Equity Capital Markets: LG Energy Solution, SKonec Entertainment, JL Mag Rare-Earth Co Ltd and more

In today’s briefing:

LG Energy Passive Flow from Overseas ETFs: Global X Lithium & Battery (LIT)

Given the AUM of the Global X Lithium Battery ETF (ticker: LIT), the potential passive impact on LG Energy and LG Chem should be worthy of our careful attention.
If LIT revises its methodology, the timing to include LG Energy is expected to be the April rebalancing.
LG Energy will have a 2-3% index weight, welcoming a passive inflow of ₩130-200B (0.2-0.3% of SO). In contrast, ₩232.1B from LIT will likely escape LG Chem, 0.5% of SO.

LG Energy is being benchmarked against CATL for its IPO valuation and we believe this is incorrect.
CATL’s position within China’s supply chain and LFP technology should drive a significant premium against other North Asian peers in our view.
If LG Energy were to simply be benchmarked against Samsung SDI it starts to look expensive and while a premium may be reasonable we do not consider it a given.

SKonec Entertainment (276040 KS), which specializes in VR based metaverse technologies, is getting ready to complete an IPO in the Korean stock market in the next several weeks.
Currently, Skonec Entertainment has a gray market value of 34,000 won, which is 183% higher than the high end of the IPO price range of 12,000 won.
The company has been one of the first game companies to develop VR based gun shooting games in Korea.

JL Mag Rare-Earth Co Ltd (300748 CH) is a leading producer of high-performance rare earth permanent magnets. It has launched an H-Share listing to raise $570 million at the mid-point.
In JL Mag Rare-Earth Secondary Listing: Magnetic Moments, we stated that it has attractive fundamentals and the secondary listing is worth a closer look.
Our valuation analysis suggests that the H-Share price range is fair. Pricing is expected on 17 January with an H-Share listing on 14 January.

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