Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p><em>This week in StubWorld ...</em></p>
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<p><a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> continues to outperform <a href="https://www.smartkarma.com/entities/ppb-group-berhad" target="_blank" data-smartkarma-citation="entities:793:1" rel="noopener">Ppb Group (PEP MK)</a> after the <a href="https://www.smartkarma.com/entities/yihai-kerry-arawana-holdin-a" target="_blank" data-smartkarma-citation="entities:29184:1" rel="noopener">Yihai Kerry Arawana Holdings Co Ltd (300999 CH)</a> spin-off; <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> is cheap, and there are catalysts in the pipeline apart from the recently announced demerger; and <a href="https://www.smartkarma.com/entities/china-motor-corp" target="_blank" data-smartkarma-citation="entities:6315:1" rel="noopener">China Motor (2204 TT)</a> is trading cheap to <a href="https://www.smartkarma.com/entities/yulon-motor-company" target="_blank" data-smartkarma-citation="entities:18249:1" rel="noopener">Yulon Motor Company (2201 TT)</a>, which in turn is trading rich to <a href="https://www.smartkarma.com/entities/taiwan-acceptance-corp" target="_blank" data-smartkarma-citation="entities:13398:1" rel="noopener">Yulon Finance Corp (9941 TT)</a>. </p>
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<p>Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...


Wilmar International (WIL SP) continues to outperform Ppb Group (PEP MK) after the Yihai Kerry Arawana Holdings Co Ltd (300999 CH) spin-off; LG Corp (003550 KS) is cheap, and there are catalysts in the pipeline apart from the recently announced demerger; and China Motor (2204 TT) is trading cheap to Yulon Motor Company (2201 TT), which in turn is trading rich to Yulon Finance Corp (9941 TT). 



Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: PPB/Wilmar, LG Corp, China Motor/Yulon Motor

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p><strong>In this insight, we provide an updated SoTP (Sum-of-the Parts) valuation analysis of <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a>. We first highlighted a deep valuation gap of this stock in our insight <a href="https://www.smartkarma.com/insights/lg-corp-deep-value-4-key-catalysts" target="_blank" data-smartkarma-citation="insights:45512" rel="noopener">LG Corp: Deep Value + 4 Key Catalysts</a> on 19 November 2020. Since then, LG Corp's shares are up 29%. Although LG Corp's shares have performed really well in the past several weeks, we believe there is further significant upside to current share price.</strong></p></div>

In this insight, we provide an updated SoTP (Sum-of-the Parts) valuation analysis of LG Corp (003550 KS). We first highlighted a deep valuation gap of this stock in our insight LG Corp: Deep Value + 4 Key Catalysts on 19 November 2020. Since then, LG Corp's shares are up 29%. Although LG Corp's shares have performed really well in the past several weeks, we believe there is further significant upside to current share price.

LG Corp: Updated SoTP Valuation Analysis & Timing of Key Upcoming Catalyst Events

<p>On 23 December, <a href="https://www.smartkarma.com/entities/lg-electronics-inc" target="_blank" data-smartkarma-citation="entities:8814:1" rel="noopener">LG Electronics (066570 KS)</a> announced that it will spin off its electric vehicles components business and form a <a href="https://www.ft.com/content/c3c711a6-d5dd-4343-a9c3-7744fb71091f" target="_blank" rel="noopener">major joint venture</a> with <a href="https://www.smartkarma.com/entities/magna-international-inc" target="_blank" data-smartkarma-citation="entities:25498:1" rel="noopener">Magna International (MG CN)</a> (Canada). The name of this JV newco is <strong>LG Magna e-Powertrain</strong>. LG Electronics has provided EV components such as motors and battery packs for GM's Bolt and Jaguar's I-Pace electric vehicles.  Magna makes EV gear for Volkswagen and other carmakers. The JV will employ about 1,000 people in North America, Korea, and China. The initial value of the newly formed JV will be $925 million.</p><div class="content-highlight"><p>There has been a lot of local speculation that this new JV (<strong>LG Magna e-Powertrain) could potentially become a leading supplier to Apple's new EVs. </strong>This has been a major reason why LG Electronics' share price has been so strong post this announcement of the JV creation.</p></div><p>The formation of the JV LG Magna E-Powertrain certainly appears to have a positive impact on the shares of LG Electronics (common), LG Electronics (pref), and LG Corp. Among these these LG Electronics (pref) appears to have the strongest momentum as investors attempt to reduce the price gap between the common and preferred shares.</p>

