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>LG Corp's 3-day correction puts the price ratio to its synthetic 21.83% below the 180-day high. It is now pretty much at the 180-day mean. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/210/322/original/LG+Corp+vs+Synthetic+Subsidiary.png?1622503301" class="editor-image img-responsive" data-smartkarma-image-id="210322"></figure></section><table class="table table-striped">
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<col width="70">
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<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"LG Corp"}' data-sheets-formula="=R[-80]C[0]">LG Corp</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current sigma on a 20-day moving average"}'>Current sigma on a 20-day moving average</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-2.7385958489570132}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}' data-sheets-formula='=indirect("$B"&amp;R[8]C[0])'>-2.74σ</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"%Δ to 180-day mean"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>Price ratio %Δ to 180-day mean</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.026883633025444442}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=indirect("$B"&amp;R[6]C[0])'><strong>+2.69%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"%Δ to 180-day high"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>Price ratio %Δ to 180-day high</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.21831222028206346}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=indirect("$C"&amp;R[5]C[0])'><strong>-21.83%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"%Δ to 180-day low"}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'>Price ratio %Δ to 180-day low</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.20080215233447854}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=indirect("$D"&amp;R[4]C[0])'>+20.08%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>LG Corp is now at a 71.34% discount to its NAV. LX Holdings is also pushed down to a 40.78% discount to the NAV with a 3-day price correction of 56.72% from the base price.</p><table class="table table-striped">
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<col width="100">
<col width="100">
<col width="100">
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<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"NAV"}' data-sheets-note="Sang Hyun Park: Cases when a company's net cash position and the value of its publically traded interests are worth more than its market cap create the opportunity of a stub trade, in which investors can take a view that the company's core business will rise by shorting the minority stakes whilst going long the underlying. Such an opportunity has arisen in the wake of the Alibaba listing which has seen early investing company Yahoo trade at a discount to the value of its stake in Alibaba.">NAV</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"LG Corp"}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=R[-12]C[0]">LG Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"LX Holdings Corp"}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=R[-12]C[5]">LX Holdings Corp</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of listed holdings"}'>Value of listed holdings</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":38492.822249340556}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=SUM(R[31]C[2]:R[36]C[2])">₩38,492.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1157.0833809438}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=SUM(R[27]C[7]:R[29]C[7])">₩1,157.1B</td>
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<tr>
<td data-sheets-value='{"1":2,"2":" - % of Holdco market cap"}'>- % of Holdco market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.6578371305170547}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[-1]C[0]/((R[-12]C[0]*R[-15]C[0])/1000000000)">265.78%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.3852747681580349}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[-1]C[0]/((R[-12]C[5]*R[-15]C[5])/1000000000)">138.53%</td>
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<tr>
<td data-sheets-value='{"1":2,"2":"Value of unlisted holdings"}'>Value of unlisted holdings</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2516.349}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=SUM(R[35]C[2]:R[36]C[2])">₩2,516.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":115.35}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=SUM(R[28]C[7])">₩115.4B</td>
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<tr>
<td data-sheets-value='{"1":2,"2":"Stub value"}'>Stub value</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-26526.4093797853}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=(R[-14]C[0]*R[-17]C[0]/1000000000)-R[-3]C[0]-R[-1]C[0]">-₩26,526.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-437.15982544379995}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=(R[-14]C[5]*R[-17]C[5]/1000000000)-R[-3]C[0]-R[-1]C[0]">-₩437.2B</td>
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<tr>
<td data-sheets-value='{"1":2,"2":"Stub value per share"}'>Stub value per share</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-184990.08486705087}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]*1000000000/R[-18]C[0]">-₩184,990</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-5730.936957227313}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]*1000000000/R[-18]C[5]">-₩5,731</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of operating assets"}'>Value of operating assets</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7940}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=SUM(R[51]C[2])">₩7,940.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=SUM(R[39]C[7])">₩0.0B</td>
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<tr>
<td data-sheets-value='{"1":2,"2":"GAV"}'>GAV</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":48949.17124934056}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-6]C[0]+R[-4]C[0]+R[-1]C[0]">₩48,949.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1272.4333809437999}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-6]C[0]+R[-4]C[0]+R[-1]C[0]">₩1,272.4B</td>
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<tr>
<td data-sheets-value='{"1":2,"2":"GAV per share"}'>GAV per share</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":341362.12006468733}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]/R[-11]C[0]*1000000000">₩341,362</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":16680.936957227314}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]/R[-11]C[5]*1000000000">₩16,681</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Discount to GAV (excl. treasury shares)"}'>Discount to GAV (excl. treasury shares)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7041265153237837}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-19]C[0])/R[-1]C[0]">70.41%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.34356205361379794}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-19]C[5])/R[-1]C[0]">34.36%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Holdco net cash/debt (de-consolidated)"}'>Holdco net cash/debt (de-consolidated)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1770.0119120000002}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[48]C[2]">₩1,770.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":172}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[36]C[7]">₩172.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of pref shares"}'>Value of pref shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":194.7411866891386}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=(R[-20]C[0]*R[-17]C[0])/1000000000">₩194.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33.92134775}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=(R[-20]C[5]*R[-17]C[5])/1000000000">₩33.9B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NAV"}'><strong>NAV</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":50524.44197465142}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-5]C[0]+R[-2]C[0]-R[-1]C[0]"><strong>₩50,524.4B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1410.5120331937999}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-5]C[0]+R[-2]C[0]-R[-1]C[0]"><strong>₩1,410.5B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NAV per share (excl. treasury shares)"}'><strong>NAV per share (excl. treasury shares)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":352347.7555870701}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]/R[-16]C[0]*1000000000"><strong>₩352,348</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18491.075961607057}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-1]C[0]/R[-16]C[5]*1000000000"><strong>₩18,491</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Discount to NAV"}'><strong>Discount to NAV</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7133513740375126}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-24]C[0])/R[-1]C[0]"><strong>71.34%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.4078224532344446}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-24]C[5])/R[-1]C[0]"><strong>40.78%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX &amp; DART","6":1}'>Source: KRX &amp; DART</td></tr>
</tbody>
</table><p>LG Corp's 71.34% NAV discount is the highest even among the highly-discounted comparable local holding companies.</p><table class="table table-striped">
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<col width="70">
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<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Discount &amp; weight"}'>NAV discount of the comparable local holding companies at the last closing prices</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"LG Corp"}' data-sheets-formula="=R[-22]C[0]"><strong>LG Corp</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.7133513740375126}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[6]C[0]"><strong>71.34%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Samsung C&amp;T Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-22]C[0]">Samsung C&amp;T Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.600814867090198}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[5]C[12]">60.08%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Inc"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-22]C[0]">SK Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5200541636690171}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[4]C[18]">52.01%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Lotte Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-22]C[0]">Lotte Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5479794057666695}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[3]C[24]">54.80%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hanwha Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-22]C[0]">Hanwha Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5802746134439841}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[2]C[30]">58.03%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"CJ Corp"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-22]C[0]">CJ Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.4699156030660857}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[1]C[36]">46.99%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kolmar Korea Holdings Co Ltd"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-22]C[0]">Kolmar Korea Holdings Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.5027453492894413}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[0]C[42]">50.27%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Harim Holdings Co Ltd"}' data-sheets-numberformat='[null,4,"[$₩]#,##0"]' data-sheets-formula="=R[-22]C[0]">Harim Holdings Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6911875863701072}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=NAV!R[-1]C[54]">69.12%</td>
</tr>
<tr><td colspan="2">Source: KRX &amp; DART</td></tr>
</tbody>
</table>

