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

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Event-Driven

Jusung Engineering Co., Ltd. manufactures semiconductor, flat panel display, and solar cell production equipment.  The Company produces space divided CVD-ALD thin film machines for semiconductor manufacture; equipment for producing liquid crystal display panels; and equipment for manufacturing crystalline silicon and thin film silicon tandem solar cells.

<ul>
<li>The reshuffle results align with expectations, but the decision to list 11 KOSDAQ Global stocks in April is surprising. Local authorities seem to prioritize boosting the derivatives market for liquidity.</li>
<li>Ecopro Materials' SSF listing, earlier than expected, attracts attention, potentially leading to an unusual basis pattern, coinciding with a major lockup release on May 17th.</li>
<li>We should also be wary of a pattern akin to last July's in KOSDAQ stocks. Spot prices of recent SSFs showed a pronounced short-term uptrend, especially in KOSDAQ, versus KOSPI.</li>
</ul>


The reshuffle results align with expectations, but the decision to list 11 KOSDAQ Global stocks in April is surprising. Local authorities seem to prioritize boosting the derivatives market for liquidity.
Ecopro Materials' SSF listing, earlier than expected, attracts attention, potentially leading to an unusual basis pattern, coinciding with a major lockup release on May 17th.
We should also be wary of a pattern akin to last July's in KOSDAQ stocks. Spot prices of recent SSFs showed a pronounced short-term uptrend, especially in KOSDAQ, versus KOSPI.


KRX's Official SSF/SSO Reshuffle Results: Trading Considerations

LOCK&LOCK CO., LTD. produces and sells plastic food storage and outdoor airtight containers.  The Company also produces various materials such as ceramic ware, pot, glass, and other kitchen stuffs.

<ul>
<li>The tendering price is ₩8,750, roughly 7% higher than the last close. However, Affinity's commitment makes this event noteworthy.</li>
<li>Lock&amp;Lock requires Affinity to target 30%. To reach 95%, securing 25% is needed, much higher than SsangYong C&amp;E, indicating potential price volatility.</li>
<li>A second public offering is likely due to the widening gap between the ownership threshold and actual acquisition percentage in Lock&amp;Lock. This could impact prices significantly during the tendering period.</li>
</ul>


The tendering price is ₩8,750, roughly 7% higher than the last close. However, Affinity's commitment makes this event noteworthy.
Lock&amp;Lock requires Affinity to target 30%. To reach 95%, securing 25% is needed, much higher than SsangYong C&amp;E, indicating potential price volatility.
A second public offering is likely due to the widening gap between the ownership threshold and actual acquisition percentage in Lock&amp;Lock. This could impact prices significantly during the tendering period.


Lock&Lock Tender Offer: Different Trading Angles Compared to Recent Ssangyong C&E Case

HPSP Co., Ltd operates as a manufacturing company. The Company manufactures semiconductor devices, systems and others. HPSP also provides related solution services.

<ul>
<li>This morning's HPSP (403870 KS) situation began with Maekyung's report, indicating Crescendo PE contacted local bankers for the controlling stake sale.</li>
<li>The surge in HPSP's stock price after Maekyung's report suggests Crescendo PE's tacit approval, implying their involvement in the news's emergence.</li>
<li>Despite the likely confirmed sale of Crescendo PE's stake, timing remains uncertain due to disclosure rules. Continued monitoring is vital, considering potential market reactions later.</li>
</ul>


This morning's HPSP (403870 KS) situation began with Maekyung's report, indicating Crescendo PE contacted local bankers for the controlling stake sale.
The surge in HPSP's stock price after Maekyung's report suggests Crescendo PE's tacit approval, implying their involvement in the news's emergence.
Despite the likely confirmed sale of Crescendo PE's stake, timing remains uncertain due to disclosure rules. Continued monitoring is vital, considering potential market reactions later.


Market Chats About What Really Went Down with HPSP This Morning

Hanmi Science Co., Ltd. produces pharmaceutical products, including antibiotics, vitamins, and intestinal tonics.  The Company also provides beverages and processes soft capsules for other pharmaceutical firms.

<ul>
<li>The local market anxiously awaits the family's ability to pay by early May. Failure could prompt the Tax Service to sell their pledged stocks, including Hanmi Science shares.</li>
<li>Preventing Tax Service from selling Hanmi Science shares requires additional collateral, unlikely due to existing pledges. Rumor suggests mother and daughter may sell shares before May, followed by Tax Service.</li>
<li>Given negotiation uncertainty with KKR, it's crucial to prepare for potential failure rather than solely relying on success, necessitating a pragmatic approach.</li>
</ul>


The local market anxiously awaits the family's ability to pay by early May. Failure could prompt the Tax Service to sell their pledged stocks, including Hanmi Science shares.
Preventing Tax Service from selling Hanmi Science shares requires additional collateral, unlikely due to existing pledges. Rumor suggests mother and daughter may sell shares before May, followed by Tax Service.
Given negotiation uncertainty with KKR, it's crucial to prepare for potential failure rather than solely relying on success, necessitating a pragmatic approach.


