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.

Event-Driven

<ul>
<li>The ETF operators (KODEX and TIGER) applied to KRX for approval of a special change for an early swap between LG Chem and LG Energy.</li>
<li>KRX will likely approve this special change application, and the effective date should be immediately after listing. I will update when the exact implementation date of each index is released.</li>
<li>We also detect a trend spreading in the local industry that many local active managers decided to sell all other secondary battery stocks to raise funds to purchase LG Energy.</li>
</ul>


The ETF operators (KODEX and TIGER) applied to KRX for approval of a special change for an early swap between LG Chem and LG Energy.
KRX will likely approve this special change application, and the effective date should be immediately after listing. I will update when the exact implementation date of each index is released.
We also detect a trend spreading in the local industry that many local active managers decided to sell all other secondary battery stocks to raise funds to purchase LG Energy.


LG Energy: Sector ETFs Special Rule Change & Local Active Managers' Preemptive Trading

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

LG Energy Solution / Equity Capital Markets

<ul>
<li>LG Energy has demonstrated the ability to rapidly grow revenue and a $27.5bn revenue target for FY24 looks reasonable enough based on current conditions. </li>
<li>However, that growth has come with numerous issues such as recalls due to battery fires and questionable strategic positioning for the future. </li>
<li>In addition, overall profitability metrics look challenging relative to peers such as CATL.</li>
</ul>


LG Energy has demonstrated the ability to rapidly grow revenue and a $27.5bn revenue target for FY24 looks reasonable enough based on current conditions. 
However, that growth has come with numerous issues such as recalls due to battery fires and questionable strategic positioning for the future. 
In addition, overall profitability metrics look challenging relative to peers such as CATL.


<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

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Hyundai Engineering   / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:33008:1" rel="noopener">Hyundai Engineering Co Ltd (HEC KS)</a> is looking to raise up to US$1bn in its upcoming Korea IPO.</li>
<li>Whilst the firm has a relatively high concentration of international orders in its backlog, 40% in 9M21, it has been on the down trend since 2016.</li>
<li>In this note, we discuss peer comparison, our assumptions and valuation against domestic and international peers.</li>
</ul>



Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its upcoming Korea IPO.
Whilst the firm has a relatively high concentration of international orders in its backlog, 40% in 9M21, it has been on the down trend since 2016.
In this note, we discuss peer comparison, our assumptions and valuation against domestic and international peers.


Hyundai Engineering Pre-IPO - Unjustifiable Premium to Most Domestic Peers

<ul>
<li>LG Energy Solution’s business model and growth plans look robust IF you assume that the company will not be technologically disrupted. </li>
<li>However, we are concerned due to supply chain risks and the fire safety track record. </li>
<li>With a demanding looking valuation we believe these risks need to be understood.</li>
</ul>


LG Energy Solution’s business model and growth plans look robust IF you assume that the company will not be technologically disrupted. 
However, we are concerned due to supply chain risks and the fire safety track record. 
With a demanding looking valuation we believe these risks need to be understood.


LG Energy IPO – Business Model Pros and Cons

South Korea

LG Energy Solution produces and sells batteries. The Company manufactures and sells automobile batteries, small batteries, energy storage system batteries, and other products. LG Energy Solution markets its products worldwide.

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LG Energy Solution (373220 KS)

LG Energy: Sector ETFs Special Rule Change & Local Active Managers' Preemptive Trading

I summarize the situation in which the local sector ETF operators applied to KRX for a rule change to include LG Energy early and how local active...

Sanghyun Park

LG Energy IPO – The Financials

Despite LG Energy's strong top line growth history and projections, a history of battery fires, weak margins and questionable strategic positioning...

Mio Kato

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

Hyundai Engineering Pre-IPO - Unjustifiable Premium to Most Domestic Peers

Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its upcoming Korea IPO. In this note, we discuss peer comparison, our...

Clarence Chu

LG Energy IPO – Business Model Pros and Cons

LG Energy's business model looks robust if you assume that the company will not be technologically disrupted but we are concerned due to supply...

Mio Kato

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