LG Corp's 3-day correction puts the price ratio to its synthetic 21.83% below the 180-day high. It is now pretty much at the 180-day mean. 





LG Corp

Current sigma on a 20-day moving average
-2.74σ


Price ratio %Δ to 180-day mean
+2.69%


Price ratio %Δ to 180-day high
-21.83%


Price ratio %Δ to 180-day low
+20.08%

Source: KRX

LG Corp is now at a 71.34% discount to its NAV. LX Holdings is also pushed down to a 40.78% discount to the NAV with a 3-day price correction of 56.72% from the base price.







NAV
LG Corp
LX Holdings Corp


Value of listed holdings
₩38,492.8B
₩1,157.1B


- % of Holdco market cap
265.78%
138.53%


Value of unlisted holdings
₩2,516.3B
₩115.4B


Stub value
-₩26,526.4B
-₩437.2B


Stub value per share
-₩184,990
-₩5,731


Value of operating assets
₩7,940.0B
₩0.0B


GAV
₩48,949.2B
₩1,272.4B


GAV per share
₩341,362
₩16,681


Discount to GAV (excl. treasury shares)
70.41%
34.36%


Holdco net cash/debt (de-consolidated)
₩1,770.0B
₩172.0B


Value of pref shares
₩194.7B
₩33.9B


NAV
₩50,524.4B
₩1,410.5B


NAV per share (excl. treasury shares)
₩352,348
₩18,491


Discount to NAV
71.34%
40.78%

Source: KRX &amp; DART

LG Corp's 71.34% NAV discount is the highest even among the highly-discounted comparable local holding companies.





NAV discount of the comparable local holding companies at the last closing prices

