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.

Event-Driven

<ul>
<li>A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.</li>
<li>ECM developments - <a href="https://www.smartkarma.com/entities/nexus-select-trust" target="_blank" data-smartkarma-citation="entities:36566:1" rel="noopener">Nexus Select Trust (NST IN)</a>, <a href="https://www.smartkarma.com/entities/tata-technologies" target="_blank" data-smartkarma-citation="entities:23700:1" rel="noopener">Tata Technologies (TATATECH IN)</a>, <a href="https://www.smartkarma.com/entities/adicon-holdings-limited" target="_blank" data-smartkarma-citation="entities:33786:1" rel="noopener">ADICON Holdings Limited (ADI HK)</a>, <a href="https://www.smartkarma.com/entities/horizon-construction-development" target="_blank" data-smartkarma-citation="entities:35117:1" rel="noopener">Horizon Construction Development (1887128D HK)</a> IPOs.</li>
<li>Event-Driven developments - <a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a>, <a href="https://www.smartkarma.com/entities/sbi-shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">SBI Shinsei Bank (8303 JP)</a>, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/hailan-holdings-ltd" target="_blank" data-smartkarma-citation="entities:39776:1" rel="noopener">Hailan Holdings (2278 HK)</a>, <a href="https://www.smartkarma.com/entities/inner-mongolia-yitai-coal-company-ltd" target="_blank" data-smartkarma-citation="entities:14904:1" rel="noopener">Inner Mongolia Yitai Coal Company Ltd (3948 HK)</a>, Allkem. </li>
</ul>


A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments - Nexus Select Trust (NST IN), Tata Technologies (TATATECH IN), ADICON Holdings Limited (ADI HK), Horizon Construction Development (1887128D HK) IPOs.
Event-Driven developments - ARTERIA Networks Corp (4423 JP), SBI Shinsei Bank (8303 JP), Toshiba Corp (6502 JP), Hailan Holdings (2278 HK), Inner Mongolia Yitai Coal Company Ltd (3948 HK), Allkem. 


Weekly Deals Digest (14 May) - Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sbi-shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">SBI Shinsei Bank (8303 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">SBI Holdings (8473 JP)</a>’s tender offer of JPY2,800 per share, a 12.6% premium to the undisturbed price (11 May).</li>
<li>There is no minimum acceptance condition. SBI and irrevocables from government entities represent 73.02% of voting rights, ensuring the implementation of tender squeeze-out procedures.</li>
<li>The special committee failed to unanimously recommend the offer. Minorities will feel short-changed as the outcome is predetermined and the offer tends to favour the government shareholders.</li>
</ul>



SBI Shinsei Bank (8303 JP) has recommended SBI Holdings (8473 JP)’s tender offer of JPY2,800 per share, a 12.6% premium to the undisturbed price (11 May).
There is no minimum acceptance condition. SBI and irrevocables from government entities represent 73.02% of voting rights, ensuring the implementation of tender squeeze-out procedures.
The special committee failed to unanimously recommend the offer. Minorities will feel short-changed as the outcome is predetermined and the offer tends to favour the government shareholders.


SBI Shinsei Bank (8303 JP): SBI’s Contentious JPY2,800 Tender Offer

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
Marubeni (8002 JP) and Secom (9735 JP)<a href="https://www.smartkarma.com/entities/secom-co-ltd" target="_blank" data-smartkarma-citation="entities:11405:1" rel="noopener"></a> today announced a Tender Offer to take private Marubeni's subsidiary <a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a> at a 54% premium to the close. </li>
<li>Listed 4.5yrs ago, the company hasn't grown hugely. Revenue growth is slow. EBITDA growth is flat. The takeout is 3.6x book, 7x estimated EBITDA, and about mid-teens PER. Without synergies.</li>
<li>The price is OK, not great. The Board rejected the final price because it was too low and didn't include synergies, then accepted because the bidders wouldn't go further? Hmmm...</li>
</ul>



Marubeni (8002 JP) and Secom (9735 JP) today announced a Tender Offer to take private Marubeni's subsidiary ARTERIA Networks Corp (4423 JP) at a 54% premium to the close. 
Listed 4.5yrs ago, the company hasn't grown hugely. Revenue growth is slow. EBITDA growth is flat. The takeout is 3.6x book, 7x estimated EBITDA, and about mid-teens PER. Without synergies.
The price is OK, not great. The Board rejected the final price because it was too low and didn't include synergies, then accepted because the bidders wouldn't go further? Hmmm...


