In today’s briefing:
- EOFLOW/Medtronic Tender: Trading Suspension Lifted, Now for the Hard Part
- Eoflow: Outlook After Trading Resumes on 16 November
- SK Telecom: Three Key Catalysts
- Ecopro Materials IPO Trading – One of the Weakest Subscription Rates of the Year
- S Korean Banks Screen; KB Financial (105560 KS) Most Compelling on Valuations, Return Trends & PEG
EOFLOW/Medtronic Tender: Trading Suspension Lifted, Now for the Hard Part
- The KRX has completed its review and excluded Eoflow (294090 KS) from the substantive review for listing eligibility. Therefore, trading will resume tomorrow, 16 November.
- The shares should rise on trading resumption as Medtronic’s tender remains in play, KRX’s review supported Eoflow’s business continuity and the short-selling ban-driven market rally.
- Deal break risks remain significant. Medtronic Plc (MDT US)’s long-dated closing date and lack of Eoflow integration job postings suggest it remains concerned about near-term unfavourable court rulings.
Eoflow: Outlook After Trading Resumes on 16 November
- On 15 November, the Korea Exchange announced that Eoflow (294090 KS) will start trading again on 16 November.
- The fact that KRX has allowed Eoflow to trade again will be viewed positively by many investors. Plus, the recent temporary ban on short selling should also positively impact Eoflow.
- We believe a higher probability event is for Medtronic to complete a tender offer of Eoflow sometime in 2Q 2024 at about 26,000 won.
SK Telecom: Three Key Catalysts
- In this insight, we discuss three key catalysts that are likely to positively impact SK Telecom in the next several months.
- The current gap between SK Telecom’s 2023 expected dividend yield (6.6%) and US 10 year treasury note (4.47%) is 2.13%.
- The gap between SK Telecom’s dividend yield and US 10 year treasury note yield could widen to 3-4%+ in 2024, making SK Telecom’s dividend yield more attractive.
Ecopro Materials IPO Trading – One of the Weakest Subscription Rates of the Year
- EcoPro Materials (ECO123 KS) raised around US$320m, after downsizing the deal and pricing its IPO at the low end of the range at KRW36,200/share.
- Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
- In this note, we will talk about the demand for the deal and other trading dynamics.
S Korean Banks Screen; KB Financial (105560 KS) Most Compelling on Valuations, Return Trends & PEG
- In our latest South Korean banks screener; we switch from Hana Financial to KB Financial as our preferred Korean banks pick
- NPLs and precautionary quality credits continue on a rising trend, whilst KB has controlled its NPL ratio and precautionary ratio better than most to 3Q23
- KB has a low PBV ratio relative to its ROE, rising post-provision returns, a healthy CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist
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