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

Japan Post Insurance / Equity Capital Markets

Yesterday, post-market close, <a href="https://www.smartkarma.com/entities/359" target="_blank" data-smartkarma-citation="entities:359:1">Japan Post Holdings (6178 JP)</a>(JPH) announced that it will sell 185m shares (including over-allotment) or 30.8% of <a href="https://www.smartkarma.com/entities/840" target="_blank" data-smartkarma-citation="entities:840:1">Japan Post Insurance (7181 JP)</a>(JPI) amounting to US$4bn. JPI plans to buy back up to 50m shares out of these, leaving around US$3.1bn worth of stock to be placed. Out of these 185m shares, 30% will be placed with foreigners.
The selldown is part of the government's plan for privatization under which JPH is supposed to reduce its stake in JPI and <a href="https://www.smartkarma.com/entities/838" target="_blank" data-smartkarma-citation="entities:838:1">Japan Post Bank (7182 JP)</a>(JPB) to around 50%. This was highlighted in the IPO of the three entities in 2015. Thus, the deal is not totally unexpected but the timing of it was never certain. For people interested in more about the history and background, we've covered the IPO and JPH sell down in the below series of insights:
<ul>
<li>All three IPOs: <a href="https://www.smartkarma.com/insights/when-the-bank-is-cheap-and-holdco-discount-makes-the-mothership-cheaper-then-who-needs-insurance" target="_blank">When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?</a>
</li>
<li>JPI IPO: <a href="https://www.smartkarma.com/insights/three-s-a-crowd-a-minnow-amongst-giants-risks-getting-lost-in-the-chatter" target="_blank">Three’s a crowd - A minnow amongst giants risks getting lost in the chatter</a>
</li>
<li>JPB IPO: <a href="https://www.smartkarma.com/insights/dividend-yield-looks-enticing-versus-jgbs-yield-while-risks-are-similar" target="_blank">Dividend yield looks enticing versus JGBs yield, while risks are similar</a>
</li>
<li>JPH IPO: <a href="https://www.smartkarma.com/insights/final-call-to-board-the-mothership-they-don-t-come-much-cheaper-than-this" target="_blank">Final call to board the mothership. They don’t come much cheaper than this.</a>
</li>
<li>JPH Placement: <a href="https://www.smartkarma.com/insights/japan-post-holdings-placement-similar-reasons-similar-price-will-probably-yield-similar-returns" target="_blank">Japan Post Holdings Placement - Similar Reasons, Similar Price Will Probably Yield Similar Returns</a>
</li>
</ul>
In this insight, I'll comment on some of the deal dynamics and index weighting impact.

Yesterday, post-market close, Japan Post Holdings (6178 JP)(JPH) announced that it will sell 185m shares (including over-allotment) or 30.8% of Japan Post Insurance (7181 JP)(JPI) amounting to US$4bn. JPI plans to buy back up to 50m shares out of these, leaving around US$3.1bn worth of stock to be placed. Out of these 185m shares, 30% will be placed with foreigners.
The selldown is part of the government's plan for privatization under which JPH is supposed to reduce its stake in JPI and Japan Post Bank (7182 JP)(JPB) to around 50%. This was highlighted in the IPO of the three entities in 2015. Thus, the deal is not totally unexpected but the timing of it was never certain. For people interested in more about the history and background, we've covered the IPO and JPH sell down in the below series of insights:

All three IPOs: When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?

JPI IPO: Three’s a crowd - A minnow amongst giants risks getting lost in the chatter

JPB IPO: Dividend yield looks enticing versus JGBs yield, while risks are similar

JPH IPO: Final call to board the mothership. They don’t come much cheaper than this.

JPH Placement: Japan Post Holdings Placement - Similar Reasons, Similar Price Will Probably Yield Similar Returns


In this insight, I'll comment on some of the deal dynamics and index weighting impact.

Japan Post Insurance Placement - 3x the IPO Size - Basics and Index Impact

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

We analyse the holdings of the world's largest banks by the 255 global equity funds in our analysis. For each region (America/EMEA/Asia), we have selected the 6 largest banks by total assets, as defined by the S&amp;P Global Market Intelligence Report, 2018.We find that overall, holdings in these banks are on the decline, and in some cases, investor flight has been acute.  Only 2 of the 18 banks are held overweight by global investors, with <a href="https://www.smartkarma.com/entities/279" target="_blank" data-smartkarma-citation="entities:279:1">Citigroup Inc (C US)</a> and <a href="https://www.smartkarma.com/entities/525" target="_blank" data-smartkarma-citation="entities:525:1">Bnp Paribas (BNP FP)</a> seeing the biggest exodus through 2018.

