In today’s briefing:
- LG CNS IPO Book Building Results Analysis
- EQD | Samsung Electronics – How to Position Amid a Plethora of Catalysts
- Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)
- Samsung Electronics: Revamping Executive Compensation to Include Stocks – Benchmarking TSMC
LG CNS IPO Book Building Results Analysis
- LG CNS reported a successful IPO book building results analysis. The IPO price has been finalized at 61,900 won per share (high end of the IPO price range).
- The demand ratio from the institutional investors was 114 to 1. At the IPO price of 61,900 won, the expected market cap will be 6 trillion won.
- According to our valuation analysis, it suggests a base case target price of 76,383 won per share, which represents a 23% upside from the IPO price of 61,900 won.
EQD | Samsung Electronics – How to Position Amid a Plethora of Catalysts
- Samsung Electronics stock has been an underperformer outright and also relative to Kospi200 as an overhang of catalysts has weighed on performance.
- Implied vols are at the 88th percentile over the last 3 years and are at the top of their range relative to Kospi200.
- We recommend 4 different ways to position in front of these catalysts and the large stock buy-back that was announced in November.
Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)
- KEXIM ignoring this premium could be a breach of duty, making Hanwha Ocean a prime short play. With 20% of shares, past cases suggest a 5-10% pullback.
- This play’s tougher than HMM’s. Without step-ups, timing the conversion is tricky. Early redemption’s unlikely, so the focus is on when KEXIM pulls the trigger on the conversion.
- No hints from KEXIM on the CB conversion yet, so loading up aggressively could be risky. We’ll likely need to wait for a signal from KEXIM before jumping in.
Samsung Electronics: Revamping Executive Compensation to Include Stocks – Benchmarking TSMC
- Samsung Electronics announced that it will revamp its executive compensation system to include treasury shares as incentives. Samsung has benchmarked TSMC in terms of paying treasury shares to its employees.
- Samsung Electronics’ decision to revamp its executive compensation system to include treasury shares as incentives aligns the interests of the shareholders along with the company’s management.
- Now that Samsung Electronics has incorporated stock based incentive system, it is likely that other Korean companies that could follow suit.
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