Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>Japan-Based advertising/marketing services company <a href="https://www.smartkarma.com/entities/hakuhodo-dy-holdings-inc" target="_blank" data-smartkarma-citation="entities:8736:1" rel="noopener">Hakuhodo Dy Holdings (2433 JP)</a> launched a Tender Offer to acquire all the shares in small-cap digital marketing company <a href="https://www.smartkarma.com/entities/soldout-inc" target="_blank" data-smartkarma-citation="entities:35570:1" rel="noopener">SoldOut (6553 JP)</a> on 9th February 2022.</li>
<li>The TOB Price is ¥1,809 per share in cash which translates to an implied market capitalization of ¥19.5bn (~US$170mn) for the Target company - a 101% premium to previous close.</li>
<li>The Tender Offer has a minimum acceptance condition and is expected to be completed in March 2022. Below is a closer look at the Deal Details.</li>
</ul>


Japan-Based advertising/marketing services company Hakuhodo Dy Holdings (2433 JP) launched a Tender Offer to acquire all the shares in small-cap digital marketing company SoldOut (6553 JP) on 9th February 2022.
The TOB Price is ¥1,809 per share in cash which translates to an implied market capitalization of ¥19.5bn (~US$170mn) for the Target company - a 101% premium to previous close.
The Tender Offer has a minimum acceptance condition and is expected to be completed in March 2022. Below is a closer look at the Deal Details.


High Premium Hakuhodo DY TOB for SoldOut (6553 JP) - Could Be a Catalyst for Digital Holding (2389)

Japanese news, equities, and trends, Teddy Letter

Teddy Okuyama

Japanese news, equities, and trends

Teddy Letter

We aim to fill the information gap on the Japan market, especially on small cap companies with little or no analyst coverage. While brokerages and sponsored research provide useful information, there is still an information divide between domestic and foreign investors. We aim to fill that gap by providing access to insights that are lost in translation.

Equity Bottom-Up

This is installment #6 of my 200-day challenge to do write-ups on 200 Japanese small caps, at the end of which I plan to publish a book (tentative title: Japan Small Caps Handbook). I’m writing these unedited versions in a stream of consciousness style, and they will be refined before being finalized later on.

This is installment #6 of my 200-day challenge to do write-ups on 200 Japanese small caps, at the end of which I plan to publish a book (tentative title: Japan Small Caps Handbook). I’m writing these unedited versions in a stream of consciousness style, and they will be refined before being finalized later on.

'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. 

Thematic (Sector/Industry)

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/132/original/2019-03-25_18-58-11.png?1553507902" class="editor-image img-responsive" data-smartkarma-image-id="83132"></figure>Source: Japan Analytics
</div>There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">S</a><a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">oftbank Group (9984 JP)</a>) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/206/original/2019-03-25_17-46-58.png?1553565764" class="editor-image img-responsive" data-smartkarma-image-id="83206"></figure><div class="content-caption">Source: Japan Analytics</div>OVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'.


Source: Japan Analytics
There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including Softbank Group (9984 JP)) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •Source: Japan AnalyticsOVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - Softbank Group (9984 JP)'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'. 

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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 Capital Markets