LG Corp
71.34%


Samsung C&amp;T Corp
60.08%


SK Inc
52.01%


Lotte Corp
54.80%


Hanwha Corp
58.03%


CJ Corp
46.99%


Kolmar Korea Holdings Co Ltd
50.27%


Harim Holdings Co Ltd
69.12%

Source: KRX &amp; DART



LG Corp: Block Deal Concern Causes an Even Harsher Correction

<p>The KRX has just released the base prices of the four re-listings from the LG Corp spinoff scheduled for May 27.</p><div class="content-highlight">
<p><em>For your information, we have two regulatory filing websites: 1. DART (operated by the Korea Financial Supervisory Service) and 2. KIND (operated by the KRX). This kind of corporate action filings is only published at the KIND.  Following are the links to the regulatory filings at the KIND.</em></p>
<ul>
<li><a href="https://kind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptno=20210526000318&amp;docno=&amp;viewerhost=&amp;viewerport=" target="_blank" rel="noopener">LG Corp</a></li>
<li><a href="https://kind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptno=20210526000321&amp;docno=&amp;viewerhost=&amp;viewerport=" target="_blank" rel="noopener">LG Corp 1P</a></li>
<li><a href="https://kind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptno=20210526000323&amp;docno=&amp;viewerhost=&amp;viewerport=" target="_blank" rel="noopener">LX Holdings</a></li>
<li><a href="https://kind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptno=20210526000328&amp;docno=&amp;viewerhost=&amp;viewerport=" target="_blank" rel="noopener">LX Holdings 1P</a></li>
</ul>
</div><h2>Base prices</h2><p>The base prices of all four companies haven't changed from the previous closing prices on April 28. It means that the updated split ratio based on the most recent financials (1Q21) was pretty much the same as the previously calculated split ratio based on the 3Q20 financials.</p><table class="table table-striped">
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<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
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<tbody>
<tr>
<td style="width: 146.364px;" data-sheets-value='{"1":2,"2":"Base prices"}'>Base prices</td>
<td style="text-align: right; width: 107.273px;" data-sheets-value='{"1":2,"2":"LG Corp"}'>LG Corp</td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":2,"2":"LG Corp 1P"}'>LG Corp 1P</td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":2,"2":"LX Holdings"}'>LX Holdings</td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":2,"2":"LX Holdings 1P"}'>LX Holdings 1P</td>
</tr>
<tr>
<td style="width: 146.364px;" data-sheets-value='{"1":2,"2":"Ticker"}'><strong>Ticker</strong></td>
<td style="text-align: right; width: 107.273px;" data-sheets-value='{"1":2,"2":"003550"}' data-sheets-formula='="003550"'><strong>003550</strong></td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":2,"2":"003555"}' data-sheets-formula='="003555"'><strong>003555</strong></td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":2,"2":"383800"}' data-sheets-formula='="383800"'><strong>383800</strong></td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":2,"2":"383805"}' data-sheets-formula='="383805"'><strong>383805</strong></td>
</tr>
<tr>
<td style="width: 146.364px;" data-sheets-value='{"1":2,"2":"Base price"}'><strong>Base price</strong></td>
<td style="text-align: right; width: 107.273px;" data-sheets-value='{"1":3,"3":126500}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>₩126,500</strong></td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":3,"3":99500}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>₩99,500</strong></td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":3,"3":25300}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>₩25,300</strong></td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":3,"3":19900}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}'><strong>₩19,900</strong></td>
</tr>
<tr>
<td style="width: 146.364px;" data-sheets-value='{"1":2,"2":"Ceiling price at the opening (x 2)"}'>Ceiling price at the opening (base price x 2)</td>
<td style="text-align: right; width: 107.273px;" data-sheets-value='{"1":3,"3":253000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[-1]C[0]*2">₩253,000</td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":3,"3":199000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[-1]C[0]*2">₩199,000</td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":3,"3":50600}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[-1]C[0]*2">₩50,600</td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":3,"3":39800}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=R[-1]C[0]*2">₩39,800</td>
</tr>
<tr>
<td style="width: 146.364px;" data-sheets-value='{"1":2,"2":"Floor price at the opening (x 0.5)"}'>Floor price at the opening (base price x 0.5)</td>
