In today’s briefing:
- LG Energy Solution: End of 6 Months Lock-Up Period & Valuation Sensitivity Analysis
- KOSPI200 Lockup Release Events: LG Energy Solution, HYBE, Lotte Chilsung, & Krafton
- SK Telecom & KT LONG/SHORT Swing Trading for Mean Reversion
LG Energy Solution: End of 6 Months Lock-Up Period & Valuation Sensitivity Analysis
- Our base case valuation LG Energy Solution is implied market cap of 75 trillion won or target price of 319,089 won, representing 25% below current share price.
- Currently, LGES is trading at a premium valuation multiple on a EV/EBITDA (2023E) versus CATL. We believe LGES should trade at a discount to CATL in the next 6-12 months.
- LGES’s 6 months lock-up ends on 27 July and there are 4.3% of outstanding shares that can be sold which is likely to put negative pressure on share price.
KOSPI200 Lockup Release Events: LG Energy Solution, HYBE, Lotte Chilsung, & Krafton
- HYBE and LG Energy have overhang risks. 2% of SO for HYBE and 3% for LG Energy will potentially hit the market. These are 4.46x and 19.89x ADTVs, respectively.
- LG Energy is awaiting FTSE inclusion (June 17) and Solactive ETF inclusion (end-October). Still, from a timing perspective, these passive inflows are unlikely to offset the July 27 lockup release.
- Their short interest is 1.63% (HYBE) and 0.46% (LG Energy), respectively. So, we need to consider a position buildup when their short interest shows significant upside movements.
SK Telecom & KT LONG/SHORT Swing Trading for Mean Reversion
- Price decoupling relative to KT started after SKT’s foreign room trend began to reverse on May 23. The monthly price yield difference between these two is over 7%p.
- From a short-term perspective, it seems that SKT seems to have entered somewhat oversold territory due to the FTSE outflow event.
- Additional selling by the FTSE event this week will likely provide a suitable entry timing for a LONG/SHORT pair setup with KT on a swing-term window for mean reversion.
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