Daily Brief South Korea: LOTTE Corporation, Gabia Inc, Smec Co Ltd, Samsung SDI and more

• The proposed bill fully closes the treasury-share loopholes, bans all exchangeable/pledge uses, blocks M&A allocations, and imposes strict cancellation deadlines—1 year for new buys, 6 months for existing.
• The amendment tightens disposal rules: no cancellation means pro-rata sales to existing shareholders only, shutting down selective deals and closing the wide-open disposal gap under current law.
• The proposal is far tougher than expected, likely to become the final version, and should drive a near-term mandatory-cancel narrative and notable price action in governance-sensitive holding-co names.

• After the market close on 24 November, it was announced that Align Partners is conducting a partial tender offer of a 10% stake in Gabia Inc (079940 KS). 
• Tender offer price is 33,000 won (20% higher than current price). Tender offer amount is 44.7 billion won. 
• If Align Partners successfully completes this tender offer, its stake would rise to 19.03%. Plus, the combined stakes of Align Partners and Miri Capital would be 42.99%. 

• On 24 November, the SNT Group formalized its hostile takeover of Smec. S&T Holdings  disclosed that it acquired an additional 5.46% stake in SMEC, raising its stake to 13.65%.
• S&T Holdings and SNT Group Chairman Choi combined own a 20.2% stake in SMEC. In comparison, the SMEC CEO Choi Young-seop owns a 9.75% stake in SMEC.
• In our view, this is likely to lead to a potential fight for the control of SMEC’s management rights, pushing up the share price of SMEC even further.

• Smec Co Ltd is a South Korean company with dual exposure to the cyclical machine tool industry and the evolving telecommunications sector. Its machinery division, rooted in Samsung Heavy Industries, produces CNC lathes, machining centers, and robotic automation solutions. The ICT division provides various gateway solutions.
• The company is strategically positioned to benefit from the growth in factory automation and the transition to electric vehicles (EVs), which require advanced manufacturing equipment. Recent corporate actions, including a significant stake acquisition by SNT Holdings with the stated purpose of influencing management, could signal a strategic shift and a more aggressive approach to enhancing corporate value.
• Despite a strong growth track record in revenue and net income over the past several years, the company faces intense competition from larger domestic players and is susceptible to the capital expenditure cycles of its key end-markets. The lack of a consistent dividend payment may be a deterrent for income-focused investors.

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• Recent quarters operating numbers for Samsung SDI (006400 KS) is quite poor and have caused the share price to decrease accordingly. 
• The share price has rallied on the back of the news on Tesla’s new business to order ESS from Samsung SDI. 
• At what level shall investors start to accumulate Samsung SDI.