Marubeni & Secom To Launch Tender Offer for Arteria Networks (4423)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/marubeni-corp" target="_blank" data-smartkarma-citation="entities:7463:1" rel="noopener">Marubeni Corp (8002 JP)</a> and <a href="https://www.smartkarma.com/entities/secom-co-ltd" target="_blank" data-smartkarma-citation="entities:11405:1" rel="noopener">Secom Co Ltd (9735 JP)</a>’s tender offer of JPY1,980 per share, a 54.1% premium to the undisturbed price.</li>
<li>The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 16.61% ownership ratio.</li>
<li>The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate. This is doable as the tender price is attractive. </li>
</ul>



ARTERIA Networks Corp (4423 JP) has recommended Marubeni Corp (8002 JP) and Secom Co Ltd (9735 JP)’s tender offer of JPY1,980 per share, a 54.1% premium to the undisturbed price.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 16.61% ownership ratio.
The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate. This is doable as the tender price is attractive. 


Arteria Networks (4423 JP): JPY1,980 Tender Offer from Marubeni and SECOM

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Our 2023 outlook, initially discussed in our January 6th 2023 Int'l Compass, was for $93 to cap upside on the MSCI ACWI (ACWI-US); this has again proven prescient.</li>
<li>Since late-January/early-February we have recommended shifting to defensives, and MSCI ACWI defensive Sectors including Health Care (IXJ-US), Utilities (JXI-US), and Consumer Staples (KXI-US) are now hitting 3-4-month RS highs.</li>
<li>With the ACWI-US just now starting to turn down after testing $93, we continue to recommend a tactical overweight to the aforementioned defensive Sectors, and also to gold miners (GDX-US).</li>
</ul>


Our 2023 outlook, initially discussed in our January 6th 2023 Int'l Compass, was for $93 to cap upside on the MSCI ACWI (ACWI-US); this has again proven prescient.
Since late-January/early-February we have recommended shifting to defensives, and MSCI ACWI defensive Sectors including Health Care (IXJ-US), Utilities (JXI-US), and Consumer Staples (KXI-US) are now hitting 3-4-month RS highs.
With the ACWI-US just now starting to turn down after testing $93, we continue to recommend a tactical overweight to the aforementioned defensive Sectors, and also to gold miners (GDX-US).


Stay Tactically Overweight Defensives; Remain Overweight Europe, Japan, & EAFE. Buys in Defensives

Japan

Sumitomo Corp is a general trading company.  The Company imports and exports a wide variety of goods such as metals, machinery, chemicals, fuel,food products, and textiles.  Sumitomo also operates real estate, construction, shipping, insurance, finance, and leasing businesses.

TOYOTA TSUSHO CORPORATION, a member of the Toyota Group, is a trading company. The Company markets automobiles, trucks, steel products, industrial machinery, chemical products, and energy in both domestic and overseas markets.  Toyota Tsusho primarily exports Toyota cars to Southeast Asia, China, the Middle East, and Latin America.

MonotaRO Co., Ltd. mainly sells machine tools, engine parts, and factory consumable goods on the web site.

Sojitz Corporation is a general trading company.  The Company has business divisions such as Machinery & Aerospace, Energy & Mineral Resources, Chemicals & Plastics, Real Estate Development & Forest Products, Consumer Lifestyle Business, and New Business Development Group.  Sojitz was formed through the business integration between Nichimen and Nissho Iwai.

MISUMI Group Inc. distributes precision machinery parts by mail order. The products include a variety of components such as press die, plastic mold, automated machinery, pc & network, and wiring.  The Company also sells supplies for factories, hospitals, and restaurants and semi-conductors by mail order.

IWATANI CORPORATION is a trading company supplying gases for industrial and household use.  The Company also handles fuel, consumer products, industrial materials, minerals, construction, agriculture, and medical products.  Iwatani produces liquid hydrogen with Mitsubishi Heavy Industries.

NAGASE & COMPANY, LTD. is a trading firm specializing in chemical products such as dyestuff, synthetic resins and rubber, and inorganic and organic chemicals.  The Company also handles electronics such as semiconductor manufacturing equipment and liquid crystal display (LCD) materials, as well as health care products such as cosmetics and medical equipment.

