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 Split: Daily Trading Flow Before/After Trading Suspension

SK Telecom & SK Square Relisting Walkthrough on November 29

SK Telecom Spinoff Relisting Step-By-Step Walkthrough

SKT Long Gaining Traction with New High in Store

SKT FIF-Adjustment Passive Play: SK Square ADS Refund May Kill It

The Blockchain Delusion. A (Mostly) Bearish Investment Thesis.

Clepsydra Capital

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

Event-Driven

<h2>October 12 EGM results</h2><p>SK Telecom's demerger and stock split got shareholder approval yesterday.</p><div class="content-highlight"><p><strong>Based on the number of attending votes, the approval rate for the demerger reached 99.95%, and the approval rate for the stock split was 99.96%, receiving overwhelming support from individual shareholders as well as institutions, including the National Pension Service.</strong></p></div><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/760/original/3.png?1634066969" class="editor-image img-responsive" data-smartkarma-image-id="234760"></figure></section><p>As a result of this, SK Telecom and SK Square will be officially launched on November 1, the record date of the demerger. The current SK Telecom will be listed and re-listed as SK Telecom and SK Square, respectively, on November 29 after a period of stock trading suspension from October 26 to November 26.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension begins"}'>Trade suspension begins</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44495}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 10. 26</td>
</tr>
<tr>
<td><strong>Record date of demerger</strong></td>
<td style="text-align: right;"><strong>2021. 11. 01</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension ends"}'>Trade suspension ends</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44526}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 11. 26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Re-listing"}'><strong>Re-listing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44529}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 11. 29</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></section><p>SK Telecom plans to transform itself into a telecom service, artificial intelligence, and digital infrastructure service company and increase its annual sales from ₩15T in 2020 to ₩22T in 2025.</p><div class="content-highlight"><ul>
<li>As for the Telecom service business, it plans to solidify 5G leadership and continue the growth of media services. In the case of AI-based services, it will evolve the subscription service (T Universe) into an online and offline subscription commerce platform. Lastly, the company plans to fully expand its high-growth data center, cloud, and industrial Internet of Things (IoT) businesses by utilizing 5G MEC (mobile edge computing) for the digital infrastructure service business.</li>
<li>SK Square will be launched as a semiconductor/ICT investment company. Based on the successful DNA accumulated through investments in the semiconductor and ICT platform business so far, the company has set a vision to increase its net asset value from the current ₩26T to ₩75T by 2025.</li>
</ul></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Vision 2025"}'>Vision 2025</td>
<td data-sheets-value='{"1":2,"2":"SK Telecom"}'>SK Telecom</td>
<td data-sheets-value='{"1":2,"2":"SK Square"}'>SK Square</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Core business areas"}'>Core business areas</td>
<td data-sheets-value='{"1":2,"2":"Telecom service, AI-based service, &amp; digital infrastructure"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'>Telecom service, AI-based service, &amp; digital infrastructure</td>
<td data-sheets-value='{"1":2,"2":"Semiconductor &amp; ICT investment"}'><div><div>Semiconductor &amp; ICT investment</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current value"}'>Current value</td>
<td data-sheets-value='{"1":2,"2":"FY2020 annual sales of ₩15T"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'>FY2020 annual sales of ₩15T</td>
<td data-sheets-value='{"1":2,"2":"FY2021 net asset value of ₩26T"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'>FY2021 net asset value of ₩26T</td>
</tr>
<tr><td colspan="3"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target by FY2025"}'><strong>Target by FY2025</strong></td>
<td data-sheets-value='{"1":2,"2":"Annual sales of ₩22T"}'><strong>Yearly sales of ₩22T</strong></td>
<td data-sheets-value='{"1":2,"2":"Net asset value of ₩75T"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T","3":1}'><strong>Net asset value of ₩75T</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: SK Telecom"}'>Source: SK Telecom</td></tr>
</tbody>
</table><p>After the demerger, SK Telecom will have SK Broadband, SK Telink, PS&amp;Marketing, F&amp;U Credit Information, Service Top, Service Ace, and SK O&amp;S as subsidiaries. On the other hand, 16 companies will be placed under SK Square: SK Hynix, ADT Caps, 11st Street, T Map Mobility, One Store, Contents Wavve, Dream Us Company, and SK Planet.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telecom"}'>SK Telecom</td>
<td data-sheets-value='{"1":2,"2":"SK Investment"}'>SK Square</td>
</tr>
<tr>
<td><strong>: 7 in total</strong></td>
<td><strong>: 16 in total</strong></td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Broadband"}'>SK Broadband</td>
<td data-sheets-value='{"1":2,"2":"SK Hynix"}'>SK Hynix</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Telink"}'>SK Telink</td>
<td data-sheets-value='{"1":2,"2":" ADT Caps"}'>ADT Caps</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PS&amp;Marketing"}'>PS&amp;Marketing</td>
<td data-sheets-value='{"1":2,"2":"11st Street"}'>11st Street</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"F&amp;S Credit Info"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>F&amp;S Credit Info</td>
<td data-sheets-value='{"1":2,"2":"T Map Mobility"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>T Map Mobility</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Servie Top"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Service Top</td>
<td data-sheets-value='{"1":2,"2":"One Store"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>One Store</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Service Ace"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Service Ace</td>
<td data-sheets-value='{"1":2,"2":" Contents Wavve"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Contents Wavve</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK O&amp;S"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>SK O&amp;S</td>
<td data-sheets-value='{"1":2,"2":"Dream Us Company"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Dream Us Company</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":3,"2":"0.00000%"}'></td>
<td data-sheets-value='{"1":2,"2":"SK Planet"}'>SK Planet</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"FSK L&amp;S"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>FSK L&amp;S</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"Incross"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Incross</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"NanoNtech"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Nano N Tech</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"Spark Plus"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Spark Plus</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"SK Telecom CST1"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><div>SK Telecom CST1</div></td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"SK Telecom TMT Investment"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><div>SK Telecom TMT Investment</div></td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"ID Quantique"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>ID Quantique</td>
</tr>
<tr>
<td data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'></td>
<td data-sheets-value='{"1":2,"2":"Techmaker"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Techmaker</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: SED"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'>Source: SK Telecom</td></tr>
</tbody>
</table><hr><div class="content-highlight">
<p><strong>In a separate regulatory filing,</strong></p>
<p>SKT said that it would transfer 520,000 treasury shares to its employees. In other words, SKT is giving 100 shares of treasury stock to each employee. Based on the closing price of ₩304,500 on October 8, this is equivalent to ₩158.3B.</p>
<p>It represents 0.72% of the total issued shares and about 60% of its current treasury shares. After this transaction, SKT's treasury shares will fall to 379,500, 0.53% of the shares outstanding.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/761/original/4.png?1634069235" class="editor-image img-responsive" data-smartkarma-image-id="234761"></figure></section>