We analyse the holdings of the world's largest banks by the 255 global equity funds in our analysis. For each region (America/EMEA/Asia), we have selected the 6 largest banks by total assets, as defined by the S&amp;P Global Market Intelligence Report, 2018.We find that overall, holdings in these banks are on the decline, and in some cases, investor flight has been acute.  Only 2 of the 18 banks are held overweight by global investors, with Citigroup Inc (C US) and Bnp Paribas (BNP FP) seeing the biggest exodus through 2018.

Big Banks - A Crisis of Investor Confidence

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Based in Shimane Prefecture, in the Chugoku region of western Honshu, <a href="https://www.smartkarma.com/entities/6515" target="_blank" data-smartkarma-citation="entities:6515:1">San In Godo Bank (8381 JP)</a>  is unique among Japan’s 64 regional banks in being the Designated Financial Institution (DFI) for not just one but two prefectures: Shimane and neighbouring Tottori.  Long-considered a sleepy, conservatively-run bank from a backwater prefecture, San’In Godo Bank has quietly expanded its franchise over the last 20 years and now operates in seven prefectures including Hiroshima, Okayama and Hyogo prefectures in addition to its home market of Shimane and Tottori prefectures.
Trading on a PER of 10.6x (using the bank’s FY3/2019 guidance) and a PBR of 0.39x, the stock is inexpensive against the rest of the market but mid-priced against peers in a sub-sector that has for long seemed suspiciously underpriced. The stock is down just over 11% within the last six months, so has marginally outperformed against most other Japanese bank stocks in an otherwise difficult market, and may be forming a base at current levels.  For small-cap funds looking for exposure to the Japanese financial sector at a reasonable price, we believe this stock is worth considering.

Based in Shimane Prefecture, in the Chugoku region of western Honshu, San In Godo Bank (8381 JP)  is unique among Japan’s 64 regional banks in being the Designated Financial Institution (DFI) for not just one but two prefectures: Shimane and neighbouring Tottori.  Long-considered a sleepy, conservatively-run bank from a backwater prefecture, San’In Godo Bank has quietly expanded its franchise over the last 20 years and now operates in seven prefectures including Hiroshima, Okayama and Hyogo prefectures in addition to its home market of Shimane and Tottori prefectures.
Trading on a PER of 10.6x (using the bank’s FY3/2019 guidance) and a PBR of 0.39x, the stock is inexpensive against the rest of the market but mid-priced against peers in a sub-sector that has for long seemed suspiciously underpriced. The stock is down just over 11% within the last six months, so has marginally outperformed against most other Japanese bank stocks in an otherwise difficult market, and may be forming a base at current levels.  For small-cap funds looking for exposure to the Japanese financial sector at a reasonable price, we believe this stock is worth considering.

San'In Godo Bank (8381 JP): From Out of the Shadows

Interim results announced on Tuesday by <a href="https://www.smartkarma.com/entities/15777" target="_blank" data-smartkarma-citation="entities:15777:1">Gunma Bank (8334 JP)</a> beat the bank’s own guidance and suggest that an upward revision to guidance later in the year is a strong possibility.  The bank has left its full-year guidance unchanged, expecting consolidated net profits of ¥28.5 billion, or ¥66/share.  Having declared an interim dividend of ¥6/share, the bank is once again guiding for a slightly increased final dividend of ¥7/share, suggesting a dividend payout ratio of around 20%.  On a prospective PER (using the bank’s revised guidance) of 8.3x and a low PBR of 0.45x, the stock is attractive against peers.  Market reaction to the interim results was clearly positive, with the stock finishing today on ¥546, up 3.4%: the best-performing bank stock on a day of otherwise mixed bank stock performances, with all of the largest-cap bank stocks in negative territory.  Having fallen over 25% in the last 12 months and 9% in the last 3 months, the stock looks oversold at current levels and is evidently attracting investor attention.

