Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>Three major positive factors for Samsung C&amp;T include deep discount NAV, capital shifting to value/holdcos, and higher commodity prices boosting trading business earnings. </li>
<li>Shanghai lockdown remains a black box event and there are some increasing concerns that the China COVID induced lockdowns could result in a potential earnings miss for Samsung Electronics.</li>
<li>Samsung C&amp;T (028260 KS) has been outperforming Samsung Electronics (005930 KS). Samsung C&amp;T is flat for the year versus Samsung Electronics which is down 13.6% YTD.</li>
</ul>


Three major positive factors for Samsung C&amp;T include deep discount NAV, capital shifting to value/holdcos, and higher commodity prices boosting trading business earnings. 
Shanghai lockdown remains a black box event and there are some increasing concerns that the China COVID induced lockdowns could result in a potential earnings miss for Samsung Electronics.
Samsung C&amp;T (028260 KS) has been outperforming Samsung Electronics (005930 KS). Samsung C&amp;T is flat for the year versus Samsung Electronics which is down 13.6% YTD.


Samsung C&T: Deep Discount NAV, Capital Shifting to Value/Holdcos, & Trading Business Boost

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>We should focus on the weight changes of the existing constituents. For this, two names really stand out: Kakao Pay (+0.44x ADTV) and LG Corp (+0.37x ADTV).</li>
<li>It is because Kakao Pay and LG Corp will undergo an increase in their float rate in the KOSPI 200 rebalancing, and these up-weights will also affect this sector index.</li>
<li>Their combined inflow size (KOSPI 200 &amp; KOSPI 200 IT) will be 1.41x and 1.16x ADTVs. This will be the most substantial, except for Kakao Bank and the new additions.</li>
</ul>


We should focus on the weight changes of the existing constituents. For this, two names really stand out: Kakao Pay (+0.44x ADTV) and LG Corp (+0.37x ADTV).
It is because Kakao Pay and LG Corp will undergo an increase in their float rate in the KOSPI 200 rebalancing, and these up-weights will also affect this sector index.
Their combined inflow size (KOSPI 200 &amp; KOSPI 200 IT) will be 1.41x and 1.16x ADTVs. This will be the most substantial, except for Kakao Bank and the new additions.


KOSPI 200 IT Sector Index Rebalancing Flow: Watch Kakao Pay & LG Corp

<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

Equity Capital Markets

<ul>
<li>LG CNS is getting ready to complete its IPO in 2023. LG CNS is one of the largest system integration (SI) companies in Korea. </li>
<li>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. </li>
<li>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.</li>
</ul>


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.


<ul>
<li>The KOSPI 200 June Review will have a total of 13 float rate changes: 11 increases and 2 reductions.</li>
<li>
<a href="https://www.smartkarma.com/entities/kakaobank-corp" target="_blank" data-smartkarma-citation="entities:33501:1" rel="noopener">Kakao Bank (323410)</a> will experience the biggest change, followed by <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM (011200)</a> and <a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (259960)</a>. The float rate of <a href="https://www.smartkarma.com/entities/hdc-hyundai-development-co-engineering-construction" target="_blank" data-smartkarma-citation="entities:27397:1" rel="noopener">HDC Hyundai Development (294870)</a> and <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670)</a> will decrease.</li>
<li>
Kakao Bank and <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (377300)</a> have the most significant passive impact. And <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550)</a>, <a href="https://www.smartkarma.com/entities/woori-financial-group-inc" target="_blank" data-smartkarma-citation="entities:27995:1" rel="noopener">Woori Financial Group (316140)</a>, and <a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (259960)</a> are also worth noting.</li>
</ul>


The KOSPI 200 June Review will have a total of 13 float rate changes: 11 increases and 2 reductions.

Kakao Bank (323410) will experience the biggest change, followed by HMM (011200) and  Krafton Inc (259960). The float rate of HDC Hyundai Development (294870) and Doosan Infracore (042670) will decrease.

Kakao Bank and Kakao Pay (377300) have the most significant passive impact. And LG Corp (003550), Woori Financial Group (316140), and  Krafton Inc (259960) are also worth noting.


KOSPI 200 Constituents with a Float Rate Change: 11 Increases & 2 Reductions

South Korea

LG Corp. is a holding company, which operates subsidiaries including LG Electronics, LG Household & Health Care, LG Chem Ltd., and Dacom Corp. The Company's main business areas are electronics, chemicals, and household products manufacturing and telecommunications services.

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LG Corp (003550 KS)

Samsung C&T: Deep Discount NAV, Capital Shifting to Value/Holdcos, & Trading Business Boost

Three major positive factors for Samsung C&T include deep discount NAV, capital shifting to value/holdcos, and higher commodity prices boosting...

Douglas Kim

KOSPI 200 IT Sector Index Rebalancing Flow: Watch Kakao Pay & LG Corp

This post highlights the two names that will see the most substantial passive inflow on the rebalancing trading day, June 9, for the KOSPI 200 IT...

Sanghyun Park

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

Initial Thoughts on the LG CNS IPO

LG CNS is getting ready to complete its IPO in 2023. LG Corp owns 49.95% stake in LG CNS. Local media mentioned LG CNS value could reach 4 trillion...

Douglas Kim

KOSPI 200 Constituents with a Float Rate Change: 11 Increases & 2 Reductions

This post summarizes all the KOSPI 200 constituents, which will likely change their respective float rate in the June Review.

Sanghyun Park

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