Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/infroneer-holdings-inc" target="_blank" data-smartkarma-citation="entities:35785:1" rel="noopener">INFRONEER Holdings (5076 JP)</a> is the new name of the holding company which was comprised of Maeda Corporation, Maeda Road Construction, and Maeda Seisakusho.</li>
<li>Infroneer owns a 20% stake in smaller construction company <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> through subsidiary Maeda Construction. It has launched a Tender Offer for the rest at a 28.5% premium.</li>
<li>This could get complicated. If you own, I would not sell at terms.</li>
</ul>



INFRONEER Holdings (5076 JP) is the new name of the holding company which was comprised of Maeda Corporation, Maeda Road Construction, and Maeda Seisakusho.
Infroneer owns a 20% stake in smaller construction company Toyo Construction (1890 JP) through subsidiary Maeda Construction. It has launched a Tender Offer for the rest at a 28.5% premium.
This could get complicated. If you own, I would not sell at terms.


Infroneer (5076 JP) Tender Offer for Toyo Construction (1890 JP) Could Get Funky

<ul>
<li>The <a href="https://www.smartkarma.com/entities/katakura-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:2007:1" rel="noopener">Katakura Industries (3001 JP)</a> MBO was launched in early November at a price which was too light but activist/long-time holder Oasis agreed to sell (with an up-and-out exception).  </li>
<li>Another would-be activist bought Oasis' shares at a premium to the Tender, encouraging hopes of a bump in the Tender Offer Price. </li>
<li>Yesterday, the bidder dashed those hopes, and today the shares fell, but not to the TOB Price. This has longer-term designs.</li>
</ul>


The Katakura Industries (3001 JP) MBO was launched in early November at a price which was too light but activist/long-time holder Oasis agreed to sell (with an up-and-out exception).  
Another would-be activist bought Oasis' shares at a premium to the Tender, encouraging hopes of a bump in the Tender Offer Price. 
Yesterday, the bidder dashed those hopes, and today the shares fell, but not to the TOB Price. This has longer-term designs.


Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later

David Blennerhassett

Equity Bottom-Up

Headquartered in Shanghai, <a href="https://www.smartkarma.com/entities/fu-shou-yuan-international" target="_blank" data-smartkarma-citation="entities:18168:1" rel="noopener">Fu Shou Yuan International (1448 HK)</a> (FSY) is one of the largest funeral home companies worldwide with revenue of US$289mn in 2020.
China has high entry barriers for the death care industry as local governments enforce licensing caps. Coupled with a shortage of burial space, an increasing wealthy portion of the population, and the social stigma attached to the business, FSY enjoys high margins amid a relatively inelastic demand.
Shares are down 12% from the recent high in May. A sound investment or is this dead money?

Headquartered in Shanghai, Fu Shou Yuan International (1448 HK) (FSY) is one of the largest funeral home companies worldwide with revenue of US$289mn in 2020.
China has high entry barriers for the death care industry as local governments enforce licensing caps. Coupled with a shortage of burial space, an increasing wealthy portion of the population, and the social stigma attached to the business, FSY enjoys high margins amid a relatively inelastic demand.
Shares are down 12% from the recent high in May. A sound investment or is this dead money?

Fu Shou Yuan (1448 HK): No Stiff Competition

Last week, the founder and Chairman of <a href="https://www.smartkarma.com/entities/eps-holdings-inc" target="_blank" data-smartkarma-citation="entities:13246:1" rel="noopener">EPS Holdings (4282 JP)</a> announced an MBO to take the company private. In <a href="https://www.smartkarma.com/insights/another-too-cheap-mbo-as-founder-takes-out-eps" target="_blank" data-smartkarma-citation="insights:52208" rel="noopener">Another Too-Cheap MBO as Founder Takes Out EPS</a> I discussed the details of the MBO and Tender Offer and noted that it was "too cheap."The stock traded briefly through terms at the open of trading on Monday 31 May - the first day it could trade freely post-announcement. Today, it traded briefly through terms on a spike, settled back, and then rose into the close, as the two-day 5-minute chart below shows. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/210/483/original/Screenshot+2021-06-01+at+6.43.23+PM.png?1622544595" class="editor-image img-responsive" data-smartkarma-image-id="210483"></figure></section>Separately, I heard that there was some talk of "a higher price."I do not have the full story or the content but one has to be careful of the details.