<td style="text-align: right; width: 107.273px;" data-sheets-value='{"1":3,"3":63300}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=ceiling(R[-2]C[0]/2, 100)">₩63,300</td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":3,"3":49750}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=ceiling(R[-2]C[0]/2, 10)">₩49,750</td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":3,"3":12650}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=ceiling(R[-2]C[0]/2, 10)">₩12,650</td>
<td style="text-align: right; width: 129.091px;" data-sheets-value='{"1":3,"3":9950}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0"}' data-sheets-formula="=ceiling(R[-2]C[0]/2, 10)">₩9,950</td>
</tr>
<tr><td colspan="5" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>Base price calculation:</p><ul>
<li>A = Market cap at the previous close on April 28</li>
<li>B = Updated split ratio based on the most recent financials (1Q21)</li>
<li>C = Total shares based on the previous split ratio calculated with the 3Q20 financials</li>
<li><strong>Base price for each company = A × B / C</strong></li>
</ul><h2>Market caps</h2><div><p>LG Corp can begin tomorrow as low as ₩9.95T or as high as ₩39.80T. LG Corp opens at a range of ₩150.3~601.3B. LX Holdings can greet its shareholders at a market cap as low as ₩0.97T or as high as ₩3.86T. Lastly, LX Holdings 1P will begin at a range of ₩14.6~58.3B.</p></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td style="width: 136.364px;" data-sheets-value='{"1":2,"2":"Market caps"}'>Market caps</td>
<td style="text-align: right; width: 121.818px;" data-sheets-value='{"1":2,"2":"LG Corp"}'>LG Corp</td>
<td style="text-align: right; width: 126.364px;" data-sheets-value='{"1":2,"2":"LG Corp 1P"}'>LG Corp 1P</td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":2,"2":"LX Holdings"}'>LX Holdings</td>
<td style="text-align: right; width: 127.273px;" data-sheets-value='{"1":2,"2":"LX Holdings 1P"}'>LX Holdings 1P</td>
</tr>
<tr>
<td style="width: 136.364px;" data-sheets-value='{"1":2,"2":"Shares outstanding"}'>Shares outstanding</td>
<td style="text-align: right; width: 121.818px;" data-sheets-value='{"1":3,"3":157300993}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=R[31]C[0]">157,300,993</td>
<td style="text-align: right; width: 126.364px;" data-sheets-value='{"1":3,"3":3021620.326859276}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=R[31]C[0]">3,021,620</td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":3,"3":76280690}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=R[33]C[-2]">76,280,690</td>
<td style="text-align: right; width: 127.273px;" data-sheets-value='{"1":3,"3":1465285}' data-sheets-numberformat='[null,2,"#,##0",1]' data-sheets-formula="=R[33]C[-2]">1,465,285</td>
</tr>
<tr>
<td style="width: 136.364px;" data-sheets-value='{"1":2,"2":"Base price"}'><strong>Base price</strong></td>
<td style="text-align: right; width: 121.818px;" data-sheets-value='{"1":3,"3":19898.5756145}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000"><strong>₩19,898.6B</strong></td>
<td style="text-align: right; width: 126.364px;" data-sheets-value='{"1":3,"3":300.6512225224979}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000"><strong>₩300.7B</strong></td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":3,"3":1929.901457}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000"><strong>₩1,929.9B</strong></td>
<td style="text-align: right; width: 127.273px;" data-sheets-value='{"1":3,"3":29.1591715}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000"><strong>₩29.2B</strong></td>
</tr>
<tr>
<td style="width: 136.364px;" data-sheets-value='{"1":2,"2":"Ceiling price at the opening (x 2)"}'>Ceiling price at the opening (base price x 2)</td>
<td style="text-align: right; width: 121.818px;" data-sheets-value='{"1":3,"3":39797.151229}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩39,797.2B</td>
<td style="text-align: right; width: 126.364px;" data-sheets-value='{"1":3,"3":601.3024450449958}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩601.3B</td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":3,"3":3859.802914}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩3,859.8B</td>
<td style="text-align: right; width: 127.273px;" data-sheets-value='{"1":3,"3":58.318343}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩58.3B</td>
</tr>
<tr>
<td style="width: 136.364px;" data-sheets-value='{"1":2,"2":"Floor price at the opening (x 0.5)"}'>Floor price at the opening (base price x 0.5)</td>
<td style="text-align: right; width: 121.818px;" data-sheets-value='{"1":3,"3":9957.1528569}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩9,957.2B</td>
<td style="text-align: right; width: 126.364px;" data-sheets-value='{"1":3,"3":150.32561126124895}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩150.3B</td>
<td style="text-align: right; width: 128.182px;" data-sheets-value='{"1":3,"3":964.9507285}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩965.0B</td>
<td style="text-align: right; width: 127.273px;" data-sheets-value='{"1":3,"3":14.57958575}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula="=R[-7]C[0]*R9C[0]/1000000000">₩14.6B</td>
</tr>
<tr><td colspan="5" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>