Interim results announced on Tuesday by Gunma Bank (8334 JP) beat the bank’s own guidance and suggest that an upward revision to guidance later in the year is a strong possibility.  The bank has left its full-year guidance unchanged, expecting consolidated net profits of ¥28.5 billion, or ¥66/share.  Having declared an interim dividend of ¥6/share, the bank is once again guiding for a slightly increased final dividend of ¥7/share, suggesting a dividend payout ratio of around 20%.  On a prospective PER (using the bank’s revised guidance) of 8.3x and a low PBR of 0.45x, the stock is attractive against peers.  Market reaction to the interim results was clearly positive, with the stock finishing today on ¥546, up 3.4%: the best-performing bank stock on a day of otherwise mixed bank stock performances, with all of the largest-cap bank stocks in negative territory.  Having fallen over 25% in the last 12 months and 9% in the last 3 months, the stock looks oversold at current levels and is evidently attracting investor attention.

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/068/507/original/2018-11-02_10-20-29.png?1541121653" class="editor-image img-responsive" data-smartkarma-image-id="68507"></figure>Source: Japan Analytics
NB: companies are colour-coded by sector
</div>28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the evolution in the ranking of the leading non-financial Japanese companies by market capitalisation measured at the end of each of the last 28 years.METHODOLOGY - Our comments follow in the detail below, but first a few notes:-<ul>
<li>In the interests of clarity (/sanity?), financials have been omitted. Twelve of the Top 20-ranked companies in 1990 were financials. However, only <a href="https://www.smartkarma.com/entities/742" target="_blank" data-smartkarma-citation="entities:742:1">Nomura (8604 JP)</a>, <a href="https://www.smartkarma.com/entities/6483" target="_blank" data-smartkarma-citation="entities:6483:1">Aozora (8304 JP)</a> and <a href="https://www.smartkarma.com/entities/16897" target="_blank" data-smartkarma-citation="entities:16897:1">Shinsei (8303 JP)</a> have survived in their original corporate structure and have the same ticker code. Our chart would have otherwise have included the now-merged IBJ, Fuji Bank, Dai-Ichi Kangyo Bank, Mitsubishi Bank, Sakura Bank, Sumitomo Bank, Tokai Bank, Sanwa Bank and Mitsubishi Trust Bank.  Excluded from the present-day Top 20 are <a href="https://www.smartkarma.com/entities/218" target="_blank" data-smartkarma-citation="entities:218:1">Mitsubishi UFJ (8306 JP)</a>, <a href="https://www.smartkarma.com/entities/217" target="_blank" data-smartkarma-citation="entities:217:1">Sumitomo Mitsui Financial (8316 JP)</a>, <a href="https://www.smartkarma.com/entities/838" target="_blank" data-smartkarma-citation="entities:838:1">Japan Post Bank (7182 JP)</a>, <a href="https://www.smartkarma.com/entities/359" target="_blank" data-smartkarma-citation="entities:359:1">Japan Post Holdings (6178 JP)</a> and <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho Financial (8411 JP)</a> from the present day.</li>
<li>Only companies that were in the Top 20 in 1990 or 2018, as well as those companies that have been in the Top 10 for at least three of the last 28 years, have been included. </li>
<li>Two companies from 1990's Top 20 - Seibu Railway and Japan Airlines - have since been delisted. Although they have relisted as <a href="https://www.smartkarma.com/entities/458" target="_blank" data-smartkarma-citation="entities:458:1">Seibu Holdings (9024 JP)</a> and <a href="https://www.smartkarma.com/entities/1184" target="_blank" data-smartkarma-citation="entities:1184:1">Japan Airlines (9201 JP)</a>, they are no longer highly-ranked.</li>
<li>Seven current Top 20 companies - (<a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/1089" target="_blank" data-smartkarma-citation="entities:1089:1">NTT Docomo (9437 JP)</a>, <a href="https://www.smartkarma.com/entities/639" target="_blank" data-smartkarma-citation="entities:639:1">KDDI (9433 JP)</a>, <a href="https://www.smartkarma.com/entities/13498" target="_blank" data-smartkarma-citation="entities:13498:1">Japan Tobacco (2914 JP)</a>, <a href="https://www.smartkarma.com/entities/13520" target="_blank" data-smartkarma-citation="entities:13520:1">Central Japan Railway (9022 JP)</a>, <a href="https://www.smartkarma.com/entities/751" target="_blank" data-smartkarma-citation="entities:751:1">Fast Retailing (9983 JP)</a> and <a href="https://www.smartkarma.com/entities/15070" target="_blank" data-smartkarma-citation="entities:15070:1">Recruit (6098 JP)</a>)  - have listed during the last 28 years. </li>
</ul>THE 2050 RANKING?- Which of the current market leaders will still be in the Top 20 in 2050 in their current guise? For those still around to read this in 32 year's time, we would wager on just three - <a href="https://www.smartkarma.com/entities/3077" target="_blank" data-smartkarma-citation="entities:3077:1">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/73" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/563" target="_blank" data-smartkarma-citation="entities:563:1">Sony (6758 JP)</a>.


