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.

Equity Capital Markets

Renesas Electronics / Equity Capital Markets

<div>
Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/renesas-placement-very-well-flagged-past-deals-have-done-well-but-large-size-warrants-correction" target="_blank" rel="noopener">Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.</a>
In this note, I'll talk about the updates since then.
</div>


Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.
In this note, I'll talk about the updates since then.


Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> has seen a flurry of profit-taking in the past two weeks since it dramatically repurchased 30% of its shares outstanding in an overnight trade.The shares now trade lower than they did the moment before the announcement. <a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life Insurance (8750 JP)</a> is probably JPI's closest listed peer, and it is up 8.8% in the same period. I would say that the stock and its holders are conspiring against me but that is not how things work.Lots of discussion below the fold - index treatment, overhang, PBR accretion, and more.

Japan Post Insurance (7181 JP) has seen a flurry of profit-taking in the past two weeks since it dramatically repurchased 30% of its shares outstanding in an overnight trade.The shares now trade lower than they did the moment before the announcement. Dai Ichi Life Insurance (8750 JP) is probably JPI's closest listed peer, and it is up 8.8% in the same period. I would say that the stock and its holders are conspiring against me but that is not how things work.Lots of discussion below the fold - index treatment, overhang, PBR accretion, and more.

Japan Post Insurance - A Surprising Selloff But Still A Buy

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Rakuten is playing catch up with Amazon in logistics and this is the primary driver behind its new collaboration with Japan Post.
The two companies will set up a new joint business in July to cover the country in new, efficient fulfilment centres. 
As a result, Rakuten will be able to save substantially on capital investment in its own logistics network, particularly the most expensive part of that: the last mile network Rakuten Express, which will now be cancelled in favour of partner services centred on Japan Post.
This will allow Rakuten to focus logistics investment on full coverage at the national level.
Rakuten is growing faster than Z Holding's in e-commerce, including in 1Q2021 and looks set to continue to do so, with the new logistics platform a key part of this, ensuring consumers receive the kind of fulfilment speed and consistency normally only associated with Amazon Japan.

Rakuten is playing catch up with Amazon in logistics and this is the primary driver behind its new collaboration with Japan Post.
The two companies will set up a new joint business in July to cover the country in new, efficient fulfilment centres. 
As a result, Rakuten will be able to save substantially on capital investment in its own logistics network, particularly the most expensive part of that: the last mile network Rakuten Express, which will now be cancelled in favour of partner services centred on Japan Post.
This will allow Rakuten to focus logistics investment on full coverage at the national level.
Rakuten is growing faster than Z Holding's in e-commerce, including in 1Q2021 and looks set to continue to do so, with the new logistics platform a key part of this, ensuring consumers receive the kind of fulfilment speed and consistency normally only associated with Amazon Japan.

Rakuten Ramps up Logistics to Increase Lead in E-Commerce

Event-Driven

In mid-December 2020, there were news reports which suddenly circulated suggesting <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> was planning to buy ¥300bn of its own shares, with the goal of making sure that <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a>'s ownership dropped below 50%.This was discussed that day in <a href="https://www.smartkarma.com/insights/huge-japan-post-insurance-buyback-mooted-decks-cleared-time-to-buy" target="_blank" data-smartkarma-citation="insights:46429" rel="noopener">Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy</a> and re-upped three weeks later in <a href="https://www.smartkarma.com/insights/japan-post-insurance-update-three-reasons-to-buy-any-overhang-slightly-higher" target="_blank" data-smartkarma-citation="insights:46862" rel="noopener">Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher</a> just before the TOPIX FFW announcement. Things have been quiet since then, but the Company has steadily made progress ticking off the matters which were part of the company's corrective action plan after the sales scandal of 2019-2020. Getting these things finalised effectively "proves" that the company is ready to be let loose of its parent company, but importantly, the corrective action plan was couched in terms that basically said the only good way forward was to have a better and more comprehensive product suite, which would require being free of the burdens of the "Approval System."<div class="content-remarks">
In November of 2020, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> ("JPH") CEO Masuda publicly described a JPH plan to lower its stake in <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> ("JPI") and <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a> ("JPB") to below 50% in the five year period to 2025.
In late April 2021, the government Panel on Postal Service Privatization (<a href="https://www.yuseimineika.go.jp/iinkai.html" target="_blank" rel="noopener">link</a>) submitted a report (Japanese only (<a href="https://www.yuseimineika.go.jp/iinkai/dai230/230_iken.pdf" target="_blank" rel="noopener">link1</a>, <a href="https://www.yuseimineika.go.jp/iinkai/dai230/230_iken_gaiyo.pdf" target="_blank" rel="noopener">link2</a>)) to Prime Minister Suga which urged <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> to lower its equity stakes in its two financial units - <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> and <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a> to or below 50 pct between fiscal 2021 and fiscal 2025. It also asked the JPH to make a plan to sell ALL of its shares in the subsidiaries.
</div><h2>The NEW News</h2>Today, with full-year earnings, Japan Post Insurance announced a buyback of up to 162,906,300 shares (29.0%) spending up to ¥439.8bn. This will be done in a ToSTNeT-3 transaction Monday morning. Japan Post Holdings announced they would sell a similar number of shares into the buy order, and would sell an additional 400,000 shares held in a trust. By so doing, the percentage of Japan Post Insurance voting rights held by Japan Post Holdings would drop to 49.90%. That's it. A HUGELY accretive buyback leads to a huge business opportunity for a hugely undervalued life insurer (about to become substantially more undervalued on Price/EEV terms) which has been handcuffed for its whole existence. What more do you want?

