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 price diversion between LG Chem and LG Energy has deepened considerably over the past two days. The sigma is currently -2.35. It is virtually the most extreme level year-to-date.</li>
<li>LG Energy's immediate-term overhang risk will likely offset the upcoming passive inflow event. In addition, the intensity of their price cointegration has not been weakened in recent months.</li>
<li>Therefore, we should consider setting up reversion trading from this point on, aimed at the lockup release on July 27.</li>
</ul>


The price diversion between LG Chem and LG Energy has deepened considerably over the past two days. The sigma is currently -2.35. It is virtually the most extreme level year-to-date.
LG Energy's immediate-term overhang risk will likely offset the upcoming passive inflow event. In addition, the intensity of their price cointegration has not been weakened in recent months.
Therefore, we should consider setting up reversion trading from this point on, aimed at the lockup release on July 27.


Reversion Trading on a Massive Price Diversion of LG Chem & LG Energy Solution

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

<ul>
<li>Tianqi Lithium (TL) raised around US$2bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.</li>
<li>TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.</li>
<li>In this note, we talk about the updates since our last note, along with the trading dynamics.</li>
</ul>


Tianqi Lithium (TL) raised around US$2bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
In this note, we talk about the updates since our last note, along with the trading dynamics.


Tianqi Lithium A/H Trading - A-Shares Have Done Relatively Well, H-Shares Should Follow

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>After the market close today, Seoul Economic Daily reported that Socar is likely to delay its IPO to later on. </li>
<li>Although Socar has not formally announced that it will delay the IPO, we believe that there is a high probability that the IPO will be postponed. </li>
<li>The overall sentiment on the Socar IPO appears to be negative by many institutional investors, unless the company reduces the IPO price range substantially. </li>
</ul>


After the market close today, Seoul Economic Daily reported that Socar is likely to delay its IPO to later on. 
Although Socar has not formally announced that it will delay the IPO, we believe that there is a high probability that the IPO will be postponed. 
The overall sentiment on the Socar IPO appears to be negative by many institutional investors, unless the company reduces the IPO price range substantially. 


<ul>
<li>Our base case valuation of WCP is EV of 2.4 trillion won, implied market cap of 3.0 trillion won and target price of 87,805 won per share. </li>
<li>Given the lack of upside relative to the IPO price range (80,000 won to 100,000 won), we would PASS on this IPO deal.</li>
<li>We forecast the company to generate revenue of 229.1 billion won (up 23.5% YoY) in 2022. We estimate operating margin of 14.8% in 2022, lower than 21.8% in 2021.</li>
</ul>


Our base case valuation of WCP is EV of 2.4 trillion won, implied market cap of 3.0 trillion won and target price of 87,805 won per share. 
Given the lack of upside relative to the IPO price range (80,000 won to 100,000 won), we would PASS on this IPO deal.
We forecast the company to generate revenue of 229.1 billion won (up 23.5% YoY) in 2022. We estimate operating margin of 14.8% in 2022, lower than 21.8% in 2021.


<ul>
<li>WCP is getting ready for an IPO in Korea in August. This is expected to be one of the largest IPOs in Korea post LG Energy Solution (373220 KS).</li>
<li>The IPO price range is from 80,000 won to 100,000 won. The IPO base deal size is from $560 million to $700 million.</li>
<li>WCP is a leading maker of separators which are key materials used in EV batteries.</li>
</ul>


WCP is getting ready for an IPO in Korea in August. This is expected to be one of the largest IPOs in Korea post LG Energy Solution (373220 KS).
The IPO price range is from 80,000 won to 100,000 won. The IPO base deal size is from $560 million to $700 million.
WCP is a leading maker of separators which are key materials used in EV batteries.


South Korea

LG Energy Solution produces and sells batteries. The Company manufactures and sells automobile batteries, small batteries, energy storage system batteries, and other products. LG Energy Solution markets its products worldwide.

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LG Energy Solution (373220 KS)

Reversion Trading on a Massive Price Diversion of LG Chem & LG Energy Solution

This post examines the reversion trading situation to capitalize on a massive price diversion between LG Chem and LG Energy Solution.

Sanghyun Park

Tianqi Lithium A/H Trading - A-Shares Have Done Relatively Well, H-Shares Should Follow

Tianqi Lithium (TL) raised around US$2bn via its H-shares listing. In this note, we talk about the updates since our last notes, along with the...

Sumeet Singh

SOCAR IPO Likely to Be Delayed

Although Socar has not formally announced that it will delay the IPO, we believe that there is a high probability that the IPO will be postponed.

Douglas Kim

WCP IPO Valuation Analysis

Our base case valuation of WCP is target price of 87,805 won per share. Given the lack of upside relative to the IPO price range (80,000 won to...

Douglas Kim

WCP IPO Preview

WCP is getting ready for an IPO in Korea in August. This is expected to be one of the largest IPOs in Korea in 2022. WCP is a leading maker of...

Douglas Kim

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