In today’s briefing:
- Clearing up FSS Review of Samsung SDI & Hanwha Aerospace: Watch for Ramped-Up Recall Pressure
- KOSPI 200 (KOSPI2 Index) Hits 99th Percentile Implied Volatility Amid US Tariff Impact
- Lotte Logistics Pre-IPO – Sluggish Revenues, High Dependence on Group Affiliates
- Lotte Global Logistics IPO Valuation Analysis
Clearing up FSS Review of Samsung SDI & Hanwha Aerospace: Watch for Ramped-Up Recall Pressure
- Samsung SDI’s rights offering is locked in and even accelerated. Hanwha Aerospace awaits FSS approval, but a pullback is unlikely, with no major red flags seen by regulators.
- With a four-week gap, supply pressure eases, reducing overhang concerns. This shift in dynamics impacts stock rights pricing and is key for any arb setup.
- The wider schedule gap between deals boosts lenders’ flexibility, increasing the likelihood of a stronger share recall. This makes for a solid trade setup, targeting recall-driven price action.
KOSPI 200 (KOSPI2 Index) Hits 99th Percentile Implied Volatility Amid US Tariff Impact
- Market Reaction: The announcement of US reciprocal tariffs caused significant declines across Asia-Pacific markets. Although initial losses were partially recovered during the day, most markets closed substantially lower.
- Impact on South Korea: South Korea faces a 25% tariff. This led to a 1.5% drop in the Korea Stock Exchange KOSPI 200 Index (KOSPI2 INDEX).
- Volatility Increase: The Kospi 200 VIX index rose to a high of 28.64 before retreating to 26.05, indicating the 99th percentile of implied volatility.
Lotte Logistics Pre-IPO – Sluggish Revenues, High Dependence on Group Affiliates
- Lotte Global Logistics (LGG KS) aims to raise around US$140m in its Korea IPO via selling a mix of primary and secondary shares.
- Lotte Global Logistics is a logistics and shipping company engaged in a comprehensive logistics service business including courier service, land transportation, 3PL, port loading and unloading, and international logistics.
- In this note, we talk about the company’s historical performance.
Lotte Global Logistics IPO Valuation Analysis
- Our base case valuation of Lotte Global Logistics is implied market cap of 560 billion won, which represents target price of 13,454 won per share.
- We have a negative view of this IPO as our target price does not provide a meaningful upside to the IPO price range.
- Four major factors we are negative on this IPO include lack of sales growth, excessive competition (Coupang and CJ Logistics), mystery of put option clause, and highly geared balance sheet.
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