HANWA CO., LTD. wholesales, imports, and exports steel products, nonferrous metals, industrial machines, and food products.  The Company also handles chemical products, construction materials, and information equipment.  Hanwa has several subsidiaries and sales bases in the U.S. and around Asia.

INABA DENKI SANGYO CO., LTD. sells electric cables, plumbing products, and electronic equipment.  The Company's products include cables, electric switchboards, lighting equipment, sensors, and ducts.  Inaba Denki Sangyo also provides real estate management and data processing services.

KANEMATSU CORPORATION is a trading company handling textiles, fuel, chemicals, steel and housing construction materials, foodstuffs, and electronic equipment. The Company diversifies by operating a semiconductor-related IT (Information Technology) business.

Adani Enterprises Limited is an international trading house that operates from offices in India as well as other countries. The Company is involved in coal mining, cargo handling and power generation.  Adani also trades in a large number of products including textiles, energy, metals and agricultural products.

Reece Limited operates as a plumbing, building and hardware merchant throughout Australia.  The Company offers a variety of bathroom, kitchen and laundry products through its national stores and showrooms.  Reece's products are utilized by plumbers, consumers, architects, builders and interior designers.

United Rentals, Inc., through its subsidiary, is an equipment rental company operating a network of locations in the United States and Canada.  The Company serves the construction industry, industrial and commercial concerns, homeowners, and other individuals.

Fastenal Company sell industrial and construction supplies in a wholesale and retail fashion.  The Company markets its products and services throughout the United States, Canada, Mexico, Puerto Rico, Singapore, China, and The Netherlands.

Watsco, Inc. distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.  The Company operates various locations in the United States, with primary markets in the Sunbelt.

W.W. Grainger, Inc. distributes maintenance, repair and operating supplies, and related information to the commercial, industrial, contractor, and institutional markets in North America.  The Company's products include motors, HVAC equipment, lighting, hand and power tools, pumps, and electrical equipment.

Ashtead Group Plc is an international equipment rental company servicing customers nationwide in the US and the UK. The Company rents construction and industrial equipment. Ashtead generates approximately 85% of its revenue in the US through its subsidiary, Sunbelt Rentals with 388 locations across the US. The Group's UK business, A-Plant, has 106 locations nationwide.

Bunzl plc is a distribution group supplying a range of non-food consumable products for customers to operate their businesses but which they do not actually sell. The Company partners with both suppliers and customers in providing outsourcing solutions and service oriented distribution. Bunzl's main customer markets include grocery, foodservice, cleaning and safety.

Indutrade AB provides engineering and equipment, flow technology, industrial components, and special products.  The Company sells its products to industrial companies primarily in Northern Europe.

AerCap Holdings NV is the world's largest aircraft leasing firm by fleet value, and is listed on the New York Stock Exchange (AER). It has its headquarters in Dublin with offices in Amsterdam, Los Angeles, Shannon, Fort Lauderdale, Singapore, Shanghai, Abu Dhabi, Seattle and Toulouse.

Marubeni Corporation is a trading company with business divisions in iron & steel, information technology, utility & infrastructure, energy, food, metals & mineral resources, development & construction, and chemicals.  The Company markets its products globally through a network of sales offices and representative firms.

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Marubeni Corp (8002 JP)

Weekly Deals Digest (14 May) - Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction

Last week, notable developments occurred in Event-Driven (Arteria, Shinsei Bank, Toshiba, Allkem, St Barbara, Hailan, Yitai, Lian Beng) and ECM...

Arun George

SBI Shinsei Bank (8303 JP): SBI’s Contentious JPY2,800 Tender Offer

The special committee failed to unanimously recommend the offer. Minorities will feel short-changed as the outcome is predetermined and the offer...

Arun George

Marubeni & Secom To Launch Tender Offer for Arteria Networks (4423)

Marubeni and Secom will launch a tender to take Marubeni sub Arteria Networks private. The fact pattern on negotiations is worth reading. The price...

Travis Lundy

Arteria Networks (4423 JP): JPY1,980 Tender Offer from Marubeni and SECOM

The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate....

Arun George

Stay Tactically Overweight Defensives; Remain Overweight Europe, Japan, & EAFE. Buys in Defensives

$93 on $ACWI continues to be a key resistance that we have discussed since early-Jan as capping upside for 2023. Stick with defensives $IXJ $XLV...

Vermilion Research

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