In today’s briefing:
- LG Energy – Quick Thoughts on US$2bn EB Offering by Parent
- LG Chem: To Issue Exchangeable Bonds Worth US$2 Billion
- LG Chem Official ₩2.6T EB Issuance (1.6% of LG Energy SO): Details & Trading Considerations
- POSCO DX Could Switch Its Listing from KOSDAQ to KOSPI by End of 2023
- Fadu Pre-IPO – Peer Comparison – Hardly Comparable in Scale to Its Peers
LG Energy – Quick Thoughts on US$2bn EB Offering by Parent
- LG Chem Ltd (051910 KS) aims to raise around US$2bn via offering 2028 and 2030 puttable USD exchangeable bonds for LG Energy Solution (373220 KS) shares.
- LG Chem (LGC) had been rumoured to sell down some of its stake in LG Energy Solutions (LGES), hence, this deal will remove the overhang on LGES.
- In this note, we have a quick look at the deal and provide our thoughts on the structure.
LG Chem: To Issue Exchangeable Bonds Worth US$2 Billion
- On 11 July, LG Chem announced that it would issue foreign currency exchangeable bonds worth US$2 billion to raise funs to expansion into its rechargeable battery materials.
- Investors in LG Energy Solution will likely have a more positive view of this EB issue rather than a block sale of common shares, because of lack of price discount.
- We believe LG Chem is not done in selling its shares of LGES as we think LG Chem is likely to sell additional 5-10% stake in LGES in 3-5 years.
LG Chem Official ₩2.6T EB Issuance (1.6% of LG Energy SO): Details & Trading Considerations
- The exchange prices are ₩687,500 and ₩715,000 at a premium of 25-30% to the closing price of LG Energy Solution today.
- The commencement date for both the 5-year and 7-year bonds’ exchange is August 28th.
- We should design a strategic setup that targets a band play within the current price range and the low ₩700,000 range.
POSCO DX Could Switch Its Listing from KOSDAQ to KOSPI by End of 2023
- On 10 July, it was reported in the Hankyung Business Daily that Posco DX (022100 KS) could switch its listing from KOSDAQ to KOSPI by the end of 2023.
- One of the key reasons for the change in the listing venue from KOSDAQ to KOSPI is that POSCO Group believes this could lead to improved valuations for the company.
- We believe the valuations of Posco DX have become too high. Therefore, we have a Negative View of Posco DX at current prices.
Fadu Pre-IPO – Peer Comparison – Hardly Comparable in Scale to Its Peers
- Fadu (440110 KS) is looking to raise up to US$147m in its Korean IPO.
- Fadu is a South Korean fabless semiconductor maker mainly engaged in flash storage technology innovation. Its core products are Enterprise Solid State Drive (SSD) and Enterprise SSDs.
- In our previous notes, we looked at the company’s past performance. In this note, we talk about peer comparison.
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