Daily Brief Energy/Materials: Posco ADR, EcoPro Materials, Rent.com.au Ltd and more

In today’s briefing:

Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban
Trading Strategy of Ecopro Materials IPO Post Book Building Results and Short Selling Ban
Rent.com.au Ltd – Portal Back on Track, Capital Raise to Support RentPay

Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban

Given Korea’s blanket ban on short-selling, we should concentrate on the likelihood of these ADRs being significantly discounted compared to their underlying shares.
It should persist for an extended period, highlighting the importance of continuously monitoring ADR spreads over the next 2-3 months to seize the opportune entry timing.
Since all these carry single-stock futures, a flexible setup targeting this spread can be designed, ideally incorporating currency hedges.

Ecopro Materials reported disappointing IPO book building results. IPO price has been finalized at 36,200 won, which is at the low end of the IPO price range.
The demand ratio was 17.2 to 1 which was low. Total IPO offering amount was 419 billion won. Ecopro Materials will start trading on 17 November.
Our base case valuation of Ecopro Materials is target price of 37,436 won per share, which is 3.4% higher than the IPO price. We remain negative on this IPO.

Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
The company has reported Q1 FY24 revenue of $0.786m, with the search engine, Rent.com.au, returning to positive EBITDA of ~$0.05m.
Separately the company has launched a fully-underwritten entitlement offer to raise $1.95m at $0.017/share to support the commercialisation of its fintech platform RentPay.

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