The KRX has just released the base prices of the four re-listings from the LG Corp spinoff scheduled for May 27.
For your information, we have two regulatory filing websites: 1. DART (operated by the Korea Financial Supervisory Service) and 2. KIND (operated by the KRX). This kind of corporate action filings is only published at the KIND.  Following are the links to the regulatory filings at the KIND.

LG Corp
LG Corp 1P
LX Holdings
LX Holdings 1P

Base pricesThe base prices of all four companies haven't changed from the previous closing prices on April 28. It means that the updated split ratio based on the most recent financials (1Q21) was pretty much the same as the previously calculated split ratio based on the 3Q20 financials.









Base prices
LG Corp
LG Corp 1P
LX Holdings
LX Holdings 1P


Ticker
003550
003555
383800
383805


Base price
₩126,500
₩99,500
₩25,300
₩19,900


Ceiling price at the opening (base price x 2)
₩253,000
₩199,000
₩50,600
₩39,800


Floor price at the opening (base price x 0.5)
₩63,300
₩49,750
₩12,650
₩9,950

Source: KRX

Base price calculation:
A = Market cap at the previous close on April 28
B = Updated split ratio based on the most recent financials (1Q21)
C = Total shares based on the previous split ratio calculated with the 3Q20 financials
Base price for each company = A × B / C
Market capsLG Corp can begin tomorrow as low as ₩9.95T or as high as ₩39.80T. LG Corp opens at a range of ₩150.3~601.3B. LX Holdings can greet its shareholders at a market cap as low as ₩0.97T or as high as ₩3.86T. Lastly, LX Holdings 1P will begin at a range of ₩14.6~58.3B.









Market caps
LG Corp
LG Corp 1P
LX Holdings
LX Holdings 1P


Shares outstanding
157,300,993
3,021,620
76,280,690
1,465,285


Base price
₩19,898.6B
₩300.7B
₩1,929.9B
₩29.2B


Ceiling price at the opening (base price x 2)
₩39,797.2B
₩601.3B
₩3,859.8B
₩58.3B


Floor price at the opening (base price x 0.5)
₩9,957.2B
₩150.3B
₩965.0B
₩14.6B

Source: KRX



LG Corp/LX Holdings: Official Base Prices & Index Calculation Timeline & Treatment Clarification

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">
<p>Our NAV valuation of LX Holdings suggests NAV of 1.0 trillion won (13,556 won per share). Our NAV valuation of the company is based on the current market values for the three listed companies including Silicon Works, LG International, and LG Hausys. For MMA, we have used a 50% of its book value at the end of 2020. We have also assumed net cash of 179 billion won which is 0.088 x net cash of LG Corp (Consolidated at End of 1Q 2021). We have also assumed a 35% holdco discount. </p>
<p>We believe there are many investors who purchased Silicon Works, LG International, and LG Hausys ahead of the actual split date and the NAV (post holdco discount) of LX Holdings could be much less than the initial market cap of LX Holdings once it starts trading. Given that our base case value of LX Holdings is 13,556 won and if the final base price is confirmed at above 20,000 won to 25,000 won, for example, we believe in reducing to positions to lower levels. </p>
</div>


