Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Cross Asset Strategy

<ul>
<li>The KOSDAQ index rose by 7.1% today to 1,064.4 today which was one of the largest single day returns for KOSDAQ in the past three decades.</li>
<li>Will this 7% upside move be a fake reversal or the start of a strong, sustainable momentum trade driven by a potential 17 trillion won inflow into the KOSDAQ companies?</li>
<li>The Korean government is trying to encourage the injection of nearly 17 trillion won into KOSDAQ listed companies through venture capital (raised through integrated market assets (IMAs) and commercial papers).</li>
</ul>


The KOSDAQ index rose by 7.1% today to 1,064.4 today which was one of the largest single day returns for KOSDAQ in the past three decades.
Will this 7% upside move be a fake reversal or the start of a strong, sustainable momentum trade driven by a potential 17 trillion won inflow into the KOSDAQ companies?
The Korean government is trying to encourage the injection of nearly 17 trillion won into KOSDAQ listed companies through venture capital (raised through integrated market assets (IMAs) and commercial papers).


KOSDAQ's 7% Rise Today - A Fake Reversal or Sustainable by a Potential 17 Trillion Won Inflow?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Korea Stock Exchange KOSPI 200 / Event-Driven

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

<ul>
<li>Korea banned all short selling in March 2020 and resumed short selling only on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> index constituents in May 2021.</li>
<li>News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.</li>
<li>There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.</li>
</ul>


Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.


Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

External broker reports(aggregated public sources), Mirae Asset Securities

Mirae Asset Securities

External broker reports(aggregated public sources)

Mirae Asset Securities Co.,Ltd. provides comprehensive wealth management services. The Company offers fixed income securities brokerage, securities dealing, equity underwriting, and other services. Mirae Asset Securities also deals with mergers and acquisitions, foreign currency, and financial derivatives

Equity Bottom-Up

<ul><li>We maintain our target price of W180,000 on L&amp;F and continue to recommend the stock as our top pick in the battery materials sector.</li><li>In LFP cathode materials, the firm’s proactive investments have begun to translate into orders, with more likely to follow.</li><li>L&amp;F recently disclosed an LFP cathode materials order related to Samsung SDI’s North American ESS business, and we see potential for additional orders from Europe across both EV and ESS applications depending on downstream order wins. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We maintain our target price of W180,000 on L&amp;F and continue to recommend the stock as our top pick in the battery materials sector.In LFP cathode materials, the firm’s proactive investments have begun to translate into orders, with more likely to follow.L&amp;F recently disclosed an LFP cathode materials order related to Samsung SDI’s North American ESS business, and we see potential for additional orders from Europe across both EV and ESS applications depending on downstream order wins. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

L&F (066970 KS/Buy)LFP Order Momentum Likely to Build Further

<ul><li>Minimal US EV exposure and clear ESS growthLift TP to W180,000 (from W110,000) We raise our target price on L&amp;F to W180,000 and retain the stock as our top pick in the battery materials sector</li><li>Given the diverging demand trends between the EV and ESS segments, we believe it is reasonable to value these businesses separately and have thus switched to an SOTP-based valuation</li><li>We value the high-nickel cathode materials (EV-related) business at W5tr and the LFP cathode materials (ESS-related) business at W1</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Minimal US EV exposure and clear ESS growthLift TP to W180,000 (from W110,000) We raise our target price on L&amp;F to W180,000 and retain the stock as our top pick in the battery materials sectorGiven the diverging demand trends between the EV and ESS segments, we believe it is reasonable to value these businesses separately and have thus switched to an SOTP-based valuationWe value the high-nickel cathode materials (EV-related) business at W5tr and the LFP cathode materials (ESS-related) business at W1Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

L&F (066970 KS/Buy)Minimal US EV Exposure and Clear ESS Growth

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Equity Capital Markets

Hunan Yuneng New Energy Battery Material / Equity Capital Markets

Hunan Yuneng New Energy Battery Material (YNEM HK)

<ul>
<li>Hunan Yuneng, a lithium iron phosphate cathode material supplier, is seeking an A+H listing. CSC and HSBC are the joint sponsors.</li>
<li>We look at the company's core business, lithium iron phosphate cathode materials for power batteries and energy storage batteries.</li>
<li>We discuss our preliminary thoughts on the company's valuation based on the A-H premium.</li>
</ul>


Hunan Yuneng, a lithium iron phosphate cathode material supplier, is seeking an A+H listing. CSC and HSBC are the joint sponsors.
We look at the company's core business, lithium iron phosphate cathode materials for power batteries and energy storage batteries.
We discuss our preliminary thoughts on the company's valuation based on the A-H premium.


Hunan Yuneng (湖南裕能) A+H Pre-IPO: Early Thoughts

South Korea

L&F Co., Ltd. develops and manufactures battery materials. The Company produces and sells cathode active materials, anode materials, electrolyte, separator, and other products. L&F markets its products throughout Korea.

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L&F (066970 KS)

KOSDAQ's 7% Rise Today - A Fake Reversal or Sustainable by a Potential 17 Trillion Won Inflow?

The KOSDAQ index rose by 7.1% today to 1,064.4 today which was one of the largest single day returns for KOSDAQ in the past three decades.

Douglas Kim

Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Media reports indicate that there could be a temporary short sell ban in Korea. This could lead to futures backwardation, market manipulation and a...

Brian Freitas

L&F (066970 KS/Buy)LFP Order Momentum Likely to Build Further

We maintain our target price of W180,000 on L&F and continue to recommend the stock as our top pick in the battery materials sector.

Mirae Asset Securities

L&F (066970 KS/Buy)Minimal US EV Exposure and Clear ESS Growth

Minimal US EV exposure and clear ESS growthLift TP to W180,000 (from W110,000) We raise our target price on L&F to W180,000 and retain the stock as...

Mirae Asset Securities

Hunan Yuneng (湖南裕能) A+H Pre-IPO: Early Thoughts

Hunan Yuneng is seeking an A+H listing. In this note, we look at the company's business and its industry, and give our early thoughts on valuation.

Ke Yan, CFA, FRM

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