Raksul (ラクスル) can be read in Japanese as "to make easy", and within the printing and delivery markets, that is precisely what the company aims to do. Raksul's main business is an EC site that connects small lot printing customers with SME print shops. In addition, as the company's customers include a large number of SMEs, additional marketing services such as advertising through the distribution of flyers are offered. Finally, the company also offers an EC service for package delivery, once again targeting SMEs owning less than twenty trucks, as suppliers.<div class="content-caption">Basic Information</div><table class="table table-striped"><tbody><tr><td>Company Name</td><td>Raksul Inc.</td></tr><tr><td>Company Ticker</td><td>4382</td></tr><tr><td>Stock Exchange</td><td>TSE Mothers Section</td></tr><tr><td>Business Description</td><td>Discount net printing and delivery</td></tr><tr><td>Unit Size</td><td>100</td></tr><tr><td>New Shares Offered</td><td>2,500,000</td></tr><tr><td>Existing Shares Offered</td><td>8,449,900</td></tr><tr><td>Overallotment (Existing Shares)</td><td>1,642,100</td></tr><tr><td>Total Shares Offered</td><td>12,592,000</td></tr><tr><td>Tentative Price</td><td>1,300-1,500</td></tr><tr><td>Estimated Capital to be Raised (JPY)</td><td>3,500,000,000</td></tr><tr><td>Pricing Date</td><td>23rd May</td></tr><tr><td>Bookbuilding</td><td>16th May -  22nd May</td></tr><tr><td>Application Dates</td><td>24th May - 29th May</td></tr><tr><td>Listing Date</td><td>31st May</td></tr><tr><td>Shares Outstanding at Listing</td><td>29,349,800</td></tr><tr><td>Estimated Market Capitalisation (JPY)</td><td>41,089,000,000</td></tr></tbody></table><div style="text-align: left;" class="content-caption">Source: Company Disclosures, LightStream Research</div><div class="content-caption">Underwriters</div><table class="table table-striped"><tbody><tr><td>　</td><td>Broker</td></tr><tr><td rowspan="3">Lead Underwriters</td><td>Daiwa Securities</td></tr><tr><td>MUFG Morgan Stanley  Securities</td></tr><tr><td>Mizuho Securities</td></tr><tr><td rowspan="4">Underwriters</td><td>SBI Securities</td></tr><tr><td>SMBC Nikko Securities</td></tr><tr><td>Monex Securities</td></tr><tr><td>Kabu.com Securities</td></tr></tbody></table><div style="text-align: left;" class="content-caption">Source: Company Disclosures, LightStream Research</div>

Raksul (ラクスル) can be read in Japanese as "to make easy", and within the printing and delivery markets, that is precisely what the company aims to do. Raksul's main business is an EC site that connects small lot printing customers with SME print shops. In addition, as the company's customers include a large number of SMEs, additional marketing services such as advertising through the distribution of flyers are offered. Finally, the company also offers an EC service for package delivery, once again targeting SMEs owning less than twenty trucks, as suppliers.Basic InformationCompany NameRaksul Inc.Company Ticker4382Stock ExchangeTSE Mothers SectionBusiness DescriptionDiscount net printing and deliveryUnit Size100New Shares Offered2,500,000Existing Shares Offered8,449,900Overallotment (Existing Shares)1,642,100Total Shares Offered12,592,000Tentative Price1,300-1,500Estimated Capital to be Raised (JPY)3,500,000,000Pricing Date23rd MayBookbuilding16th May -  22nd MayApplication Dates24th May - 29th MayListing Date31st MayShares Outstanding at Listing29,349,800Estimated Market Capitalisation (JPY)41,089,000,000Source: Company Disclosures, LightStream ResearchUnderwriters　BrokerLead UnderwritersDaiwa SecuritiesMUFG Morgan Stanley  SecuritiesMizuho SecuritiesUnderwritersSBI SecuritiesSMBC Nikko SecuritiesMonex SecuritiesKabu.com SecuritiesSource: Company Disclosures, LightStream Research

Raksul IPO: Under the Radar, Shouldn't Be, but Too Expensive to Get Excited Immediately

Japan

Digital Holdings, Inc. operates as an internet advertising agency. The Company provides internet advertising, digital marketing, and other related services for local small and medium-size enterprises. Digital Holdings also offers venture investment, information gathering, and digital shift support education services.

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Digital Holdings Inc (2389 JP)

High Premium Hakuhodo DY TOB for SoldOut (6553 JP) - Could Be a Catalyst for Digital Holding (2389)

Hakuhodo launched a ~US170mn Tender Offer to acquire SoldOut. This looks like a done deal and could be a catalyst for SoldOut's current parent...

Janaghan Jeyakumar, CFA

Day 6: Fringe81 (6550)

This is installment #6 of my 200-day challenge to do write-ups on 200 Japanese small caps, at the end of which I plan to publish a book (tentative...

Teddy Okuyama

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33...

Campbell Gunn

Raksul IPO: Under the Radar, Shouldn't Be, but Too Expensive to Get Excited Immediately

Raksul (ラクスル) can be read in Japanese as "to make easy", and within the printing and delivery markets, that is precisely what the company aims to...

Mio Kato

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