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.

Equity Capital Markets

LG Energy Solution / Equity Capital Markets

<ul>
<li><strong>Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs. </strong></li>
<li>Trading debuts across different markets have been poor. But there are some trades to be put for lock-up expiries.</li>
<li>This will be our last week of ECM weekly notes for the year. Our weekly notes will be back in January when things start to pick up again.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs. 
Trading debuts across different markets have been poor. But there are some trades to be put for lock-up expiries.
This will be our last week of ECM weekly notes for the year. Our weekly notes will be back in January when things start to pick up again.


ECM Weekly (19th December 2021) - LG Energy, Hyundai Engineering, Chervon, Sirnaomics, JG Mag A/H

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

<p>The KRX confirmed that</p><ul>
<li>If SK IE Technology satisfies the requirements for an exceptional addition of newly listed large-scale companies, it replaces HDC in the upcoming June rebalancing.</li>
<li>The KRX will post the replacement on the KRX index website on June 2.</li>
</ul><p>SK IE Tech's fast entry into KOSPI 200 should be a done deal as its 10-day average daily market cap of ₩10.26T puts it at the 35th spot right behind Korean Air Lines.</p><p>The 50th spot is CJ Cheiljedang, with a 10-day average daily market cap of ₩6.85T, requiring SK IE Tech to plunge 33.23% to fall below CJ Cheiljedang.</p><h2>Free float estimation</h2><p>SK IE Tech's non-float is 73.96%. The immediate float sits at 15.04%, with an 11.00% stake residing in the institutional lockups. <strong>The KRX includes institutional voluntary lockups in the float shares for the index calculation. </strong>So, <strong>26.04%</strong> should be our index float for KOSPI 200.</p><table class="table table-striped">
<colgroup>
<col width="250">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Float estimation"}'>Float estimation</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shares"}'>Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"% of SO"}'>% of SO</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Last filed"}'>Last filed</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Release date"}'>Release date</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Major shareholder"}'>Major shareholder</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":49907592}' data-sheets-formula="=43633432+6274160">49,907,592</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6999898678205009}' data-sheets-formula="=R[0]C[-1]/R2C6">70.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44327}'>11-May-21</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Executives"}'>Executives</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}'>0</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-formula="=R[0]C[-1]/R2C6">0.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP"}'>ESOP</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2823956}'>2,823,956</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.03960801368999951}' data-sheets-formula="=R[0]C[-1]/R2C6">3.96%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Non float"}'><strong>- Non-float</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":52731548}' data-sheets-formula="=sum(R[-3]C[0]:R[-1]C[0])"><strong>52,731,548</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7395978815105004}' data-sheets-formula="=R[0]C[-1]/R2C6"><strong>73.96%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Institutional lockups - 6 months"}'>Institutional lockups - 6 months</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3020988}'>3,020,988</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0423715291815185}' data-sheets-formula="=R[0]C[-1]/R2C6">4.24%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44511}'>11-Nov-21</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Institutional lockups - 3 months"}'>Institutional lockups - 3 months</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2087672}'>2,087,672</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.02928110110647215}' data-sheets-formula="=R[0]C[-1]/R2C6">2.93%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44419}'>11-Aug-21</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Institutional lockups - 1 months"}'>Institutional lockups - 1 months</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2700264}'>2,700,264</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.037873144439436325}' data-sheets-formula="=R[0]C[-1]/R2C6">3.79%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":43993}'>11-Jun-20</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Institutional lockups - 15 days"}'>Institutional lockups - 15 