In today’s briefing:
- MSCI Korea: Potential Inclusions & Exclusions in August 2022 Highlighted by Locals
- SOCAR IPO Book Building Results
- Selected European Holdcos and DLCs: July ‘22 Report
- SOCAR IPO: Order Table, Revised Terms, & Thinking Points
MSCI Korea: Potential Inclusions & Exclusions in August 2022 Highlighted by Locals
- We discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement (12 August) that are being highlighted by the locals.
- The potential inclusion candidates in the MSCI Korea Index emphasized by the locals in August 2022 include LG Energy Solution and Kakao Pay; potential exclusion candidate include SK Telecom.
- The overall assessment of the MSCI Korea Index rebalance in August is rather mixed. There are two potential inclusions (LG Energy Solution and Kakao Pay) and one exclusion (SK Telecom).
SOCAR IPO Book Building Results
- SOCAR announced its IPO book building results. The IPO price has been determined at 28,000 won (18% lower than the low end of the IPO range).
- Our base case target price for SOCAR is 27,176 won, which is 3% lower than the IPO price of 28,000 won.
- We remain Negative on this IPO due to lack of upside. There were 348 companies involved in the IPO survey with the final demand ratio of 56 to 1.
Selected European Holdcos and DLCs: July ‘22 Report
- Discounts to NAV of covered holdcos haven’t shown a clear trend during July/beginning of August. Investors have favored Swedish hodlcos, disliked GBL’s results and avoided the Heineken/Heineken Holdings trade.
- Discounts to NAV: Alba, 42.8%; GBL, 34.5%; Heineken Holdings to 21.5%; Industrivärden C, 7.8%; Investor B, 14.3%; Porsche Automobile Holding to 29.4%. Rio Tinto DLC tightened to 16.2%.
- Spreads tend to widen in bear markets but short term recoveries provide opportunities on tightening discounts. If anything, recommended trades are: Industrivärden C vs. listed assets, Porsche, Rio Tinto (DLC).
SOCAR IPO: Order Table, Revised Terms, & Thinking Points
- SOCAR’s institutional subscription rate was 56.97 to 1. It is highly unusual for an institutional competition rate to be this low among IPOs worth more than ₩1T.
- SOCAR eventually set the price at ₩28,000 and reduced the offering volume from 4.55M to 3.64M, resulting in deal size of ₩100B at an implied market cap of ₩970B.
- Since Lotte Rental’s buying flow may be triggered earlier than expected, we may need to consider a swing trade if the price enters an oversold territory after listing.
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