Last week, the founder and Chairman of EPS Holdings (4282 JP) announced an MBO to take the company private. In Another Too-Cheap MBO as Founder Takes Out EPS I discussed the details of the MBO and Tender Offer and noted that it was "too cheap."The stock traded briefly through terms at the open of trading on Monday 31 May - the first day it could trade freely post-announcement. Today, it traded briefly through terms on a spike, settled back, and then rose into the close, as the two-day 5-minute chart below shows. Separately, I heard that there was some talk of "a higher price."I do not have the full story or the content but one has to be careful of the details.

EPS MBO Is Cheap. Too Cheap. But Be Careful Of Your Assumptions

<a href="https://www.smartkarma.com/entities/shoko-co-ltd" target="_blank" data-smartkarma-citation="entities:1167:1" rel="noopener">Shoko Co Ltd (8090 JP)</a> is a trading company which deals in fertilizers and chemicals and is the consolidated subsidiary of <a href="https://www.smartkarma.com/entities/showa-denko-k-k" target="_blank" data-smartkarma-citation="entities:1496:1" rel="noopener">Showa Denko K.K. (4004 JP)</a>. Shoko is undergoing a transformation/restructuring as part of its Swing-by Mid-Term Management Plan (is any Japanese company ever NOT going through some kind of transformative effort?).
This is an LBO of sorts, done with the agreement of Showa Denko, which after its purchase of the Hitachi Chemicals business almost a year ago has better things to do.
It is being taken over by a PE project fund, and Showa Denko is keeping 15% and involving itself with a shareholder agreement and involvement on choosing directors going forward. 
The deal requires only 51.8% of shares out, of which Showa Denko provides 29%. It needs 22% of the other 56% outstanding. It basically all has to come from domestic passive, some small measure of crossholders, and retail. Foreigners own almost nothing. 
But this, like many other deals, is being done at the wrong price. The TOB price is at a tiny premium, and the effective Adjusted EV/EBITDA multiple (EV adjusted for securities holdings and net receivables) is too low.
More below the fold.

Shoko Co Ltd (8090 JP) is a trading company which deals in fertilizers and chemicals and is the consolidated subsidiary of Showa Denko K.K. (4004 JP). Shoko is undergoing a transformation/restructuring as part of its Swing-by Mid-Term Management Plan (is any Japanese company ever NOT going through some kind of transformative effort?).
This is an LBO of sorts, done with the agreement of Showa Denko, which after its purchase of the Hitachi Chemicals business almost a year ago has better things to do.
It is being taken over by a PE project fund, and Showa Denko is keeping 15% and involving itself with a shareholder agreement and involvement on choosing directors going forward. 
The deal requires only 51.8% of shares out, of which Showa Denko provides 29%. It needs 22% of the other 56% outstanding. It basically all has to come from domestic passive, some small measure of crossholders, and retail. Foreigners own almost nothing. 
But this, like many other deals, is being done at the wrong price. The TOB price is at a tiny premium, and the effective Adjusted EV/EBITDA multiple (EV adjusted for securities holdings and net receivables) is too low.
More below the fold. 

Shoko (8090 JP) Tender Offer - Showa Denko Sells Too Cheap. Looks Bumpity.

Japan

KOSAIDO Co., Ltd. provides commercial printing services.  The Company also develops and markets computer software and provides information processing systems.

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Kosaido (7868 JP)

Infroneer (5076 JP) Tender Offer for Toyo Construction (1890 JP) Could Get Funky

Infroneer Holdings - the former Maeda Corp/Maeda Road grouping - has launched a Tender to take out minorities in Toyo Construction at a 15-year...

Travis Lundy

Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later

The Katakura MBO looks like it will not get a bump to its too-light price despite a large holder having bought shares 9.3% through terms. That...

Travis Lundy

Fu Shou Yuan (1448 HK): No Stiff Competition

Fu Shou Yuan is an attractive business: the largest player in China, high margins, high entry barriers, and relatively low capex needs. One to buy...

David Blennerhassett

EPS MBO Is Cheap. Too Cheap. But Be Careful Of Your Assumptions

The EPS Holding (8242 JP) MBO is too cheap. Lots too cheap. But it is NOT because management asked for JPY 2100/share. There are good reasons for...

Travis Lundy

Shoko (8090 JP) Tender Offer - Showa Denko Sells Too Cheap. Looks Bumpity.

Showa Denko is selling its fertiliser/trading co subsidiary Shoko (8090) to a PE fund. The fund is buying it cheap. REALLY cheap. And a small...

Travis Lundy

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