Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

LG Energy Solution / Equity Capital Markets

<ul>
<li>LG Energy Solution is getting ready to complete its IPO in the Korean stock market on 27 January 2022. The IPO price is from 257,000 won to 300,000 won. </li>
<li>The IPO base deal size is from $9.3 billion to $10.8 billion. This is the biggest ever IPO in Korea. </li>
<li>The bankers used CATL and Samsung SDI as its comps. Using their annualized EBITDA in 2021, the average EV/EBITDA of its peers is 51.4x (2021E). </li>
</ul>


LG Energy Solution is getting ready to complete its IPO in the Korean stock market on 27 January 2022. The IPO price is from 257,000 won to 300,000 won. 
The IPO base deal size is from $9.3 billion to $10.8 billion. This is the biggest ever IPO in Korea. 
The bankers used CATL and Samsung SDI as its comps. Using their annualized EBITDA in 2021, the average EV/EBITDA of its peers is 51.4x (2021E). 


<ul>
<li>LG Energy Solution has passed the preliminary review for listing on the Korea Exchange. It is expected to provide IPO filings in early December and go public in January 2022.</li>
<li>The local media has mentioned that the value of LG Energy could range between 75 trillion won to 85 trillion won. </li>
<li>If we use an EV/EBITDA multiple of 29x and an estimated EBITDA of 2.5 trillion won (2021E), this would suggest an implied market cap of 83.6 trillion won. </li>
</ul>


LG Energy Solution has passed the preliminary review for listing on the Korea Exchange. It is expected to provide IPO filings in early December and go public in January 2022.
The local media has mentioned that the value of LG Energy could range between 75 trillion won to 85 trillion won. 
If we use an EV/EBITDA multiple of 29x and an estimated EBITDA of 2.5 trillion won (2021E), this would suggest an implied market cap of 83.6 trillion won. 


LG Energy Solution: Passes the Preliminary Review for Listing on the Korean Exchange

Event-Driven

<ul>
<li>SK IE Technology's second largest shareholder Premier Partners is selling its shares through a block deal worth between 465 billion won to 538.9 billion won.</li>
<li>We would AVOID this block deal due to lack valuation merits coupled with additional overhang from the remaining shares by Premier Partners post this block sale. </li>
<li>SK IET, which is trading at 51.7x P/E and 5.3x P/B consensus 2022 earnings estimates, appears to be fully valued at current levels. </li>
</ul>


SK IE Technology's second largest shareholder Premier Partners is selling its shares through a block deal worth between 465 billion won to 538.9 billion won.
We would AVOID this block deal due to lack valuation merits coupled with additional overhang from the remaining shares by Premier Partners post this block sale. 
SK IET, which is trading at 51.7x P/E and 5.3x P/B consensus 2022 earnings estimates, appears to be fully valued at current levels. 


SK IE Technology - Block Deal Sale by Second Largest Shareholder Premier Partners

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> reported its 3Q 2021 results today. The company generated sales of 10.6 trillion won (up 41.4% YoY and 6.0% lower than the consensus) and operating profit of 726.6 billion won (down 19.6% YoY and 29.6% lower than the consensus). Although LG Chem's results were stagnant in 3Q 2021, its results are likely to improve materially in 4Q 2021. The consensus currently estimates LG Chem to generate sales of 11.7 trillion won (up 31% YoY) and an operating profit of 1.2 trillion won (up 925% YoY) in 4Q 2021.LG Chem also announced <a href="https://www.chosun.com/economy/industry-company/2021/10/25/5V5L3Z7LONEFPBUA3TKQNRYS7M/?utm_source=naver&amp;utm_medium=referral&amp;utm_campaign=naver-news" target="_blank" rel="noopener">Kwon Young-Soo</a> as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief Operating Officer (COO) of <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a>. Having worked in various companies of the LG Group for nearly 42 years, clearly Kwon Young-Soo shown a lot of loyalty to the LG Group. In addition, he has proven record of successfully leading numerous LG Group businesses. Overall, we believe that the market will have a positive view of the decision to put Kwon Young-Soo as the CEO of LG Energy Solution.At this point, it appears that the higher probability of an IPO for LG Energy Solution is sometime in 1Q 2022, rather than in November/December 2021. LG and GM have settled on a <a href="https://www.reuters.com/article/businessNews/idUSKBN2HF0EO" target="_blank" rel="noopener">$2 billion cost</a> related to the Bolt recall earlier this month, paving the way for an IPO in the next several months.

