Battery material maker L&F stock soars on shift to Kospi listing

L&F Co. factory [Courtesy of L&F]

L&F Co., a South Korean anode manufacturer, is planning to seek a move to the Kospi, the main Korean stock market.

According to investment banking industry sources on Wednesday, L&F is currently in discussions with major securities firms regarding its listing. L&F admitted that the company is considering a Kospi listing, but added that no details have been confirmed yet.

Upon news of the company’s potential Kospi listing, its stock price surged12 percent during the afternoon trading session on the Kosdaq market, closing at 279,000 won ($220.2), up 17.47 percent from the previous day‘s closing price of 237,500 won.

The L&F Kospi listing is expected to take place either within this year, at the earliest, or early next year at the latest. The company will require approval from shareholders through a general meeting for the listing. It will also have to go through due diligence by the underwriters, which will take a few months, as well as the preliminary review by the Korea Exchange, which takes about a couple of months.

Analysts note that there are several reasons behind L&F’s consideration of a Kospi listing.

A Kospi listing can improve the company‘s image and is expected to boost its stock price, as there will be a bigger pool of institutional and foreign investors in the Kospi market than in the Kosdaq market. A similar case was seen with Celltrion Inc., the pharmaceutical company ranked No.1 by market capitalization in the Kosdaq, which moved to the Kospi in March 2018. In the following month after the listing, the company was included on the Kospi 200.

Another advantage is the potential for fundraising. As a battery company that requires significant liquidity for new business investments and expansions, a Kospi listing can provide ample liquidity. L&F plans to produce 400,000 tons of anode material by 2026 and build a precursor plant in the U.S.

In addition to those reasons, industry insiders believe the company is seeking a Kospi listing largely because it can help reduce the impact of short covering on the company.

Battery-related stocks have been significant targets for short-sellers, and L&F has been among the major targets of those short-sellers, along with EcoPro Group members. As of Friday, L&F ranked third in terms of short-selling balance on the Kosdaq, with about 437 billion won. The figure is equivalent to 5.39 percent of its market capitalization. The short-selling trading volume for the company was 5.1 billion won earlier this year but has increased significantly to around 100 billion won.