In today’s briefing:
- TIGER Top 10 Rebalancing: A Big Change Awaits
- A Pair Trade Between SK Telecom & LG Uplus
- Bionote Pre-IPO – Thoughts on Valuation
- Sungeel Hitech: Timing Trading Angle (End of Lock Up Period & Early Inclusion of KOSDAQ 150)
TIGER Top 10 Rebalancing: A Big Change Awaits
- The two names in LONG (LG Energy Solution and Celltrion) and the two names in SHORT (Shinhan Financial and KB Financial) are almost a foregone conclusion.
- POSCO Holdings is now ahead of Kakao Corp due to the recent sharp rise in its share price. But the gap between them is still quite tight.
- This rebalancing will likely aggravate LG Energy’s flow crunch as it also awaits an MSCI up-weight (2x ADTV) in end-November and a KOSPI 200 up-weight (2x ADTV) on December 8.
A Pair Trade Between SK Telecom & LG Uplus
- At current prices, we like a pair trade between SK Telecom (go long) and LG Uplus (go short).
- We believe the share price gap has widened too much in the past month in favor of LG Uplus and this gap is likely to close in the coming weeks.
- While LG Uplus tries to expand its non-telecom businesses, this may involve greater spending on marketing and promotions (as % of sales), which could be a drag on its earnings.
Bionote Pre-IPO – Thoughts on Valuation
- Bionote (377740 KS) is looking to raise approximately US$200m in its Korean IPO. The IPO would consist of both a primary and secondary selldown.
- Bionote is an integrated producer of diagnostics test products and biocontent products.
- In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.
Sungeel Hitech: Timing Trading Angle (End of Lock Up Period & Early Inclusion of KOSDAQ 150)
- An ideal timing of selling/shorting Sungeel Hitech would be after its stock is included in KOSDAQ 150 but before the end of the 6 months lock up period.
- Sungeel Hitech is a likely candidate for an early entry in KOSDAQ 150 in December.
- Sungeel Hitech’s 6 months end of lock-up period is on 28 January 2023. There are 0.31 million shares (2.6% of total outstanding shares) that can be sold after this period.
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