In today’s briefing:
- Entry Opportunities from Delisting Risk Due to Korea Zinc’s Post-Buyback Volume Drying Up
- Doosan’s Tweaked Restructuring Play: My Take on Hitting Robotics’ 13% Spread
- Hyundai Motor India IPO Trading – Set for a Tricky Start
- Hyundai Motor India IPO: Little Downside. Low Retail Interest-Myopia, Misguidance, Misinterpretation
- Hyundai Motor India IPO: How Far to Fast Entry?
- Korea Zinc: Court Dismisses the Second Injunction Filed by MBK
Entry Opportunities from Delisting Risk Due to Korea Zinc’s Post-Buyback Volume Drying Up
- Korea Zinc’s delisting daily trading volume cutoff is 20K, about 0.12% of the total. We might see volumes plummet, making it tough to maintain even that 20K level.
- Keep an eye on trading opportunities; we have some time with delisting risks, but low trading volume could lead to being booted from the KOSPI 200 and Global Index.
- This sell-off could spike short-term volatility and create great entry points for trading, especially after the court approved the buyback tender, denying MBK’s injunction.
Doosan’s Tweaked Restructuring Play: My Take on Hitting Robotics’ 13% Spread
- The big question is how to cash in on the dissenters’ rights spread for Robotics. The main concern is cancellation risk, but the FSS doesn’t seem too negative on approval.
- To sustain nuclear momentum, Enerbility needs heavy borrowing for facility investments, requiring a lower debt ratio. Offloading debt-heavy Bobcat is a move shareholders might support.
- With NPS unlikely to ignore the government’s nuclear push, Robotics’ spread could narrow quickly. Despite cancellation risk and no hedge, the remaining juice makes an outright position worth considering.
Hyundai Motor India IPO Trading – Set for a Tricky Start
- Hyundai Motor (005387 KS) raised around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
- HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
- In our previous notes, we looked at the company’s past performance and valuations. In this note, we will talk about the trading dynamics.
Hyundai Motor India IPO: Little Downside. Low Retail Interest-Myopia, Misguidance, Misinterpretation
- Hyundai Motor India is expected to close flat or slightly positive today, as low retail participation and modest expectations for gains on listing day could limit selling pressure.
- Many retail investors skipped the IPO, influenced by ‘finfluencers’ who had largely advised against it based on misinterpreted valuation comparison with Maruti Suzuki India (MSIL IN) .
- Hyundai Motor India’s meaningful discount to Maruti Suzuki on operating profit based valuation multiples suggest room for outperformance in the medium term.
Hyundai Motor India IPO: How Far to Fast Entry?
- Hyundai Motor (005380 KS) raised INR 279bn (US$3.3bn) by selling some of its stake in Hyundai Motor India (1342Z IN), valuing Hyundai India at INR 1,593bn (US$18.95bn).
- The anchor investor book was fully subscribed. The non-institutional and retail books were undersubscribed, so institutions got more stock. And that changes the free float estimates for one global index.
- Even with the higher float, Hyundai Motor India (1342Z IN) is unlikely to get Fast Entry to one global index later this month. Index inclusions should commence in February 2025.
Korea Zinc: Court Dismisses the Second Injunction Filed by MBK
- The Seoul Central District Court dismissed the second injunction filed by MBK Partners and Young Poong to suspend the share buyback/tender offer by Korea Zinc Chairman Choi and his allies.
- As a result of the court dismissing the second injunction filed by MBK, the M&A fight for Korea Zinc is likely to continue until the AGM in March 2025.
- Depending upon Korea Zinc’s tender offer subscription, there is a possibility of MBK buying more shares directly from the market if the subscription falls below the proposed amounts.
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