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.

Event-Driven

<ul>
<li>The LG Chem/LG Energy pair has been getting much attention lately. Its stakeholding value in LG Energy amounts to ₩83.1T, more than twice its own market value.</li>
<li>Given LG Chem's solid operating business value, only the likes of SK Square is worse in terms of NAV discount, as LG Chem's NAV discount is nearing 70%.</li>
<li>With the LG Chem OUT/LG Energy IN passive play pretty much completed, we should aim at an entry point for LG Chem's massive discount to its LG Energy shareholding value.</li>
</ul>


The LG Chem/LG Energy pair has been getting much attention lately. Its stakeholding value in LG Energy amounts to ₩83.1T, more than twice its own market value.
Given LG Chem's solid operating business value, only the likes of SK Square is worse in terms of NAV discount, as LG Chem's NAV discount is nearing 70%.
With the LG Chem OUT/LG Energy IN passive play pretty much completed, we should aim at an entry point for LG Chem's massive discount to its LG Energy shareholding value.


LG Chem & LG Energy LONG/SHORT Pair Trading on a Massive NAV Discount

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>We believe there is an attractive pair trade of going long on LG Chem and going short on LG Energy Solution at current levels. </li>
<li>Main reasons why we like this pair trade include large shares that could be sold after 6 months lockup for LGES, LG Chem's attractive valuation, and shift to value stocks.</li>
<li>In the past one month, LG Energy Solution is down 5.3% whereas LG Chem is up 2.4%. We believe this gap could widen in the next several months. </li>
</ul>


We believe there is an attractive pair trade of going long on LG Chem and going short on LG Energy Solution at current levels. 
Main reasons why we like this pair trade include large shares that could be sold after 6 months lockup for LGES, LG Chem's attractive valuation, and shift to value stocks.
In the past one month, LG Energy Solution is down 5.3% whereas LG Chem is up 2.4%. We believe this gap could widen in the next several months. 


A Pair Trade Between LG Chem & LG Energy Solution

<ul>
<li>In this insight, we provide an updated SoTP valuation analysis of LG Corp (003550 KS) and discuss some of the key upcoming catalysts including the IPO of LG CNS.</li>
<li>Our base case valuation analysis of LG Corp suggests an implied price of 107,664 won per share, representing 45.5% upside from current levels.</li>
<li>The IPO of LG CNS is likely to be a positive catalyst in the next 6-12 months for LG Corp. </li>
</ul>


In this insight, we provide an updated SoTP valuation analysis of LG Corp (003550 KS) and discuss some of the key upcoming catalysts including the IPO of LG CNS.
Our base case valuation analysis of LG Corp suggests an implied price of 107,664 won per share, representing 45.5% upside from current levels.
The IPO of LG CNS is likely to be a positive catalyst in the next 6-12 months for LG Corp. 


LG Corp: Updated SoTP Valuation & Key Catalyst of LG CNS IPO

<ul>
<li>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.</li>
<li>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).</li>
<li>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).</li>
</ul>


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).


LG Energy/LG Chem Flow Trading on Solactive Lithium Index Rebalancing

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.

<ul>
<li>LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.</li>
<li>LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>


LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.
LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
In this note, we will talk about the lock-up dynamics and updates since our last note.


LG Energy IPO Lock-Up - Some Might Be Tempted to Book Profits

South Korea

LG Chem Ltd. is a chemical manufacturer. The Company's products include petrochemicals, plastic resins, and engineering plastics. LG Chem also produces industrial and electronic materials.

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LG Chem (051915 KS)

LG Chem & LG Energy LONG/SHORT Pair Trading on a Massive NAV Discount

This post explores a pair trading opportunity on the LG Chem/LG Energy Solution pair as LG Chem's NAV discount is nearing 70%.

Sanghyun Park

A Pair Trade Between LG Chem & LG Energy Solution

Main reasons why we like this pair trade (long LG Chem & short LGES) include large shares that could be sold after 6 months lockup for LGES, LG...

Douglas Kim

LG Corp: Updated SoTP Valuation & Key Catalyst of LG CNS IPO

In this insight, we provide an updated SoTP valuation analysis of LG Corp (003550 KS) and discuss some of the key upcoming catalysts including the...

Douglas Kim

LG Energy/LG Chem Flow Trading on Solactive Lithium Index Rebalancing

This post examines the trading event of LG Energy Solution and LG Chem amid the Solactive Lithium Battery Index rebalancing in May.

Sanghyun Park

LG Energy IPO Lock-Up - Some Might Be Tempted to Book Profits

LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.

Sumeet Singh

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