Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Equity Capital Markets

<h2>Preliminary review application</h2><p>The KRX announced that it had received an application for preliminary examination for the listing of LG Energy Solution. LG Energy Solutions aims to be listed on the KOSPI within this year.</p><p>LG Energy Solutions was established on December 1st last year through a physical spin-off of LG Chem's battery business division. <strong>Currently, LG Energy Solution is LG Chem's wholly-owned subsidiary. As of 2020, its sales were ₩1.46T, with a net loss of ₩451.8B.</strong></p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"LG Energy Solution financials for 2020"}'>LG Energy Solution financials for 2020</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Sales"}'><strong>Sales</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1461.1}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>₩1,461.1B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Operating loss"}'><strong>Operating loss</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-475.2}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>-₩475.2B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net loss"}'><strong>Net loss</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-451.8}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}'><strong>-₩451.8B</strong></td>
</tr>
<tr>
<td>Assets</td>
<td style="text-align: right;">₩19,941.8B</td>
</tr>
<tr>
<td>Equity</td>
<td style="text-align: right;">₩7,565.4B</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><h2>Listing schedule</h2><p>The preliminary examination for listing is a process of reviewing whether a company wishing to be listed meets the listing requirements specified in the listing regulations. For local companies, the preliminary examination for listing takes 45 days.</p><p>A listing applicant who has received approval for the preliminary examination for listing shall submit a registration statement (commonly called IPO book) to the Financial Services Commission. This process takes about 15 days.</p><p><strong>So, we will likely see an IPO book from LG Energy Solution in early August. Then, another 4 weeks should pass until listing, meaning that LG Energy Solution will likely make its public market debut in early September.</strong></p>

Preliminary review applicationThe KRX announced that it had received an application for preliminary examination for the listing of LG Energy Solution. LG Energy Solutions aims to be listed on the KOSPI within this year.LG Energy Solutions was established on December 1st last year through a physical spin-off of LG Chem's battery business division. Currently, LG Energy Solution is LG Chem's wholly-owned subsidiary. As of 2020, its sales were ₩1.46T, with a net loss of ₩451.8B.





LG Energy Solution financials for 2020

Sales
₩1,461.1B


Operating loss
-₩475.2B


Net loss
-₩451.8B


Assets
₩19,941.8B


Equity
₩7,565.4B

Source: KRX

Listing scheduleThe preliminary examination for listing is a process of reviewing whether a company wishing to be listed meets the listing requirements specified in the listing regulations. For local companies, the preliminary examination for listing takes 45 days.A listing applicant who has received approval for the preliminary examination for listing shall submit a registration statement (commonly called IPO book) to the Financial Services Commission. This process takes about 15 days.So, we will likely see an IPO book from LG Energy Solution in early August. Then, another 4 weeks should pass until listing, meaning that LG Energy Solution will likely make its public market debut in early September.

LG Energy Solution KOSPI IPO: Listing Schedule & Valuation Issues

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<p>Nexteer's share price was plagued by the auto chip shortage that causes its share price to fall from HKD 14to 7, a fall of 50% in the span of 3 months, presenting an excellent opportunity to add or initiate a position in the portfolio due to 1) the ending of the chip shortage is near thus auto-related stocks will benefit from the positive sentiment thus multiples will be higher and 2) the management has confirmed that 2H 2021 will have much bigger revenue <strong>(around 9x)</strong> although the reality could be different, nevertheless, it presents growth potential for <a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a> .</p>

Nexteer's share price was plagued by the auto chip shortage that causes its share price to fall from HKD 14to 7, a fall of 50% in the span of 3 months, presenting an excellent opportunity to add or initiate a position in the portfolio due to 1) the ending of the chip shortage is near thus auto-related stocks will benefit from the positive sentiment thus multiples will be higher and 2) the management has confirmed that 2H 2021 will have much bigger revenue (around 9x) although the reality could be different, nevertheless, it presents growth potential for Nexteer Automotive (1316 HK) .

Nexteer (1316): Positive Sentiment and Exciting 2H 2021

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>We highlight several positive developments that have occurred since last week’s <em>Int’l Compass </em>report, all of which continue to support our overall constructive outlook. Last week we noted Europe’s STOXX 500 was on the cusp of a breakout above 4040; we got the breakout. WTI and Brent crude oil also broke above key multi-year resistance at $67 and $70, respectively. The MSCI ACWI, ACWI ex-US, and EAFE indexes each hit new all-time highs and remain in uptrends. The MSCI Emerging Markets index (EEM-US) bullishly inflected above short-term resistance at $55.35 and RS is reversing the downtrend. These are all bullish signals for global equities, and our constructive outlook remains appropriate.</p>

We highlight several positive developments that have occurred since last week’s Int’l Compass report, all of which continue to support our overall constructive outlook. Last week we noted Europe’s STOXX 500 was on the cusp of a breakout above 4040; we got the breakout. WTI and Brent crude oil also broke above key multi-year resistance at $67 and $70, respectively. The MSCI ACWI, ACWI ex-US, and EAFE indexes each hit new all-time highs and remain in uptrends. The MSCI Emerging Markets index (EEM-US) bullishly inflected above short-term resistance at $55.35 and RS is reversing the downtrend. These are all bullish signals for global equities, and our constructive outlook remains appropriate.