In mid-December 2020, there were news reports which suddenly circulated suggesting Japan Post Insurance (7181 JP) was planning to buy ¥300bn of its own shares, with the goal of making sure that Japan Post Holdings (6178 JP)'s ownership dropped below 50%.This was discussed that day in Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy and re-upped three weeks later in Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher just before the TOPIX FFW announcement. Things have been quiet since then, but the Company has steadily made progress ticking off the matters which were part of the company's corrective action plan after the sales scandal of 2019-2020. Getting these things finalised effectively "proves" that the company is ready to be let loose of its parent company, but importantly, the corrective action plan was couched in terms that basically said the only good way forward was to have a better and more comprehensive product suite, which would require being free of the burdens of the "Approval System."
In November of 2020, Japan Post Holdings (6178 JP) ("JPH") CEO Masuda publicly described a JPH plan to lower its stake in Japan Post Insurance (7181 JP) ("JPI") and Japan Post Bank (7182 JP) ("JPB") to below 50% in the five year period to 2025.
In late April 2021, the government Panel on Postal Service Privatization (link) submitted a report (Japanese only (link1, link2)) to Prime Minister Suga which urged Japan Post Holdings (6178 JP) to lower its equity stakes in its two financial units - Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP) to or below 50 pct between fiscal 2021 and fiscal 2025. It also asked the JPH to make a plan to sell ALL of its shares in the subsidiaries.
The NEW NewsToday, with full-year earnings, Japan Post Insurance announced a buyback of up to 162,906,300 shares (29.0%) spending up to ¥439.8bn. This will be done in a ToSTNeT-3 transaction Monday morning. Japan Post Holdings announced they would sell a similar number of shares into the buy order, and would sell an additional 400,000 shares held in a trust. By so doing, the percentage of Japan Post Insurance voting rights held by Japan Post Holdings would drop to 49.90%. That's it. A HUGELY accretive buyback leads to a huge business opportunity for a hugely undervalued life insurer (about to become substantially more undervalued on Price/EEV terms) which has been handcuffed for its whole existence. What more do you want?

Japan Post Insurance - It's ON! Buyback, Huge Accretion, Restrictions Lifted. What's Not To Like?

In summer of 2016, I warned on Smartkarma that the BOJ was going to have to shift its ETF buy basket away from Nikkei 225. It did so in late 2016. I warned again in early 2018 that it was going to get worse, and suggested a revision to the Nikkei 225 Average methodology in <a href="https://www.smartkarma.com/insights/the-boj-s-ongoing-etf-impact-is-a-nikkei-225-reshuffle-in-the-cards" target="_blank" data-smartkarma-citation="insights:17331" rel="noopener">The BOJ's Ongoing ETF Impact - Is a Nikkei 225 Reshuffle in the Cards?</a> (followed by <a href="https://www.smartkarma.com/insights/japan-passive-boj-heading-for-trouble-with-nikkei-225" target="_blank" data-smartkarma-citation="insights:21980" rel="noopener">JAPAN PASSIVE:  BOJ Heading For Trouble with Nikkei 225</a>) whereby there would be a deemed minimum shares outstanding quantity so that Deemed Minimum Shares Out / Shares out multiplied by Existing Deemed Par Value would become NEW Deemed Par Value.
This would mean that some names would see lower weights, but on the whole, the Nikkei 225 basket would be much more liquid. 
Nothing was done. The BOJ again lowered its use of Nikkei 225 ETFs, then recently finally stopped using the average altogether. 
The Nikkei 225 had been made largely irrelevant by the Nikkei's refusal to adapt to the times.
<h2>The NEW News</h2>
Today after the close, the Nikkei Index Team announced the first proposed revision to the methodology of the Nikkei 225 Average in twenty years, and a consultation over the next five weeks. Because the concept of Par Value is no longer used in Japan in the Companies Act, it would get rid of the "Presumed Par Value" or "Deemed Par Value" for members and potential members of the Average, and replace it with a Price Adjustment Factor ("PAF") which is an inverse multiplier of the Deemed Par Value. 
In short.... it would do nothing to the index and its constituents as they stand today.
And new additions would be assigned a PAF which would presumably be related to their previously understood Deemed Par Value. But in any case, new constituents would be capped at 1% weightings so would see their Price Adjustment Factor.... adjusted. 
There are other changes proposed which change the rebalancing possibilities, and there is a note that the Average would only include members of TSE Prime (such that existing TSE1 and Nikkei 225 members which chose not to become members of TSE Prime would find themselves booted from the Nikkei 225. 
This is highly disappointing. A 20-year review could have been so much more interesting and the Nikkei could have rescued itself from effective oblivion. Alas, this misses the mark, by a wide margin. 
But details are details so we look at them below.

