In today’s briefing:
- LG Energy/LG Chem Flow Trading on Solactive Lithium Index Rebalancing
- Is Samsung in Trouble or Just in Another Downcycle?
- Initial Thoughts on the LG CNS IPO
- Yungjin Pharm (003520 KS): Antibiotic Business on a Jeopardy; Long Way to Go Before New Drug Launch
LG Energy/LG Chem Flow Trading on Solactive Lithium Index Rebalancing
- We cannot completely rule out the possibility that Solactive will announce a correction disclosure for the LG Energy Inclusion/LG Chem Exclusion 2 to 3 trading days before May 11th.
- LG Energy can expect an inflow of 0.85x ADTV (0.16% of SO). On the other hand, LG Chem will face an outflow of -1.76x ADTV (0.52% of SO).
- Considering the correction disclosure uncertainty and the passive flow size, we should approach this as a day trading event after watching the results by this Friday (or the following Monday).
Is Samsung in Trouble or Just in Another Downcycle?
- Samsung Electronics (005930 KS)’s underperformance to SK Hynix (000660 KS) just part of the cycle or company specific?
- Does the supply constraint issue help or hurt Samsung? Who is better off?
- Key points to focus on to see where Samsung is vs. their blueprint of technology roadmap
Initial Thoughts on the LG CNS IPO
- LG CNS is getting ready to complete its IPO in 2023. LG CNS is one of the largest system integration (SI) companies in Korea.
- LG Corp owns 49.95% stake in LG CNS. Local media mentioned the LG CNS value could reach about 4 trillion won to 5 trillion won after it completes its IPO.
- If LG CNS is valued at 5 trillion won, a 50% stake would be valued at 2.5 trillion won which is more than 12x book value on its balance sheet.
Yungjin Pharm (003520 KS): Antibiotic Business on a Jeopardy; Long Way to Go Before New Drug Launch
- Yungjin Pharmaceutical Co (003520 KS) earns 15% of total revenue from exports. The company mainly exports antibiotic product cephalosporins to Japan.
- Yungjin’s export income declined 47% y/y in 2021 due to COVID. With Japan’s policy of reducing the usage of antibiotics, we are not upbeat on the recovery of this business.
- Yungjin’s outlicensed new drug candidate completed only phase 1 trial. If the candidate successfully completes later stages of trials, it is expected to be marketed only in 2024.
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