Our NAV valuation of LX Holdings suggests NAV of 1.0 trillion won (13,556 won per share). Our NAV valuation of the company is based on the current market values for the three listed companies including Silicon Works, LG International, and LG Hausys. For MMA, we have used a 50% of its book value at the end of 2020. We have also assumed net cash of 179 billion won which is 0.088 x net cash of LG Corp (Consolidated at End of 1Q 2021). We have also assumed a 35% holdco discount. 
We believe there are many investors who purchased Silicon Works, LG International, and LG Hausys ahead of the actual split date and the NAV (post holdco discount) of LX Holdings could be much less than the initial market cap of LX Holdings once it starts trading. Given that our base case value of LX Holdings is 13,556 won and if the final base price is confirmed at above 20,000 won to 25,000 won, for example, we believe in reducing to positions to lower levels. 


LX Holdings - NAV Analysis Suggests A Big Downside Risk

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>With the resumption of trading in <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> shares tomorrow, in tandem with newco LX Holdings, it is time to dust off the NAV, both pre- &amp; post-split.</p>
<p>Below is LG Corp at the time of its suspension on the 28 April. That discount of 55% would remain relatively unchanged if we assume the share price for LG Corp remained static since the suspension. The average discount to NAV was ~65% over the past year.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/209/165/original/image_60854900321622006935018.png?1622006935" class="editor-image img-responsive" data-smartkarma-image-id="209165"></figure>
<div style="text-align: left;" class="content-caption">Source: my calcs, CapIQ</div>
<p>Despite the share price appreciation into the suspension, the implied stub was below November 2020 levels, and well down on its decade average.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/209/166/original/image_18268733731622007415020.png?1622007415" class="editor-image img-responsive" data-smartkarma-image-id="209166"></figure>
<div style="text-align: left;" class="content-caption">Source: my calcs, CapIQ</div>
<p>With LG Corp maintaining ~98% of the group's net assets post-split, one would <em>assume</em> this Holdco structure remains cheap.</p>
<p>And at best, LX Holdings should trade at the same discount to LG Corp's ahead of the suspension - yet pro-forma numbers indicate a premium to NAV. </p>
<p>More details below the fold.</p>
<div>
<div></div>
</div>

With the resumption of trading in LG Corp (003550 KS) shares tomorrow, in tandem with newco LX Holdings, it is time to dust off the NAV, both pre- &amp; post-split.
Below is LG Corp at the time of its suspension on the 28 April. That discount of 55% would remain relatively unchanged if we assume the share price for LG Corp remained static since the suspension. The average discount to NAV was ~65% over the past year.

Source: my calcs, CapIQ
Despite the share price appreciation into the suspension, the implied stub was below November 2020 levels, and well down on its decade average.

Source: my calcs, CapIQ
With LG Corp maintaining ~98% of the group's net assets post-split, one would assume this Holdco structure remains cheap.
And at best, LX Holdings should trade at the same discount to LG Corp's ahead of the suspension - yet pro-forma numbers indicate a premium to NAV. 
More details below the fold.