days</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":35922}'>35,922</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0005038318825690495}' data-sheets-formula="=R[0]C[-1]/R2C6">0.05%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44342}'>26-May-21</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Float, excl. inst lockups"}'><strong>Float, excl. inst lockups</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10721198}' data-sheets-formula="=R[-11]C[4]-R[-5]C[0]-sum(R[-4]C[0]:R[-1]C[0])"><strong>10,721,198</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1503725118795036}' data-sheets-formula="=R[0]C[-1]/R2C6"><strong>15.04%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Float, incl. inst lockups"}'><strong>Float, incl. inst lockups</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18566044}' data-sheets-formula="=R[-1]C[0]+sum(R[-5]C[0]:R[-2]C[0])"><strong>18,566,044</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2604021184894996}' data-sheets-formula="=R[0]C[-1]/R2C6"><strong>26.04%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
</tr>
<tr><td colspan="5" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX FIND &amp; DART"}'>Source: KRX FIND &amp; DART</td></tr>
</tbody>
</table><h2>Passive flow impact</h2><p>SK IE Tech will likely enjoy an estimated passive inflow of ₩168.5B, requiring 0.45 days to buy. On the other hand, HDC Holdings requires 1.90 days to cover an estimated passive outflow of ₩20.5B.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td style="width: 337.5px;" data-sheets-value='{"1":2,"2":"KOSPI 200 adds - passive inflow"}'>Passive flow impact</td>
<td style="text-align: right; width: 104.167px;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right; width: 115px;" data-sheets-value='{"1":2,"2":"Estimated passive inflow"}'>Estimated passive flow</td>
<td style="text-align: right; width: 105px;" data-sheets-value='{"1":2,"2":"Days to buy"}'>Days to buy/cover</td>
</tr>
<tr>
<td style="width: 337.5px;" data-sheets-value='{"1":2,"2":"SK IE Technology Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[1], "name")'>SK IE Technology Co Ltd </td>
<td style="text-align: right; width: 104.167px;" data-sheets-value='{"1":2,"2":"361610"}' data-sheets-formula='="361610"'>361610</td>
<td style="text-align: right; width: 115px;" data-sheets-value='{"1":3,"3":168.45645052857597}' data-sheets-formula="=Guide!R32C2*R[0]C[4]"><strong>+₩168.5B</strong></td>
<td style="text-align: right; width: 105px;" data-sheets-value='{"1":3,"3":0.45175219778441594}' data-sheets-formula='=R[0]C[-1]/(googlefinance(R[0]C[-2], "volumeavg")*average(index(googlefinance(R[0]C[-2], "price", today()-30, today()), 0, 2))/1000000000)'><strong>0.45x</strong></td>
</tr>
<tr>
<td style="width: 337.5px;">HDC Holdings Co Ltd</td>
<td style="text-align: right; width: 104.167px;">012630</td>
<td style="text-align: right; width: 115px;"><strong>-₩20.5B </strong></td>
<td style="text-align: right; width: 105px;"><strong>1.90x </strong></td>
</tr>
<tr><td colspan="4" style="width: 724.167px;" data-sheets-value='{"1":2,"2":"Source: KRX &amp; FnGuide"}'>Source: KRX &amp; FnGuide</td></tr>
</tbody>
</table><h2>Short interest</h2><p>HDC Holdings' short interest sits at 0.96% of the float shares, taking only 0.34 days to cover. But the market seems to be waiting to short the shares as its loan balance to float shares has risen to 10.10%, translating into 3.53 times the average daily trade value.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="70">
<col width="70">
<col width="70">
<col width="70">
<col width="70">
<col width="70">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"KOSPI 200 deletes - short interest"}'>Short interest</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Short interest to float shares"}'>Short interest to float shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Days to cover"}'>Days to cover</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Loan balance to float shares"}'>Loan balance to float shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Loan balance to ADTV"}'>Loan balance to ADTV</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"30-day average daily trade value"}'>30-day average daily trade value</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"HDC Holdings Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C2, "name")'>HDC Holdings Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"012630"}' data-sheets-formula='="012630"'>012630</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0096}'><strong>0.96%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"0.34x"}'><strong>0.34x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.101}'><strong>10.10%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"3.53x"}'><strong>3.53x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10.749360631578947}' data-sheets-formula='=(googlefinance(R[0]C[-5], "volumeavg")*average(index(googlefinance(R[0]C[-5], "price", today()-30, today()), 0, 2))/1000000000)'>₩10.7B</td>
</tr>
<tr><td colspan="7" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>