October 12 EGM resultsSK Telecom's demerger and stock split got shareholder approval yesterday.Based on the number of attending votes, the approval rate for the demerger reached 99.95%, and the approval rate for the stock split was 99.96%, receiving overwhelming support from individual shareholders as well as institutions, including the National Pension Service.As a result of this, SK Telecom and SK Square will be officially launched on November 1, the record date of the demerger. The current SK Telecom will be listed and re-listed as SK Telecom and SK Square, respectively, on November 29 after a period of stock trading suspension from October 26 to November 26.






Schedule

Trade suspension begins
2021. 10. 26


Record date of demerger
2021. 11. 01


Trade suspension ends
2021. 11. 26


Re-listing
2021. 11. 29

Source: DART

SK Telecom plans to transform itself into a telecom service, artificial intelligence, and digital infrastructure service company and increase its annual sales from ₩15T in 2020 to ₩22T in 2025.
As for the Telecom service business, it plans to solidify 5G leadership and continue the growth of media services. In the case of AI-based services, it will evolve the subscription service (T Universe) into an online and offline subscription commerce platform. Lastly, the company plans to fully expand its high-growth data center, cloud, and industrial Internet of Things (IoT) businesses by utilizing 5G MEC (mobile edge computing) for the digital infrastructure service business.
SK Square will be launched as a semiconductor/ICT investment company. Based on the successful DNA accumulated through investments in the semiconductor and ICT platform business so far, the company has set a vision to increase its net asset value from the current ₩26T to ₩75T by 2025.








Vision 2025
SK Telecom
SK Square


Core business areas
Telecom service, AI-based service, &amp; digital infrastructure
Semiconductor &amp; ICT investment


Current value
FY2020 annual sales of ₩15T
FY2021 net asset value of ₩26T



Target by FY2025
Yearly sales of ₩22T
Net asset value of ₩75T

Source: SK Telecom

After the demerger, SK Telecom will have SK Broadband, SK Telink, PS&amp;Marketing, F&amp;U Credit Information, Service Top, Service Ace, and SK O&amp;S as subsidiaries. On the other hand, 16 companies will be placed under SK Square: SK Hynix, ADT Caps, 11st Street, T Map Mobility, One Store, Contents Wavve, Dream Us Company, and SK Planet.






SK Telecom
SK Square


: 7 in total
: 16 in total



SK Broadband
SK Hynix


SK Telink
ADT Caps


PS&amp;Marketing
11st Street


F&amp;S Credit Info
T Map Mobility


Service Top
One Store


Service Ace
Contents Wavve


SK O&amp;S
Dream Us Company



SK Planet



FSK L&amp;S



Incross



Nano N Tech



Spark Plus



SK Telecom CST1



SK Telecom TMT Investment



ID Quantique



Techmaker

Source: SK Telecom


In a separate regulatory filing,
SKT said that it would transfer 520,000 treasury shares to its employees. In other words, SKT is giving 100 shares of treasury stock to each employee. Based on the closing price of ₩304,500 on October 8, this is equivalent to ₩158.3B.
It represents 0.72% of the total issued shares and about 60% of its current treasury shares. After this transaction, SKT's treasury shares will fall to 379,500, 0.53% of the shares outstanding.


SKT Demerger Got Shareholder Approval & SK Square NAV Analysis