In today’s briefing:
- Key Things to Watch in Ecopro HN’s Big Rights Offering
- Ecopro HN: Rights Offering of 200 Billion Won
- Hojeon: Activist Minority Investors Threaten to Sell Their Shares to a Competitor in a Block Deal
- POSCO’s Early EB Payoff and Post-Value-Up Pivot Trading Angles
- Hyundai Motor India: Feeling the Heat as SUV Rivals Surge
Key Things to Watch in Ecopro HN’s Big Rights Offering
- Ecopro HN announced a ₩200 billion rights issue, offering 5.67 million shares (a 40% capital increase) with a stockholder allocation rate of 0.3 per share.
- The extended timeline likely results from the issuer’s 20% discount push, with Daishin, an underdog banker, extending it to boost subscriptions despite risking price stability.
- The strategy is to time entry when the stock rights and subscription costs create a solid spread versus the spot price, despite increased volatility making price predictions harder.
Ecopro HN: Rights Offering of 200 Billion Won
- On 4 September, Ecopro HN announced that it plans to conduct a rights offering capital raise of about 200 billion won.
- The company plans to issue 5.67 million new shares and the expected rights offering price is 35,300 won (23% lower than current price).
- We would not subscribe to this rights offering mainly due to lofty valuations, declining sales and profit growth, continued negative free cash flow, and concerns about excessive shares dilution.
Hojeon: Activist Minority Investors Threaten to Sell Their Shares to a Competitor in a Block Deal
- A group of minority investors started to go activist on Hojeon (111110 KS), demanding that the company increase its treasury share buybacks/cancellations, dividends, and cut CEO’s salary.
- This coalition of minority investors has threatened to sell their shares to a competitor (Hansae) if the company does not abide by their demands.
- Hojeon has attractive valuations and are trading at low multiples. It had P/E of 5x, EV/EBITDA of 3.4x, and P/B of 0.5x in 2023.
POSCO’s Early EB Payoff and Post-Value-Up Pivot Trading Angles
- Key watchpoints: Will POSCO cancel the 3.4% treasury shares in Q4 and how will they replenish cash reserves after paying ₩1.5 trillion? Their moves could set trends.
- POSCO might cancel these shares to boost their value-up index weight. This could drive up the stock price, giving them an opening to improve their cash position through equity financing.
- Expect a short-term stock pivot with value-up index and ETFs driving inflows and price pops. After this, equity financing may signal stock peaks, with POSCO and others leading the trend.
Hyundai Motor India: Feeling the Heat as SUV Rivals Surge
- Hyundai Motor India reported an 8% decline in monthly dispatch volumes ahead of India’s festive season, coinciding with a sharp increase in shipments by competitors in the SUV space.
- Mahindra & Mahindra (MM IN) , Toyota Kirloskar Motor ( Toyota Motor (7203 JP) JV), and Kia Corp (000270 KS) each posted high double-digit volume growth in August.
- Overall, India’s domestic Passenger Vehicle sales growth for the April-August period has slowed year-on-year after two years of strong post-COVID momentum.
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