In today’s briefing:
- Revisiting Korea’s Local Rights Issue Arb Setup
- Short Selling Resuming on 31 March in Korea – Stocks With Highest Short Selling Lending Balance
- Lotte Global Logistics IPO Preview
- DN Solutions IPO: The Bear Case
- DN Solutions Pre-IPO – Peer Comparison
Revisiting Korea’s Local Rights Issue Arb Setup
- Korea’s rights issues offer a clean arb setup—track stock rights vs. spot price, with first price as a cap, and lock in predictable entry vs. exit costs.
- Aggressive locals skip hedging, betting the discount holds between final pricing and listing. History backs it, but it’s a case-by-case call—not a blanket recommendation.
- Samsung SDI and Hanwha Aerospace’s KRW 5.5T raise is massive, likely flooding stock rights into the market—prime setup for arb plays.
Short Selling Resuming on 31 March in Korea – Stocks With Highest Short Selling Lending Balance
- Short selling balance in the Korean stock market was 62.4 trillion won as of 21 March 2025, up significantly from 47.2 trillion won three months ago.
- Among the stocks in KOSPI with high short selling balance and high lending balance ratios include Posco Future M, Yuhan Corp, LG Energy Solution, and Hanwha Aerospace.
- Among the stocks in KOSDAQ with high short selling balance and high lending balance ratios include Ecopro BM, Ecopro Co, HLB, and Eo Technics.
Lotte Global Logistics IPO Preview
- Lotte Global Logistics is getting ready to complete its IPO in KOSPI in May 2025. IPO price range is from 11,500 won and 13,500 won.
- At the high end of the IPO price range, the expected public offering amount is 202 billion won.
- According to the bankers’ valuation, the expected market cap after the IPO is 479 billion won to 562 billion won.
DN Solutions IPO: The Bear Case
- DN Solutions (298440 KS), the third-largest machining centre/turning centre machine tool manufacturer, seeks to raise US$1.1 billion in a KRX IPO.
- In DN Solutions IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on tepid growth due to volume declines, early indications of margin pressure, rising cash conversion cycle, and mid-tier FCF margin.
DN Solutions Pre-IPO – Peer Comparison
- DN Solutions (298440 KS) (DNS) aims to raise around US$1.1bn in its Korea IPO via selling a mix of primary and secondary shares.
- DNS is engaged in the manufacture and sale of machine tools and the business of automation solutions and services related thereto.
- We have looked at its past performance in our earlier notes. In this note, we will undertake a peer comparison.
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