Source: Japan Analytics
NB: companies are colour-coded by sector
28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the evolution in the ranking of the leading non-financial Japanese companies by market capitalisation measured at the end of each of the last 28 years.METHODOLOGY - Our comments follow in the detail below, but first a few notes:-
In the interests of clarity (/sanity?), financials have been omitted. Twelve of the Top 20-ranked companies in 1990 were financials. However, only Nomura (8604 JP), Aozora (8304 JP) and Shinsei (8303 JP) have survived in their original corporate structure and have the same ticker code. Our chart would have otherwise have included the now-merged IBJ, Fuji Bank, Dai-Ichi Kangyo Bank, Mitsubishi Bank, Sakura Bank, Sumitomo Bank, Tokai Bank, Sanwa Bank and Mitsubishi Trust Bank.  Excluded from the present-day Top 20 are Mitsubishi UFJ (8306 JP), Sumitomo Mitsui Financial (8316 JP), Japan Post Bank (7182 JP), Japan Post Holdings (6178 JP) and Mizuho Financial (8411 JP) from the present day.
Only companies that were in the Top 20 in 1990 or 2018, as well as those companies that have been in the Top 10 for at least three of the last 28 years, have been included. 
Two companies from 1990's Top 20 - Seibu Railway and Japan Airlines - have since been delisted. Although they have relisted as Seibu Holdings (9024 JP) and Japan Airlines (9201 JP), they are no longer highly-ranked.
Seven current Top 20 companies - (Softbank (9984 JP), NTT Docomo (9437 JP), KDDI (9433 JP), Japan Tobacco (2914 JP), Central Japan Railway (9022 JP), Fast Retailing (9983 JP) and Recruit (6098 JP))  - have listed during the last 28 years. 
THE 2050 RANKING?- Which of the current market leaders will still be in the Top 20 in 2050 in their current guise? For those still around to read this in 32 year's time, we would wager on just three - Keyence (6861 JP), Toyota Motor (7203 JP) and Sony (6758 JP). 

Japan: The Evolution Of (Non-Financial) Market Leadership

Japan

Japan Post Bank Co. Ltd. provides general banking services. The Company offers deposits, savings, loans, currency exchange transactions, investment trusts, national bonds, and other related banking services to individuals and businesses. Japan Post Bank also provides other financial services such as insurance agency and financing service.

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Japan Post Bank (7182 JP)

Japan Post Insurance Placement - 3x the IPO Size - Basics and Index Impact

Yesterday, post-market close, Japan Post Holdings (6178 JP)(JPH) announced that it will sell 185m shares (including over-allotment) or 30.8% of...

Sumeet Singh

Big Banks - A Crisis of Investor Confidence

We analyse the holdings of the world's largest banks by the 255 global equity funds in our analysis. For each region (America/EMEA/Asia), we have...

Steven Holden

San'In Godo Bank (8381 JP): From Out of the Shadows

Based in Shimane Prefecture, in the Chugoku region of western Honshu, San In Godo Bank (8381 JP) is unique among Japan’s 64 regional banks in...

J. Brian Waterhouse

Gunma Bank (8334 JP): On the Right Track

Interim results announced on Tuesday by Gunma Bank (8334 JP) beat the bank’s own guidance and suggest that an upward revision to guidance later in...

J. Brian Waterhouse

Japan: The Evolution Of (Non-Financial) Market Leadership

28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the...

Campbell Gunn

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