IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Kokusai Electric  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> is a speciality manufacturer of semiconductor production equipment. <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; (KKR US)</a> seeks to raise about US$750 million through listing Kokusai.</li>
<li>In <em><strong><a href="https://www.smartkarma.com/insights/kokusai-electric-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:113787" rel="noopener">Kokusai Electric IPO: The Bull Case</a></strong></em>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend, increasing inventory days and deteriorating FCF.</li>
</ul>



Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR &amp; (KKR US) seeks to raise about US$750 million through listing Kokusai.
In Kokusai Electric IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend, increasing inventory days and deteriorating FCF.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> is a speciality manufacturer of semiconductor production equipment. <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; (KKR US)</a> seeks to raise about US$750 million through listing Kokusai.   </li>
<li>Kokusai has the leading market share in the batch deposition equipment market and the second largest market share in the treatment equipment market, according to TechInsights and Gartner.</li>
<li>The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service revenue, solid gross margin trends and modest leverage.</li>
</ul>



Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR &amp; (KKR US) seeks to raise about US$750 million through listing Kokusai.   
Kokusai has the leading market share in the batch deposition equipment market and the second largest market share in the treatment equipment market, according to TechInsights and Gartner.
The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service revenue, solid gross margin trends and modest leverage.


Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>After more than doubling between early April and the end of August, Disco has dropped back. The outlook for demand and valuations suggest potential downside of 20%. </li>
<li>Operating profit was down 21% YoY in the June quarter on a 10% decline in sales. Management is guiding for 18% and 32% declines this quarter. </li>
<li>Over-Optimistic expectations regarding the pace and degree of cyclical recovery are being squeezed out of the share price. </li>
</ul>


After more than doubling between early April and the end of August, Disco has dropped back. The outlook for demand and valuations suggest potential downside of 20%. 
Operating profit was down 21% YoY in the June quarter on a 10% decline in sales. Management is guiding for 18% and 32% declines this quarter. 
Over-Optimistic expectations regarding the pace and degree of cyclical recovery are being squeezed out of the share price. 


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>KKR is looking to raise around US$750m via selling a stake in <a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> (KE) in its Japan IPO.</li>
<li>KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.</li>
<li>In this note, we talk about the not-so-positive aspects of the deal.</li>
</ul>


KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In this note, we talk about the not-so-positive aspects of the deal.


Kokusai Electric Pre-IPO - The Negatives - Can't Avoid the Cycles

<ul>
<li>KKR is looking to raise around US$750m via selling a stake in <a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> (KE) in its Japan IPO.</li>
<li>KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.</li>
<li>In this note, we talk about the positive aspects of the deal.</li>
</ul>


KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In this note, we talk about the positive aspects of the deal.


Kokusai Electric Pre-IPO - The Positives - Well Established with High Market Share

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron (8035 JP)

Kokusai Electric IPO: The Bear Case

The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend,...

Arun George

Kokusai Electric IPO: The Bull Case

The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service...

Arun George

Disco (6146 JP): Rolling Over

After a steep run-up into falling sales and operating profit, over-optimism is being squeezed out of the share price. 20% downside risk on current...

Scott Foster

Kokusai Electric Pre-IPO - The Negatives - Can't Avoid the Cycles

KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO. In this note we talk about the not...

Sumeet Singh

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52-week Range

Market Cap (USDm)

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Kokusai Electric IPO: The Bear Case

The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend,...

Arun George

Kokusai Electric IPO: The Bull Case

The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service...

Arun George

Disco (6146 JP): Rolling Over

After a steep run-up into falling sales and operating profit, over-optimism is being squeezed out of the share price. 20% downside risk on current...

Scott Foster

Kokusai Electric Pre-IPO - The Negatives - Can't Avoid the Cycles

KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO. In this note we talk about the not...

Sumeet Singh

Kokusai Electric Pre-IPO - The Positives - Well Established with High Market Share

KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO. In this note we talk about the...

Sumeet Singh