The KRX confirmed that
If SK IE Technology satisfies the requirements for an exceptional addition of newly listed large-scale companies, it replaces HDC in the upcoming June rebalancing.
The KRX will post the replacement on the KRX index website on June 2.
SK IE Tech's fast entry into KOSPI 200 should be a done deal as its 10-day average daily market cap of ₩10.26T puts it at the 35th spot right behind Korean Air Lines.The 50th spot is CJ Cheiljedang, with a 10-day average daily market cap of ₩6.85T, requiring SK IE Tech to plunge 33.23% to fall below CJ Cheiljedang.Free float estimationSK IE Tech's non-float is 73.96%. The immediate float sits at 15.04%, with an 11.00% stake residing in the institutional lockups. The KRX includes institutional voluntary lockups in the float shares for the index calculation. So, 26.04% should be our index float for KOSPI 200.









Float estimation
Shares
% of SO
Last filed
Release date


Major shareholder
49,907,592
70.00%
11-May-21
-


Executives
0
0.00%
-
-


ESOP
2,823,956
3.96%
-
-


- Non-float
52,731,548
73.96%
-
-


Institutional lockups - 6 months
3,020,988
4.24%
-
11-Nov-21


Institutional lockups - 3 months
2,087,672
2.93%
-
11-Aug-21


Institutional lockups - 1 months
2,700,264
3.79%
-
11-Jun-20


Institutional lockups - 15 days
35,922
0.05%
-
26-May-21


Float, excl. inst lockups
10,721,198
15.04%
-
-


Float, incl. inst lockups
18,566,044
26.04%
-
-

Source: KRX FIND &amp; DART

Passive flow impactSK IE Tech will likely enjoy an estimated passive inflow of ₩168.5B, requiring 0.45 days to buy. On the other hand, HDC Holdings requires 1.90 days to cover an estimated passive outflow of ₩20.5B.








Passive flow impact
Ticker
Estimated passive flow
Days to buy/cover


SK IE Technology Co Ltd 
361610
+₩168.5B
0.45x


HDC Holdings Co Ltd
012630
-₩20.5B 
1.90x 

Source: KRX &amp; FnGuide

Short interestHDC Holdings' short interest sits at 0.96% of the float shares, taking only 0.34 days to cover. But the market seems to be waiting to short the shares as its loan balance to float shares has risen to 10.10%, translating into 3.53 times the average daily trade value.











Short interest
Ticker
Short interest to float shares
Days to cover
Loan balance to float shares
Loan balance to ADTV
30-day average daily trade value


HDC Holdings Co Ltd
012630
0.96%
0.34x
10.10%
3.53x
₩10.7B

Source: KRX



SK IE Tech In & HDC Out Offers A Clear-Cut Long/Short Setup

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p>In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.</p></div><p>Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. </p><p>Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. </p><div class="content-highlight">
<p>In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).</p>
<p>In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  </p>
</div><p>Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos. </p>

In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. 
In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).
In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  
Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos. 

Closing the Gap: Korean Holdcos Vs. Opcos

Thematic (Sector/Industry)

<div class="content-highlight">
<p>In this insight, we discuss the best ways to position for the growth of REITs in South Korea. In the sections below, we have categorized four main ways in which we think investors would be best positioned to invest in the growing REIT market in Korea over the next 1-2 years, which include the following: </p>
<p>I) <a href="https://www.smartkarma.com/entities/esr-kendall-square-reit-co-ltd" target="_blank" data-smartkarma-citation="entities:32172:1" rel="noopener">ESR Kendall Square REIT (365550 KS)</a> </p>
<p>II) Major Korean Construction Companies Entering REIT Market</p>
<p>III) Upcoming New Listings in the REIT Market</p>
<p>IV) Other Notable REITs in Korea</p>
</div>


