Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Equity Capital Markets

LG Energy Solution / Equity Capital Markets

<ul>
<li>The bankers began to receive pre-orders from overseas institutions from the 7th of this month. And it had already far exceeded the amount allocated to the institutions within a week.</li>
<li>But the market is genuinely concerned that the cause of the fire has not yet been clearly identified, which leads to concerns about whether this risk can be structurally prolonged.</li>
<li>It seems that the valuation attractiveness and the flow imbalance due to the tight float seem to offset concerns about the risks associated with NCM batteries.</li>
</ul>


The bankers began to receive pre-orders from overseas institutions from the 7th of this month. And it had already far exceeded the amount allocated to the institutions within a week.
But the market is genuinely concerned that the cause of the fire has not yet been clearly identified, which leads to concerns about whether this risk can be structurally prolonged.
It seems that the valuation attractiveness and the flow imbalance due to the tight float seem to offset concerns about the risks associated with NCM batteries.


LG Energy IPO: Great Pre-Order Success, but Still Worrying Aspects

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>In this insight, we discuss about what the locals are saying about LG Energy Solution in Korea to better understand how the locals are thinking about this IPO.</li>
<li>The local market is generally positive on the LG Energy Solution IPO. Valuations are reasonable and many investors expect the IPO to be priced at 300,000 won (high end). </li>
<li>Some of the major issues highlighted by the locals on this IPO include relatively cheap valuation relative to CATL, growing market share globally (ex-China), and low free float post IPO. </li>
</ul>


In this insight, we discuss about what the locals are saying about LG Energy Solution in Korea to better understand how the locals are thinking about this IPO.
The local market is generally positive on the LG Energy Solution IPO. Valuations are reasonable and many investors expect the IPO to be priced at 300,000 won (high end). 
Some of the major issues highlighted by the locals on this IPO include relatively cheap valuation relative to CATL, growing market share globally (ex-China), and low free float post IPO. 


LG Energy Solution - What Are the Locals Saying About This IPO?

Event-Driven

<ul>
<li>In the past week, Posco (005490 KS) announced that it will form a holding company structure through a physical spin-off (물적분할). </li>
<li>Many minority shareholders are opposing this move since they believe that this structure could result in the company eventually listing POSCO (steel company) and their stakes could be diluted.</li>
<li>Shareholders will finally vote on this new organizational structure on 28 January 2022. Many minority shareholders are opposing on this new deal. The final vote will likely remain very close. </li>
</ul>


In the past week, Posco (005490 KS) announced that it will form a holding company structure through a physical spin-off (물적분할). 
Many minority shareholders are opposing this move since they believe that this structure could result in the company eventually listing POSCO (steel company) and their stakes could be diluted.
Shareholders will finally vote on this new organizational structure on 28 January 2022. Many minority shareholders are opposing on this new deal. The final vote will likely remain very close. 


POSCO's Physical Spin-Off to Form POSCO Holdings: Opposed by Many Minority Shareholders

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>In <a href="https://www.smartkarma.com/insights/lg-energy-solution-ipo-initiation-amp-my-ride" target="_blank" data-smartkarma-citation="insights:62402" rel="noopener">LG Energy Solution IPO Initiation: Amp My Ride</a>, we stated that LGES has attractive fundamentals with a strong backlog, healthy revenue growth and improving margins (recall provisions have peaked). </li>
<li>In <a href="https://www.smartkarma.com/insights/lg-energy-solution-vs-catl-vs-samsung-sdi-vs-sk-innovation" target="_blank" data-smartkarma-citation="insights:62445" rel="noopener">LG Energy Solution Vs CATL Vs Samsung SDI Vs SK Innovation</a>, we benchmarked LGES and its listed battery peers across key financial metrics. </li>
<li>In this note, we look at the syndicate's valuation methodology and present our valuation methodology. Our valuation analysis suggests that the IPO price range is attractive. </li>
</ul>


In LG Energy Solution IPO Initiation: Amp My Ride, we stated that LGES has attractive fundamentals with a strong backlog, healthy revenue growth and improving margins (recall provisions have peaked). 
In LG Energy Solution Vs CATL Vs Samsung SDI Vs SK Innovation, we benchmarked LGES and its listed battery peers across key financial metrics. 
In this note, we look at the syndicate's valuation methodology and present our valuation methodology. Our valuation analysis suggests that the IPO price range is attractive. 


LG Energy Solution IPO: Valuation Insights

<ul>
<li>LG Energy's listing will significantly impact the local battery sector indexes. Since the market cap is at least ₩60T, LG Energy's index weight will immediately approach the cap when included.</li>
<li>The stock with the most considerable passive flow impact following the inclusion of LG Energy would be none other than LG Chem.</li>
<li>LG Chem's passive outflow estimated based on the current index weight for each index is about 3.26x of ADTV, representing 1.06% of SO and 1.63% of float shares.</li>
</ul>


LG Energy's listing will significantly impact the local battery sector indexes. Since the market cap is at least ₩60T, LG Energy's index weight will immediately approach the cap when included.
The stock with the most considerable passive flow impact following the inclusion of LG Energy would be none other than LG Chem.
LG Chem's passive outflow estimated based on the current index weight for each index is about 3.26x of ADTV, representing 1.06% of SO and 1.63% of float shares.


LG Chem: Passive Outflow from Local Battery Sector Indexes

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 (051915 KS)

LG Energy IPO: Great Pre-Order Success, but Still Worrying Aspects

This post summarizes investors' reactions to the LG Energy IPO. Specifically, it outlines the nature of investors' fundamental interests and the...

Sanghyun Park

LG Energy Solution - What Are the Locals Saying About This IPO?

The local market is generally positive on the LG Energy Solution IPO. Valuations are reasonable and many investors expect the IPO to be priced at...

Douglas Kim

POSCO's Physical Spin-Off to Form POSCO Holdings: Opposed by Many Minority Shareholders

Overall, we believe that POSCO's shares could be negatively pressured by this decision on the company to form a physical spin-off of the company.

Douglas Kim

LG Energy Solution IPO: Valuation Insights

Our valuation analysis suggests that the IPO price range is attractive. Pre-marketing closes on 17 Dec and the international roadshow will run...

Arun George

LG Chem: Passive Outflow from Local Battery Sector Indexes

This post examines and estimates the passive outflow impact for LG Chem from the local battery sector indexes as a result of LG Energy's listing.

Sanghyun Park

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