In summer of 2016, I warned on Smartkarma that the BOJ was going to have to shift its ETF buy basket away from Nikkei 225. It did so in late 2016. I warned again in early 2018 that it was going to get worse, and suggested a revision to the Nikkei 225 Average methodology in The BOJ's Ongoing ETF Impact - Is a Nikkei 225 Reshuffle in the Cards? (followed by JAPAN PASSIVE:  BOJ Heading For Trouble with Nikkei 225) whereby there would be a deemed minimum shares outstanding quantity so that Deemed Minimum Shares Out / Shares out multiplied by Existing Deemed Par Value would become NEW Deemed Par Value.
This would mean that some names would see lower weights, but on the whole, the Nikkei 225 basket would be much more liquid. 
Nothing was done. The BOJ again lowered its use of Nikkei 225 ETFs, then recently finally stopped using the average altogether. 
The Nikkei 225 had been made largely irrelevant by the Nikkei's refusal to adapt to the times.
The NEW News
Today after the close, the Nikkei Index Team announced the first proposed revision to the methodology of the Nikkei 225 Average in twenty years, and a consultation over the next five weeks. Because the concept of Par Value is no longer used in Japan in the Companies Act, it would get rid of the "Presumed Par Value" or "Deemed Par Value" for members and potential members of the Average, and replace it with a Price Adjustment Factor ("PAF") which is an inverse multiplier of the Deemed Par Value. 
In short.... it would do nothing to the index and its constituents as they stand today.
And new additions would be assigned a PAF which would presumably be related to their previously understood Deemed Par Value. But in any case, new constituents would be capped at 1% weightings so would see their Price Adjustment Factor.... adjusted. 
There are other changes proposed which change the rebalancing possibilities, and there is a note that the Average would only include members of TSE Prime (such that existing TSE1 and Nikkei 225 members which chose not to become members of TSE Prime would find themselves booted from the Nikkei 225. 
This is highly disappointing. A 20-year review could have been so much more interesting and the Nikkei could have rescued itself from effective oblivion. Alas, this misses the mark, by a wide margin. 
But details are details so we look at them below. 

After 20yrs, Nikkei 225 Proposes Minor Impact Rule Changes (Nintendo Disappointment?)

Japan

Japan Post Holdings Co. Ltd. operates post stations, banks, and insurance business. The Company offers letters and goods transportation services, stamp sales, deposits, loans, and insurance products.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Japan Post Holdings (6178 JP)

Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

Renesas and INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our...

Sumeet Singh

Japan Post Insurance - A Surprising Selloff But Still A Buy

Japan Post Insurance has bought back 29% of its shares and EPS, book value, and EEV accretion is immense, but the shares have underperformed rival...

Travis Lundy

Rakuten Ramps up Logistics to Increase Lead in E-Commerce

Rakuten's lead in e-commerce is strengthening against Z Holdings and its deal with Japan Post will ensure it is far, far ahead on fulfilment...

Michael Causton

Japan Post Insurance - It's ON! Buyback, Huge Accretion, Restrictions Lifted. What's Not To Like?

Japan Post Insurance has announced a 29% buyback, the JPH selldown, the imminent end to Postal Privatization Act restrictions. And it can get some...

Travis Lundy

After 20yrs, Nikkei 225 Proposes Minor Impact Rule Changes (Nintendo Disappointment?)

TWENTY YEARS after its last major index methodology review, the Nikkei has proposed changes to the Nikkei 225. Existing constituents are not...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)