Major Breakouts For WTI and Brent Crude Oil. Actionable Themes: Energy, Manufacturing, Autos/Parts

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Full Truck Alliance   / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/full-truck-alliance" target="_blank" data-smartkarma-citation="entities:33429:1" rel="noopener">Full Truck Alliance (YMM US)</a> (FTU),  China’s largest digital freight platform by gross transaction value, aims to raise up to US$1.5bn via a US listing. It is backed by Softbank and Sequoia.</p><p>In our earlier note, we spoke about the positive aspects of the deal, <a href="https://www.smartkarma.com/insights/full-truck-alliance-pre-ipo-the-positives-category-leader" target="_blank" rel="noopener">Full Truck Alliance Pre-IPO - The Positives - Category Leader</a>. In this note, we'll talk about the not so positive aspects.</p>

Full Truck Alliance (YMM US) (FTU),  China’s largest digital freight platform by gross transaction value, aims to raise up to US$1.5bn via a US listing. It is backed by Softbank and Sequoia.In our earlier note, we spoke about the positive aspects of the deal, Full Truck Alliance Pre-IPO - The Positives - Category Leader. In this note, we'll talk about the not so positive aspects.

Full Truck Alliance Pre-IPO - The Negatives - Still a Mixed Bag

<p>China’s market regulator, the State Administration for Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems and later on issued a statement saying it places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.</p>
<p>Tesla is mainly a US company but with the growing wealth in China and Tesla's market positioning as the high-end EV, it has managed to gain substantial traction in China and doubled its sales contribution from 20 to 40% by March 2021. </p>
<p>BYD also announced that a total of <strong>1500</strong> Tang SUVs will be delivered to Norway before the end of the year as the company commits to accelerating its European and global strategies. <strong>The initial 100 cars are scheduled for delivery to Norwegian customers in the third quarter of this year</strong>.</p>
<div class="content-highlight">
<p>BYD is added into <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> and <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> at the same time while other names are involved with one or some are two - moving from one to another. </p>
</div>
<p>BYD is trading at 84% PER discount, 83% EV/EBITDA discount, and 73% PBR discount to Tesla while its share price also lagged behind Tesla's in the past 6 months. </p>
<div class="content-highlight">
<p><strong>Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time to start shorting Tesla and long BYD. </strong></p>
</div>

China’s market regulator, the State Administration for Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems and later on issued a statement saying it places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.
Tesla is mainly a US company but with the growing wealth in China and Tesla's market positioning as the high-end EV, it has managed to gain substantial traction in China and doubled its sales contribution from 20 to 40% by March 2021. 
BYD also announced that a total of 1500 Tang SUVs will be delivered to Norway before the end of the year as the company commits to accelerating its European and global strategies. The initial 100 cars are scheduled for delivery to Norwegian customers in the third quarter of this year.

BYD is added into Hang Seng China Enterprises Index (HSCEI INDEX) and Hong Kong Hang Seng Index (HSI INDEX) at the same time while other names are involved with one or some are two - moving from one to another. 

BYD is trading at 84% PER discount, 83% EV/EBITDA discount, and 73% PBR discount to Tesla while its share price also lagged behind Tesla's in the past 6 months. 

Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time to start shorting Tesla and long BYD. 


BYD (1211) Vs Tesla (TSLA): Fight over China

China

BYD Company Limited, through its subsidiaries, manufactures and sells automobiles. The Company also researches, develops, manufactures and sells batteries, which are applied on mobile phones, cordless phones, power tools and other kinds of portable electronic devices.

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BYD (1211 HK)

LG Energy Solution KOSPI IPO: Listing Schedule & Valuation Issues

This post looks into the IPO schedule and valuation issues of LG Energy Solution, which applied for a preliminary listing review yesterday.

Sanghyun Park

Nexteer (1316): Positive Sentiment and Exciting 2H 2021

Nexteer's share price was plagued by the auto chip shortage as its share price fell 50% in the span of 3 months, presenting an excellent...

Henry Soediarko

Major Breakouts For WTI and Brent Crude Oil. Actionable Themes: Energy, Manufacturing, Autos/Parts

Today we highlight several positive developments that have occurred since last week’s Int’l Compass report, all of which continue to support our...

Vermilion Research

Full Truck Alliance Pre-IPO - The Negatives - Still a Mixed Bag

Full Truck Alliance (YMM US), China’s largest digital freight platform by gross transaction value, aims to raise up to US$1.5bn via a US listing....

Sumeet Singh

BYD (1211) Vs Tesla (TSLA): Fight over China

Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time...

Henry Soediarko

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