<div>
<div>
<div>
<div>
<p>Back on 26 November, <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> announced it would be splitting itself into two: the core electronics, chemicals, and telecoms business would stay in LG Corp, with the remaining non-core holdings transferred to NewCo (LX Holdings), a new holding company, and subsequently spun-off to LG Corp shareholders. The spin-off ratio was set at 0.9115879 (LG Corp): 0.0884121 (LX Holdings).</p>
</div>
<div>It was noted at the time that LG Corp would maintain 91.5% of the group's assets - ₩9,779.8bn - as at 3Q20. This raised the question: just how much value can be unlocked via spinning off ~8%? </div>
<div>
<p>The before &amp; after were detailed in a <a href="https://www.lgcorp.com/ir/dataroom/report/annual/files/40503" target="_blank" rel="noopener">company presentation</a>:</p>
<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/209/144/original/image?1621987123" class="editor-image img-responsive" data-smartkarma-image-id="209144"></figure>
</div>
<div>
<div>
<p>US-headquartered Whitebox said a little under a month later that the "<em>The spin-off does nothing to address LG’s most pressing issue, which is the unprecedented discount at which the company trades relative to its assets and, accordingly, inferior return to shareholders</em>."</p>
<p>All to no avail. Shareholders approved the split on the 26 March, and the relisting for both LG Corp and LX Holdings takes place tomorrow, the 27 May.</p>
<div>
<table class="table table-striped">
<colgroup> <col width="100"> <col width="100"> </colgroup>
<tbody>
<tr>
<td colspan="2" style="width: 205.417px;" data-sheets-value='{"1":2,"2":"Schedule"}'>
<h3>Indicative Timetable</h3>
</td>
</tr>
<tr>
<td style="width: 205.417px;" data-sheets-value='{"1":3,"3":44281}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>26-Mar-21</td>
<td style="width: 496.845px;">Shareholders Meeting</td>
</tr>
<tr>
<td style="width: 205.417px;">29-Apr-21</td>
<td style="width: 496.845px;">Trade Suspension Commences</td>
</tr>
<tr>
<td style="width: 205.417px;" data-sheets-value='{"1":3,"3":44316}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>30-Apr-21</td>
<td style="width: 496.845px;">Record Date</td>
</tr>
<tr>
<td style="width: 205.417px;">1-May-21</td>
<td style="width: 496.845px;">Split Date</td>
</tr>
<tr>
<td style="width: 205.417px;" data-sheets-value='{"1":3,"3":44343}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>27-May-21</td>
<td style="width: 496.845px;">Relisting of both LG Corp and LX Holdings</td>
</tr>
<tr>
<td style="width: 205.417px;" data-sheets-value='{"1":2,"2":"Source: DART"}'><em>Source: LG</em></td>
<td style="width: 496.845px;"></td>
</tr>
</tbody>
</table>
</div>
<div>
<p>The questions now are: where will LG Corp and LX trade tomorrow, and what are the immediate index implications.</p>
</div>
</div>
</div>
</div>
</div>
<p>More below the fold.</p>
</div>
</div>





Back on 26 November, LG Corp (003550 KS) announced it would be splitting itself into two: the core electronics, chemicals, and telecoms business would stay in LG Corp, with the remaining non-core holdings transferred to NewCo (LX Holdings), a new holding company, and subsequently spun-off to LG Corp shareholders. The spin-off ratio was set at 0.9115879 (LG Corp): 0.0884121 (LX Holdings).

It was noted at the time that LG Corp would maintain 91.5% of the group's assets - ₩9,779.8bn - as at 3Q20. This raised the question: just how much value can be unlocked via spinning off ~8%? 

The before &amp; after were detailed in a company presentation:





US-headquartered Whitebox said a little under a month later that the "The spin-off does nothing to address LG’s most pressing issue, which is the unprecedented discount at which the company trades relative to its assets and, accordingly, inferior return to shareholders."
All to no avail. Shareholders approved the split on the 26 March, and the relisting for both LG Corp and LX Holdings takes place tomorrow, the 27 May.


   



Indicative Timetable



26-Mar-21
Shareholders Meeting


29-Apr-21
Trade Suspension Commences


30-Apr-21
Record Date


1-May-21
Split Date


27-May-21
Relisting of both LG Corp and LX Holdings


Source: LG






The questions now are: where will LG Corp and LX trade tomorrow, and what are the immediate index implications.





More below the fold.



LG Corp (003550): Index Treatment As Shares Resume Tomorrow

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.

Price Gauge
52-week Range	0.00 - 0.00
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LG Corp (003550 KS)

LG Corp: Block Deal Concern Causes an Even Harsher Correction

This post looks into the block deal concern and how it leads to an even harsher price correction to LG Corp in the last three trading sessions.

Sanghyun Park

LG Corp/LX Holdings: Official Base Prices & Index Calculation Timeline & Treatment Clarification

This post has the official base prices for LG Corp/LX Holdings relisting and clarifies the index calculation timeline and treatment, including...

Sanghyun Park

LX Holdings - NAV Analysis Suggests A Big Downside Risk

Our NAV value of LX Holdings suggests NAV of 1.0 trillion won (13,556 won per share). If the final base price is confirmed at above 20,000 won to...

Douglas Kim

LG Corp (003550 KS): The NAV Calcs

I would sell LX Holdings, for those shareholders who received scrip under the split. If LG Corp's NAV materially narrows from here - I'd sell that...

David Blennerhassett

LG Corp (003550): Index Treatment As Shares Resume Tomorrow

Keep in mind the spit ratio is premised on 3Q20 figures; the final split ratio will be based on 1Q21 figures. The KRX will publish the base prices...

David Blennerhassett

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52-week Range

Market Cap (USDm)

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