Imminent Block Deals Involving Hanmi Science Shares Due to Inheritance Tax Payments

KT Corporation provides telecommunication services including local, long distance, and international calling, satellite communication, data transmission, and wireless telephone services in South Korea.  The Company also offers network portal and high-speed Internet access services using asymmetric digital subscriber lines (ADSLs).

<ul>
<li>KT's foreign ownership declined since January, below 7.5% by last month. If it remains, the adjustment factor halves to 0.25, impacting KT's Global Index weight.</li>
<li>With the May review screening date estimated for April 17th, swift reversal of foreign inflows seems improbable. Thus, KT's adjustment factor dropping to 0.25 is likely.</li>
<li>This could lead to an outflow of 1.6M shares, approximately 3x ADTV. Given the prolonged price impact on telcos, exploring a long-short setup with SKT might be prudent.</li>
</ul>


KT's foreign ownership declined since January, below 7.5% by last month. If it remains, the adjustment factor halves to 0.25, impacting KT's Global Index weight.
With the May review screening date estimated for April 17th, swift reversal of foreign inflows seems improbable. Thus, KT's adjustment factor dropping to 0.25 is likely.
This could lead to an outflow of 1.6M shares, approximately 3x ADTV. Given the prolonged price impact on telcos, exploring a long-short setup with SKT might be prudent.


KT's Foreign Room Below 7.5%, Weight Down-Adjustment Expected in May, Resulting in 3x ADTV Outflow

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

Sanghyun Park
Korea / Special Sits, Pairs, Index Rebalancing
• Clepsydra Capital

KRX's Official SSF/SSO Reshuffle Results: Trading Considerations

As pointed out in this post, considering KOSDAQ additions as a long basket is suitable. However, stocks with high pre-reshuffle price appreciation...

Sanghyun Park

Lock&Lock Tender Offer: Different Trading Angles Compared to Recent Ssangyong C&E Case

This post delves into the trading perspectives of the Lock&Lock tender offer, highlighting its differences from the recent Ssangyong C&E case.

Sanghyun Park

Market Chats About What Really Went Down with HPSP This Morning

Maekyung's report on HPSP (403870 KS) still signals Crescendo PE's potential stake sale despite the company's outright denial, with timing...

Sanghyun Park

Imminent Block Deals Involving Hanmi Science Shares Due to Inheritance Tax Payments

This post investigates the imminent possibility of block deals involving Hanmi Science shares due to inheritance tax payments.

Sanghyun Park

KT's Foreign Room Below 7.5%, Weight Down-Adjustment Expected in May, Resulting in 3x ADTV Outflow

KT's foreign ownership declining impacts adjustment factor, potential outflow of shares, and suggests a long-short setup with SKT.

Sanghyun Park

KRX's Official SSF/SSO Reshuffle Results: Trading Considerations

As pointed out in this post, considering KOSDAQ additions as a long basket is suitable. However, stocks with high pre-reshuffle price appreciation...

Sanghyun Park

Lock&Lock Tender Offer: Different Trading Angles Compared to Recent Ssangyong C&E Case

This post delves into the trading perspectives of the Lock&Lock tender offer, highlighting its differences from the recent Ssangyong C&E case.

Sanghyun Park

Market Chats About What Really Went Down with HPSP This Morning

​Maekyung's report on HPSP (403870 KS) still signals Crescendo PE's potential stake sale despite the company's outright denial, with timing...

Sanghyun Park

Imminent Block Deals Involving Hanmi Science Shares Due to Inheritance Tax Payments

This post investigates the imminent possibility of block deals involving Hanmi Science shares due to inheritance tax payments.

Sanghyun Park

KT's Foreign Room Below 7.5%, Weight Down-Adjustment Expected in May, Resulting in 3x ADTV Outflow

​KT's foreign ownership declining impacts adjustment factor, potential outflow of shares, and suggests a long-short setup with SKT.

Sanghyun Park

Maekyung's report on HPSP (403870 KS) still signals Crescendo PE's potential stake sale despite the company's outright denial, with timing...

KT's foreign ownership declining impacts adjustment factor, potential outflow of shares, and suggests a long-short setup with SKT.