On 23 December, LG Electronics (066570 KS) announced that it will spin off its electric vehicles components business and form a major joint venture with Magna International (MG CN) (Canada). The name of this JV newco is LG Magna e-Powertrain. LG Electronics has provided EV components such as motors and battery packs for GM's Bolt and Jaguar's I-Pace electric vehicles.  Magna makes EV gear for Volkswagen and other carmakers. The JV will employ about 1,000 people in North America, Korea, and China. The initial value of the newly formed JV will be $925 million.There has been a lot of local speculation that this new JV (LG Magna e-Powertrain) could potentially become a leading supplier to Apple's new EVs. This has been a major reason why LG Electronics' share price has been so strong post this announcement of the JV creation.The formation of the JV LG Magna E-Powertrain certainly appears to have a positive impact on the shares of LG Electronics (common), LG Electronics (pref), and LG Corp. Among these these LG Electronics (pref) appears to have the strongest momentum as investors attempt to reduce the price gap between the common and preferred shares.

LG Electronics' New JV (LG Magna E-Powertrain): A Strategy to Become a Supplier to Apple's EVs?

<p>In this insight, we highlight 26 Korean companies that are/may be seeking to find new owners through M&amp;As in 2021. Key sectors of M&amp;A in Korea in 2021 include consumer and industrial. We also provide a review of our M&amp;A research in 2020. We wrote 29 reports about the M&amp;As in 2020. The M&amp;A market in Korea is estimated to be about 35 trillion won in 2020, down 8% YoY. The local media have mentioned that the M&amp;A market in Korea could be nearly <a href="https://finance.naver.com/news/news_read.nhn?article_id=0004711778&amp;office_id=009&amp;mode=LSS2D&amp;type=0&amp;section_id=101&amp;section_id2=258&amp;section_id3=&amp;date=20201207&amp;page=3" target="_blank" rel="noopener">45 trillion won</a> in 2021, up 29% YoY, which would surpass the all-time high of 38 trillion won in 2019.  </p>

In this insight, we highlight 26 Korean companies that are/may be seeking to find new owners through M&amp;As in 2021. Key sectors of M&amp;A in Korea in 2021 include consumer and industrial. We also provide a review of our M&amp;A research in 2020. We wrote 29 reports about the M&amp;As in 2020. The M&amp;A market in Korea is estimated to be about 35 trillion won in 2020, down 8% YoY. The local media have mentioned that the M&amp;A market in Korea could be nearly 45 trillion won in 2021, up 29% YoY, which would surpass the all-time high of 38 trillion won in 2019.  

Review of Our M&A Research in 2020 & Korea M&A Market Outlook in 2021: What’s For Sale?

<p>Following last week's announcement of a demerger/spinoff, <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> re-evaluation remains unresolved as its underperformance against its listed holdings continues, leading to a decade-low implied stub value - net of all key listed holdings.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/021/original/image_95567518231606891715234.png?1606891715" class="editor-image img-responsive" data-smartkarma-image-id="176021"></figure>
<p>The creation of this new holding company as a means to unlocking value via improved efficiencies and affiliate listings, has largely been overshadowed by the EV battery craze, with 33.3%-held  <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> up 165% YTD.</p>
<p>More below the fold.</p>

Following last week's announcement of a demerger/spinoff, LG Corp (003550 KS) re-evaluation remains unresolved as its underperformance against its listed holdings continues, leading to a decade-low implied stub value - net of all key listed holdings.

The creation of this new holding company as a means to unlocking value via improved efficiencies and affiliate listings, has largely been overshadowed by the EV battery craze, with 33.3%-held  LG Chem Ltd (051910 KS) up 165% YTD.
More below the fold.

2021 High Conviction: LG Corp's Decade-Low Stub

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)

StubWorld: PPB/Wilmar, LG Corp, China Motor/Yulon Motor

Wilmar continues to outperform PPB after the Yihai Kerry spin-off; and LG Corp (003550 KS) is cheap, and there are catalysts in the pipeline apart...

David Blennerhassett

LG Corp: Updated SoTP Valuation Analysis & Timing of Key Upcoming Catalyst Events

In this insight, we provide an updated SoTP (Sum-of-the Parts) valuation analysis of LG Corp. Our revised NAV of LG Corp is 152,080 won,...

Douglas Kim

LG Electronics' New JV (LG Magna E-Powertrain): A Strategy to Become a Supplier to Apple's EVs?

On 23 December, LG Electronics (066570 KS) announced that it will spin off its electric vehicles components business and form a major joint venture...

Douglas Kim

Review of Our M&A Research in 2020 & Korea M&A Market Outlook in 2021: What’s For Sale?

In this insight, we highlight 26 Korean companies that are/may be seeking to find new owners through M&As in 2021. We also provide a review of our...

Douglas Kim

2021 High Conviction: LG Corp's Decade-Low Stub

The level for LG Corp is unjustified here. You can use single stock futures to sell LG E, LG H&H, and LGChem. Or there are pockets of borrow for...

David Blennerhassett

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