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 <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>, 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.


Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Thematic (Sector/Industry)

<ul>
<li>The growth of China's semiconductor industry is inevitable and ever increasing sanctions on advanced semi supply chain components are adding fuel their self-sufficiency aspirations</li>
<li>Most Chinese semi stocks P/E ratios are sky high &amp; volatile to boot. Many US semi stocks have peaked as far as their exposure to China growth is concerned. </li>
<li>One sub-segment of the WFE sector may provide China semi growth exposure at reasonable valuation with relatively low risk. </li>
</ul>


The growth of China's semiconductor industry is inevitable and ever increasing sanctions on advanced semi supply chain components are adding fuel their self-sufficiency aspirations
Most Chinese semi stocks P/E ratios are sky high &amp; volatile to boot. Many US semi stocks have peaked as far as their exposure to China growth is concerned. 
One sub-segment of the WFE sector may provide China semi growth exposure at reasonable valuation with relatively low risk. 


China's Semi Mega Push Is Inevitable. But Is It Investable? Part 1.

<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/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a>'s large offering of <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>'s shares, <a href="https://www.smartkarma.com/entities/sbi-sumishin-net-bank" target="_blank" data-smartkarma-citation="entities:34572:1" rel="noopener">SBI Sumishin Net Bank (7163 JP)</a> aims to raise up to US$440 million. </li>
<li>Event-Driven developments - <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a>, <a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a>, <a href="https://www.smartkarma.com/entities/invocare-ltd" target="_blank" data-smartkarma-citation="entities:9044:1" rel="noopener">Invocare Ltd (IVC AU)</a>, <a href="https://www.smartkarma.com/entities/oishi-group-pcl" target="_blank" data-smartkarma-citation="entities:17370:1" rel="noopener">Oishi Group PCL (OISHI TB)</a>, <a href="https://www.smartkarma.com/entities/olam-group" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam Group (OLG SP)</a>, <a href="https://www.smartkarma.com/entities/halcyon-agri-corp-ltd" target="_blank" data-smartkarma-citation="entities:18191:1" rel="noopener">Halcyon Agri (HACL SP)</a>. </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 - Japan Post Holdings (6178 JP)'s large offering of Japan Post Bank (7182 JP)'s shares, SBI Sumishin Net Bank (7163 JP) aims to raise up to US$440 million. 
Event-Driven developments - ASM Pacific Technology (522 HK), Yashili International Holdings (1230 HK), Invocare Ltd (IVC AU), Oishi Group PCL (OISHI TB), Olam Group (OLG SP), Halcyon Agri (HACL SP). 


Weekly Deals Digest (12 Mar) - Japan Post Bank, SBI Sumishin, ASMPT, Oishi, InvoCare, Olam

Event-Driven

<ul>
<li>
<a href="https://www.bloomberg.com/news/articles/2023-03-10/chip-equipment-maker-asmpt-is-said-to-draw-takeover-interest" target="_blank" rel="noopener">Bloomberg reported</a> that PAG and other parties have expressed interest in taking <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a> private. PAG also sounded out several lenders.</li>
<li>ASMPT has three substantial shareholders (<a href="https://www.smartkarma.com/entities/asm-international-nv" target="_blank" data-smartkarma-citation="entities:21096:1" rel="noopener">Asm International Nv (ASM NA)</a>, FIL Limited and <a href="https://www.smartkarma.com/entities/schroders-plc" target="_blank" data-smartkarma-citation="entities:22134:1" rel="noopener">Schroders PLC (SDR LN)</a>) which suggests a requirement for a reasonable takeover premium.</li>
<li>ASMPT previously denied a privatisation rumour in 2020. Nevertheless, peers and historical multiples imply a fair price range of HK$82-97 per share, 11-31% premium to the last close.  </li>
</ul>



Bloomberg reported that PAG and other parties have expressed interest in taking ASM Pacific Technology (522 HK) private. PAG also sounded out several lenders.
ASMPT has three substantial shareholders (Asm International Nv (ASM NA), FIL Limited and Schroders PLC (SDR LN)) which suggests a requirement for a reasonable takeover premium.
ASMPT previously denied a privatisation rumour in 2020. Nevertheless, peers and historical multiples imply a fair price range of HK$82-97 per share, 11-31% premium to the last close.  


ASMPT (522 HK): PAG Potential Privatisation?

Hong Kong

ASM Pacific Technology Limited manufactures semiconductor back end equipment. The Company produces assembly equipment, packaging equipment, surface mount technology equipment, and other equipment. ASM Pacific Technology supplies its products in microelectronics, semiconductor, optoelectronics, and other fields.

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ASM Pacific Technology (522 HK)

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

China's Semi Mega Push Is Inevitable. But Is It Investable? Part 1.

Most Chinese semi stocks P/E ratios are sky high & volatile to boot. Many US semi stocks have peaked as far as their exposure to China growth. One...

William Keating

Weekly Deals Digest (12 Mar) - Japan Post Bank, SBI Sumishin, ASMPT, Oishi, InvoCare, Olam

Last week, notable developments occurred in Event-Driven (InvoCare, Pushpay, Tyro, ASMPT, Yashili, Ihara, Nippon Steel, Toyo, Halcyon, Olam,...

Arun George

ASMPT (522 HK): PAG Potential Privatisation?

Bloomberg reported that PAG and other parties have expressed interest in taking ASMPT private. Peers and historical multiples imply a fair price...

Arun George

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