Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>The trading data of Korean stock market on January 27th and 28th clearly shows how the NPS and other local pension funds strongly supported LG Energy Solution IPO's stock price. </li>
<li>What is concerning is that the local pension funds nearly neglected net purchase of all other 2,400+ stocks in Korea.</li>
<li>NPS and local pension funds may have less room to overly support LG Energy Solution and other Korean stocks in February. </li>
</ul>


The trading data of Korean stock market on January 27th and 28th clearly shows how the NPS and other local pension funds strongly supported LG Energy Solution IPO's stock price. 
What is concerning is that the local pension funds nearly neglected net purchase of all other 2,400+ stocks in Korea.
NPS and local pension funds may have less room to overly support LG Energy Solution and other Korean stocks in February. 


NPS Exclusively Buying LG Energy Solution At the Expense of Other 2,400+ Stocks in Korea

Event-Driven

<ul>
<li>After the market close today, it was announced that Chairman of LX Holdings Koo Bon-Joon will sell about 530 billion won worth of LG Corp (003550 KS).</li>
<li>The block sale price range is from 79,800 won to 82,400 won per share, which are 5.2% to 8.2% discount to the closing price of LG Corp today.</li>
<li>We would take the deal and we continue to have a positive view of LG Corp. </li>
</ul>


After the market close today, it was announced that Chairman of LX Holdings Koo Bon-Joon will sell about 530 billion won worth of LG Corp (003550 KS).
The block sale price range is from 79,800 won to 82,400 won per share, which are 5.2% to 8.2% discount to the closing price of LG Corp today.
We would take the deal and we continue to have a positive view of LG Corp. 


Chairman of LX Holdings Koo Bon-Joon Selling About 530 Billion Won Worth of LG Corp

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top100 stocks in the MSCI GEM Index.</li>
<li>The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.</li>
<li>Developed over the past 3 years, and implemented in its current state for 18 months, the model has a solid real-world alpha-generating performance track record, set out in detail below.</li>
</ul>


An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top100 stocks in the MSCI GEM Index.
The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.
Developed over the past 3 years, and implemented in its current state for 18 months, the model has a solid real-world alpha-generating performance track record, set out in detail below.


This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. 
The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. 
This model, which has been developed and tweaked over the past 3 years (and implemented in its current state for 17 months), has a solid real-world performance track record, which I set out in the detail below. 
Notable new entrants to the top decile this month include Russian internet company <a href="https://www.smartkarma.com/entities/yandex-nv-a" target="_blank" data-smartkarma-citation="entities:414:1" rel="noopener">Yandex (YNDX US)</a>, Indian IT Services company <a href="https://www.smartkarma.com/entities/hcl-technologies-ltd" target="_blank" data-smartkarma-citation="entities:20025:1" rel="noopener">Hcl Technologies (HCLT IN)</a>, and a return to the top 10 for <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>.
<table class="table table-striped">
<colgroup> <col> <col> <col> <col> <col> </colgroup>
<tbody>
<tr>
<td style="text-align: center; width: 48pt;">rank</td>
<td style="width: 169pt;">Name</td>
<td style="width: 119pt;">Sector</td>
<td style="width: 95pt;">Location</td>
<td style="text-align: center; width: 48pt;">prev.</td>
</tr>
<tr>
<td style="text-align: center;">1</td>
<td>
<a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS)</a> </td>
<td>Consumer Staples</td>
<td>Korea (South)</td>
<td style="text-align: center;">12</td>
</tr>
<tr>
<td style="text-align: center;">2</td>
<td>
<a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a> </td>
<td>Communication</td>
<td>China</td>
<td style="text-align: center;">2</td>
</tr>
<tr>
<td style="text-align: center;">3</td>
<td>
<a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> </td>
<td>Consumer Discretionary</td>
<td>China</td>
<td style="text-align: center;">10</td>
</tr>
<tr>
<td style="text-align: center;">4</td>
<td>
<a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> </td>
<td>Information Technology</td>
<td>China</td>
<td style="text-align: center;">4</td>
</tr>
<tr>
<td style="text-align: center;">5</td>
<td>
<a href="https://www.smartkarma.com/entities/yandex-nv-a" target="_blank" data-smartkarma-citation="entities:414:1" rel="noopener">Yandex (YNDX US)</a> </td>
<td>Communication</td>
<td>Russian Federation</td>
<td style="text-align: center;">49</td>
</tr>
<tr>
<td style="text-align: center;">6</td>
<td>
<a href="https://www.smartkarma.com/entities/new-oriental-education-technology-group" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Technology Group (9901 HK)</a> </td>
<td>Consumer Discretionary</td>
<td>China</td>
<td style="text-align: center;">1</td>
</tr>
<tr>
<td style="text-align: center;">7</td>
<td>
<a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a> </td>
<td>Information Technology</td>
<td>Taiwan</td>
<td style="text-align: center;">16</td>
</tr>
<tr>
<td style="text-align: center;">8</td>
<td>
<a href="https://www.smartkarma.com/entities/al-rajhi-bank" target="_blank" data-smartkarma-citation="entities:27038:1" rel="noopener">Al Rajhi Bank (RJHI AB)</a> </td>
<td>Financials</td>
<td>Saudi Arabia</td>
<td style="text-align: center;">33</td>
</tr>
<tr>
<td style="text-align: center;">9</td>
<td>
<a href="https://www.smartkarma.com/entities/magazine-luiza-sa" target="_blank" data-smartkarma-citation="entities:27676:1" rel="noopener">Magazine Luiza SA (MGLU3 BZ)</a> </td>
<td>Consumer Discretionary</td>
<td>Brazil</td>
<td style="text-align: center;">15</td>
</tr>
<tr>
<td style="text-align: center;">10</td>
<td>
<a href="https://www.smartkarma.com/entities/hcl-technologies-ltd" target="_blank" data-smartkarma-citation="entities:20025:1" rel="noopener">Hcl Technologies (HCLT IN)</a> </td>
<td>Information Technology</td>
<td>India</td>
<td style="text-align: center;">83</td>
</tr>
<tr>
<td colspan="5" style="text-align: left;">Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas</td>
</tr>
</tbody>
</table>
As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. 
The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. 
This model, which has been developed and tweaked over the past 3 years (and implemented in its current state for 17 months), has a solid real-world performance track record, which I set out in the detail below. 
Notable new entrants to the top decile this month include Russian internet company Yandex (YNDX US), Indian IT Services company Hcl Technologies (HCLT IN), and a return to the top 10 for TSMC (2330 TT).