In this insight, we discuss the best ways to position for the growth of REITs in South Korea. In the sections below, we have categorized four main ways in which we think investors would be best positioned to invest in the growing REIT market in Korea over the next 1-2 years, which include the following: 
I) ESR Kendall Square REIT (365550 KS) 
II) Major Korean Construction Companies Entering REIT Market
III) Upcoming New Listings in the REIT Market
IV) Other Notable REITs in Korea


Best Ways to Position for the Growth of REITs in Korea

<p>Daelim Industrial's BOD and shareholders agreed to spin-off the company into <a href="https://www.smartkarma.com/entities/dl-e-c-co-ltd" target="_blank" data-smartkarma-citation="entities:31375:1" rel="noopener">DL E&amp;C Co Ltd (375500 KS)</a> and <a href="https://www.smartkarma.com/entities/daelim-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:18095:1" rel="noopener">DL Co Ltd (000210 KS)</a> in December 2020. DL E&amp;C and DL Corp shares started trading again on 25 January 2021. DL E&amp;C and DL Corp's market caps are 2.45 trillion won and 1.08 trillion won, respectively as of 26 January 2021. The combined market caps of the two companies are 3.53 trillion won, up more than 20% from the pre-spin off levels. DL E&amp;C makes some of the best apartments in Korea and this is their bread and butter business. </p><div>Hyundai E&amp;C, GS E&amp;C, HDC Hyundai Development, and Daewoo E&amp;C are the most appropriate comps to DL E&amp;C. These four comps are currently trading at P/E (2021E) ratios 11.8x, 6.1x, 5.6x, and 6.9x, respectively, using the consensus earnings estimates. The average P/E ratio of these four companies is 7.6x. If we apply 7.6x P/E on the estimated net profit of 660 billion won, this would suggest an implied market cap of 5.0 trillion won, which would be nearly 100% upside from the current market cap of 2.4 trillion won. If we use the lowest P/E multiple of the comps (5.6x) and apply to the estimated net profit of 660 billion won, this would suggest a market cap of 3.7 trillion won, which would be 51% higher than its current market cap. </div>

Daelim Industrial's BOD and shareholders agreed to spin-off the company into DL E&amp;C Co Ltd (375500 KS) and DL Co Ltd (000210 KS) in December 2020. DL E&amp;C and DL Corp shares started trading again on 25 January 2021. DL E&amp;C and DL Corp's market caps are 2.45 trillion won and 1.08 trillion won, respectively as of 26 January 2021. The combined market caps of the two companies are 3.53 trillion won, up more than 20% from the pre-spin off levels. DL E&amp;C makes some of the best apartments in Korea and this is their bread and butter business. Hyundai E&amp;C, GS E&amp;C, HDC Hyundai Development, and Daewoo E&amp;C are the most appropriate comps to DL E&amp;C. These four comps are currently trading at P/E (2021E) ratios 11.8x, 6.1x, 5.6x, and 6.9x, respectively, using the consensus earnings estimates. The average P/E ratio of these four companies is 7.6x. If we apply 7.6x P/E on the estimated net profit of 660 billion won, this would suggest an implied market cap of 5.0 trillion won, which would be nearly 100% upside from the current market cap of 2.4 trillion won. If we use the lowest P/E multiple of the comps (5.6x) and apply to the estimated net profit of 660 billion won, this would suggest a market cap of 3.7 trillion won, which would be 51% higher than its current market cap. 

Newly Spun-Off DL E&C and DL Corp Create Higher Value

South Korea

HDC Hyundai Development Co-Engineering & Construction offers construction services. The Company builds factories, office and retail buildings, hotels, and warehouses. HDC Hyundai Development Co-Engineering & Construction provides its services throughout Korea.

HDC Hyundai Development Co-Engineering & Construction (294870 KS)

HDC Hyundai Development Co-Engineering & Construction

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HDC Hyundai Development Co-Engineering & Construction (294870 KS)

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Newly Spun-Off DL E&C and DL Corp Create Higher Value

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