LG Chem Ltd (051910 KS) reported its 3Q 2021 results today. The company generated sales of 10.6 trillion won (up 41.4% YoY and 6.0% lower than the consensus) and operating profit of 726.6 billion won (down 19.6% YoY and 29.6% lower than the consensus). Although LG Chem's results were stagnant in 3Q 2021, its results are likely to improve materially in 4Q 2021. The consensus currently estimates LG Chem to generate sales of 11.7 trillion won (up 31% YoY) and an operating profit of 1.2 trillion won (up 925% YoY) in 4Q 2021.LG Chem also announced Kwon Young-Soo as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief Operating Officer (COO) of LG Corp (003550 KS). Having worked in various companies of the LG Group for nearly 42 years, clearly Kwon Young-Soo shown a lot of loyalty to the LG Group. In addition, he has proven record of successfully leading numerous LG Group businesses. Overall, we believe that the market will have a positive view of the decision to put Kwon Young-Soo as the CEO of LG Energy Solution.At this point, it appears that the higher probability of an IPO for LG Energy Solution is sometime in 1Q 2022, rather than in November/December 2021. LG and GM have settled on a $2 billion cost related to the Bolt recall earlier this month, paving the way for an IPO in the next several months.

LG Chem - Major Highlights of 3Q 2021 Earnings & A New CEO for LG Energy Solution

<div class="content-highlight">
In this insight, we provide an updated SoTP valuation analysis on <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a>. We have a positive view of this stock. Our base case valuation analysis suggests an implied price of 131,911 won per share, representing a 41% upside from current levels.
After much delay, the IPO of LG Energy Solution could finally occur in the next several months and this may be the largest ever IPO in Korea. The IPO of LG Energy Solution could be a key catalyst for <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> in the coming weeks. 
</div>In addition to its deep discount versus its NAV, there are also four key catalysts for the company which are as follows:<ul style="list-style-type: disc;">
<li>IPO of LG Energy Solutions</li>
<li>Potential for higher dividends</li>
<li>Improvement in balance sheet &amp; potential for higher share buybacks</li>
<li>Rising foreign ownership</li>
</ul>


In this insight, we provide an updated SoTP valuation analysis on LG Corp (003550 KS). We have a positive view of this stock. Our base case valuation analysis suggests an implied price of 131,911 won per share, representing a 41% upside from current levels.
After much delay, the IPO of LG Energy Solution could finally occur in the next several months and this may be the largest ever IPO in Korea. The IPO of LG Energy Solution could be a key catalyst for LG Chem Ltd (051910 KS) and LG Corp (003550 KS) in the coming weeks. 
In addition to its deep discount versus its NAV, there are also four key catalysts for the company which are as follows:
IPO of LG Energy Solutions
Potential for higher dividends
Improvement in balance sheet &amp; potential for higher share buybacks
Rising foreign ownership


LG Corp: SoTP Valuation Analysis Update + Four Key Catalysts

South Korea

LG Chem Ltd. is a chemical manufacturer.  The Company's products include petrochemicals, plastic resins, and engineering plastics.  LG Chem also produces industrial and electronic materials.

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LG Chem Ltd (051910 KS)

LG Energy Solution IPO Preview

LG Energy Solution is getting ready to complete its IPO in the Korean stock market on 27 January 2022. This is the biggest ever IPO in Korea.

Douglas Kim

LG Energy Solution: Passes the Preliminary Review for Listing on the Korean Exchange

LG Energy Solution has passed the preliminary review for listing on the Korea Exchange. LG Energy Solution is expected to file its IPO prospectus...

Douglas Kim

SK IE Technology - Block Deal Sale by Second Largest Shareholder Premier Partners

SK IE Technology's second largest shareholder Premier Partners is selling its shares through a block deal worth between 465 billion won to 538.9...

Douglas Kim

LG Chem - Major Highlights of 3Q 2021 Earnings & A New CEO for LG Energy Solution

LG Chem also announced Kwon Young-Soo as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief...

Douglas Kim

LG Corp: SoTP Valuation Analysis Update + Four Key Catalysts

In this insight, we provide an updated SoTP valuation analysis on LG Corp. Our base case valuation analysis suggests an implied price of 131,911...

Douglas Kim

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