisted
80.30%
₩2,208.3B
Based on the most recent private placement


T-Map Mobility
Unlisted
66.30%
₩928.2B


ADT Caps
Unlisted
62.60%
₩813.8B


Contents Wavve
Unlisted
36.40%
₩436.8B


One Store
Unlisted
47.50%
₩427.5B



Others, including SK Planet
Unlisted
-
₩683.1B
Book value


Net cash
-
-
₩387.8B
-


Total
-
-
₩24,751.6B
-


- At a 50% discount to NAV
-
-
₩12,375.8B
-

Source: SK Telecom &amp; KRX



SK Telecom: Two Interpretations of Post-Spinoff Dividend Policy Creates a Huge Disparity