In today’s briefing:
- StubWorld: EcoPro Continues To Defy Logic
- KOSPI200 Index Rebalance Preview: A Busy December Rebalance
- Doosan Bobcat Placement – Past Deals Have Been Mixed but the Stock Has Been Doing Well
- Exploring Two Lucrative Arbitrage Trading Opportunities in CJ CGV’s Monumental Rights Offer
- CJ CGV: A Rights Offering 74.7 Million Shares (Destroying Shareholder Value)
- Coupang(CPNG US, SELL, TP US$15.1) Rating Change: Facing More Competition from AliExpress,DG to Sell
StubWorld: EcoPro Continues To Defy Logic
- EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high.
- Preceding my comments on EcoPro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
KOSPI200 Index Rebalance Preview: A Busy December Rebalance
- Just over a quarter of the way through the review period, we see six changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance.
- There are a few stocks that are close adds at the current time and a move higher can take them into inclusion zone leading to more deletions.
- While there is little to no short interest on the potential inclusions, short interest on the potential deletions ranges from 4.3-12.2 days of ADV and 0.5-3.5% of free float.
Doosan Bobcat Placement – Past Deals Have Been Mixed but the Stock Has Been Doing Well
- Doosan Enerbility (034020 KS) aims to raise around US$220m via selling around 4.9% of Doosan Bobcat Inc (241560 KS) .
- This will be the third selldown in the company in less than a year with the previous two deals in Nov 22 and May 23 having delivered mixed results
- In this note, we will run the deal through our ECM framework and comment on other deal dynamics.
Exploring Two Lucrative Arbitrage Trading Opportunities in CJ CGV’s Monumental Rights Offer
- A capital increase event of this size allows for a classic arbitrage trading strategy involving the acquisition of subscription rights and the simultaneous sale of an equal amount of SSF.
- We can aim to profit from the price movements between warrants and SSF during the warrants trading period by getting out of the positions before the trading period ends.
- We will also likely encounter a significantly juicy price difference between warrants+subscription and SSF, given a discount rate of 25% with an enormous capital increase rate,
CJ CGV: A Rights Offering 74.7 Million Shares (Destroying Shareholder Value)
- CJ CGV announced a massive capital increase plan of nearly 1 trillion won which includes a rights offering of 570 billion won and 450 billion won of in-kind investments.
- This capital increase is likely to negatively impact CJ CGV’s share price in the coming months. Through this capital raise, the existing shareholders are likely to be diluted significantly.
- The expected rights offering price is 7,630 won, which is 47% discount to its current price.
Coupang(CPNG US, SELL, TP US$15.1) Rating Change: Facing More Competition from AliExpress,DG to Sell
- AliExpress has prioritized South Korea. We expect AliExpress’ South Korea GMV to increase 150%~ YoY to about US 1bn in 2023, or about 3% of Coupang’s.
- We found that AliExpress has more overlap with CPNG’s key products rather than Naver. The average price of recommended items on AliExpress was 65%~ cheaper than CPNG in our sample;
- We lower our CPNG GMV est. by 2%/3% in 2023/2024. We downgrade CPNG to SELL and lower its TP to US$ 15.1.
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