Daily Brief South Korea: Eoflow , Hanwha Ocean, EcoPro Materials and more

In today’s briefing:

EOFLOW/Medtronic Tender: Pretrial Timetable and Latest Court Filings
Trading Angles Using Severely Backwardated Hanwha Ocean’s SSFs Ahead of the Rights Trading
EcoPro Materials IPO: Valuation Insights

EOFLOW/Medtronic Tender: Pretrial Timetable and Latest Court Filings

Latest filings on Insulet Corp (PODD US)’s voluntary dismissal without prejudice only to Flex (FLEX US), Eoflow (294090 KS)’s motion to restart Korean sales, dismiss a count and a timetable.
Examining the court filings suggests Medtronic Plc (MDT US)’s access to court unredacted documents is restricted. Medtronic’s limited access makes evaluating the transaction’s potential litigation risk challenging.
Eoflow’s defence in the court documents is based on reverse engineering and procedural arguments. The KRX will rule on Eoflow’s share trading suspension by 1 November.

First, we can take on some risk and build up a short position using SSFs from now, aiming for an aggressively low price (likely Day 1) during the rights trading.
If this approach seems somewhat risky, the second is to wait until the rights trading and, although accepting some sacrifice in the spread, build positions relatively risk-free.
We can also actively build up a long position in the significantly backwardated SSFs from now and, instead, set up an aggressive short on the underlying shares.

EcoPro Materials (ECO123 KS) is a leading player in the electrode material industry. It is seeking to raise up to US$470 million in a KRX IPO.
We previously discussed the IPO in EcoPro Materials IPO: The Bull Case and EcoPro Materials IPO: The Bear Case.
In this note, we look at the syndicate’s valuation methodology. Our valuation analysis suggests that the IPO price range is unattractive, and we would pass on the IPO.

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