      


rank
Name
Sector
Location
prev.


1

LG Household &amp; Health Care (051900 KS) 
Consumer Staples
Korea (South)
12


2

NetEase (9999 HK) 
Communication
China
2


3

JD.com Inc. (9618 HK) 
Consumer Discretionary
China
10


4

Xiaomi Corp (1810 HK) 
Information Technology
China
4


5

Yandex (YNDX US) 
Communication
Russian Federation
49


6

New Oriental Education &amp; Technology Group (9901 HK) 
Consumer Discretionary
China
1


7

TSMC (2330 TT) 
Information Technology
Taiwan
16


8

Al Rajhi Bank (RJHI AB) 
Financials
Saudi Arabia
33


9

Magazine Luiza SA (MGLU3 BZ) 
Consumer Discretionary
Brazil
15


10

Hcl Technologies (HCLT IN) 
Information Technology
India
83


Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas



As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

<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> reported its 3Q 2021 results today. The company generated sales of 10.6 trillion won (up 41.4% YoY and 6.0% lower than the consensus) and operating profit of 726.6 billion won (down 19.6% YoY and 29.6% lower than the consensus). Although LG Chem's results were stagnant in 3Q 2021, its results are likely to improve materially in 4Q 2021. The consensus currently estimates LG Chem to generate sales of 11.7 trillion won (up 31% YoY) and an operating profit of 1.2 trillion won (up 925% YoY) in 4Q 2021.LG Chem also announced <a href="https://www.chosun.com/economy/industry-company/2021/10/25/5V5L3Z7LONEFPBUA3TKQNRYS7M/?utm_source=naver&amp;utm_medium=referral&amp;utm_campaign=naver-news" target="_blank" rel="noopener">Kwon Young-Soo</a> as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief Operating Officer (COO) 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>. Having worked in various companies of the LG Group for nearly 42 years, clearly Kwon Young-Soo shown a lot of loyalty to the LG Group. In addition, he has proven record of successfully leading numerous LG Group businesses. Overall, we believe that the market will have a positive view of the decision to put Kwon Young-Soo as the CEO of LG Energy Solution.At this point, it appears that the higher probability of an IPO for LG Energy Solution is sometime in 1Q 2022, rather than in November/December 2021. LG and GM have settled on a <a href="https://www.reuters.com/article/businessNews/idUSKBN2HF0EO" target="_blank" rel="noopener">$2 billion cost</a> related to the Bolt recall earlier this month, paving the way for an IPO in the next several months.

LG Chem Ltd (051910 KS) reported its 3Q 2021 results today. The company generated sales of 10.6 trillion won (up 41.4% YoY and 6.0% lower than the consensus) and operating profit of 726.6 billion won (down 19.6% YoY and 29.6% lower than the consensus). Although LG Chem's results were stagnant in 3Q 2021, its results are likely to improve materially in 4Q 2021. The consensus currently estimates LG Chem to generate sales of 11.7 trillion won (up 31% YoY) and an operating profit of 1.2 trillion won (up 925% YoY) in 4Q 2021.LG Chem also announced Kwon Young-Soo as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief Operating Officer (COO) of LG Corp (003550 KS). Having worked in various companies of the LG Group for nearly 42 years, clearly Kwon Young-Soo shown a lot of loyalty to the LG Group. In addition, he has proven record of successfully leading numerous LG Group businesses. Overall, we believe that the market will have a positive view of the decision to put Kwon Young-Soo as the CEO of LG Energy Solution.At this point, it appears that the higher probability of an IPO for LG Energy Solution is sometime in 1Q 2022, rather than in November/December 2021. LG and GM have settled on a $2 billion cost related to the Bolt recall earlier this month, paving the way for an IPO in the next several months.

LG Chem - Major Highlights of 3Q 2021 Earnings & A New CEO for LG Energy Solution

South Korea

LG H&H Co., Ltd. manufactures and distributes cosmetics. The Company produces whoo, o hui, sum 37, basic cosmetics, color cosmetics, and other related products. LG H&H also produces toothpaste, soap, detergents, healthy, personal care, and refreshing products.

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LG H&H (Pref) (051905 KS)

NPS Exclusively Buying LG Energy Solution At the Expense of Other 2,400+ Stocks in Korea

In this insight, we discuss the details of how the local pension funds strongly supported LG Energy Solution IPO's stock price on January 27th and...

Douglas Kim

Chairman of LX Holdings Koo Bon-Joon Selling About 530 Billion Won Worth of LG Corp

It was announced that Chairman of LX Holdings Koo Bon-Joon will sell about 530 billion won worth of LG Corp through a block deal sale. We would...

Douglas Kim

Screening for GEMs: December 2021

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

Screening for GEMs: November 2021

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

LG Chem - Major Highlights of 3Q 2021 Earnings & A New CEO for LG Energy Solution

LG Chem also announced Kwon Young-Soo as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief...

Douglas Kim

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