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 href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> reports FY2022 results on 12 May. Since the announcement of Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share, there have been no progress updates. </li>
<li>The spread to the offer is currently 4.2%, suggesting a reasonable probability of success. However, the offer's success ultimately depends on shareholder backing, particularly from the activists on the register.</li>
<li>Shareholder support continues to pose a considerable risk as the peers have re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers.</li>
</ul>



Toshiba Corp (6502 JP) reports FY2022 results on 12 May. Since the announcement of Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share, there have been no progress updates. 
The spread to the offer is currently 4.2%, suggesting a reasonable probability of success. However, the offer's success ultimately depends on shareholder backing, particularly from the activists on the register.
Shareholder support continues to pose a considerable risk as the peers have re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers.


Toshiba (6502 JP): Tender Offer Risk/Reward

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Toshiba is trading at a 12-13% annualised return on the arb when using the expected Tender Offer Start Date proposed in the Takeover Announcement on 23 March 2023.</li>
<li>On Day 1-2 post-announcement, Toshiba traded at an 11-13% annualised spread. Since the announcement, a 12-name Peer Basket is up 11+% meaning Toshiba back end risk has shrunk.</li>
<li>Forward consensus EPS ratios have fallen, in part due to the shift forward one fiscal year by comps. We'll see where those lie in a week when earnings come.</li>
</ul>


Toshiba is trading at a 12-13% annualised return on the arb when using the expected Tender Offer Start Date proposed in the Takeover Announcement on 23 March 2023.
On Day 1-2 post-announcement, Toshiba traded at an 11-13% annualised spread. Since the announcement, a 12-name Peer Basket is up 11+% meaning Toshiba back end risk has shrunk.
Forward consensus EPS ratios have fallen, in part due to the shift forward one fiscal year by comps. We'll see where those lie in a week when earnings come.


Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX Rally continues with further Tech gains; White House call for tighter Bank regulations; Trump indicated for hush money payment;  US SEC seeking to ramp up Cryto oversight</li>
<li>JAPAN. NKY Futs +0.6% vs Cash; USDJPY 132.7; JP Equities to close quarter with &gt;6% gains; TSE ramps up rhetoric againsts low PBR stocks; GIC lifts JP investment; Citadel Back </li>
<li>NUGGET.  BayCurrent, - exploiting Japan's Digital and Salary Gaps. With inflation rising in Japan, we expect increased DX spending and more skilled IT professionals to join BayCurrent. We remain bullish.</li>
</ul>


OVERSEAS. SPX Rally continues with further Tech gains; White House call for tighter Bank regulations; Trump indicated for hush money payment;  US SEC seeking to ramp up Cryto oversight
JAPAN. NKY Futs +0.6% vs Cash; USDJPY 132.7; JP Equities to close quarter with &gt;6% gains; TSE ramps up rhetoric againsts low PBR stocks; GIC lifts JP investment; Citadel Back 
NUGGET.  BayCurrent, - exploiting Japan's Digital and Salary Gaps. With inflation rising in Japan, we expect increased DX spending and more skilled IT professionals to join BayCurrent. We remain bullish.


Good Morning Japan |Tech Bid; Trump Indicated; NUGGET: BayCurrent-Japan's Digital/Salary Gap Winner

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> announced a pre-conditional tender offer by Japan Industrial Partners (JIP), the preferred bidder at JPY4,620 per share, a 9.7% premium to the last close price.</li>
<li>The special committee opines that the offer is the best price that can be expected today, which sounds like we are recommending the offer as it is the only one.</li>
<li>The offer has several negatives: a 14% price reduction during the process, below the undisturbed price, below the mid-point IFA DCF range and no serious effort on Plan B. </li>
</ul>



Toshiba Corp (6502 JP) announced a pre-conditional tender offer by Japan Industrial Partners (JIP), the preferred bidder at JPY4,620 per share, a 9.7% premium to the last close price.
The special committee opines that the offer is the best price that can be expected today, which sounds like we are recommending the offer as it is the only one.
The offer has several negatives: a 14% price reduction during the process, below the undisturbed price, below the mid-point IFA DCF range and no serious effort on Plan B. 


Toshiba (6502 JP): JIP’s JPY4,620 Tender Offer, Now for the Really Hard Part

TSE Tokyo Price Index TOPIX / Event-Driven

<ul>
<li>Every year it's the same trade. But it isn't really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis - notably allocation.</li>
<li>But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.</li>
<li>And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.</li>
</ul>


Every year it's the same trade. But it isn't really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis - notably allocation.
But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.
And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.


The BIG March 2023 "Wednesday Thursday Trade"

Japan

Hitachi, Ltd. manufactures communications and electronic equipment, heavy electrical and industrial machinery, and consumer electronics.  The Company's diverse product line ranges from nuclear power systems to kitchen appliances. Hitachi also operates subsidiaries in the wire and cable, metal, and chemical industries.

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Hitachi Ltd (6501 JP)

Toshiba (6502 JP): Tender Offer Risk/Reward

Shareholder support continues to pose a considerable risk as the peers have re-rated, the offer’s price ratio remains unattractive and the...

Arun George

Toshiba (6502) - Thinking About the Arb

Toshiba has seen shares rise a bit since Day1 post-anncmt ~6 weeks ago, but Peers have risen further and the earnings shift on forward consensus is...

Travis Lundy

Good Morning Japan |Tech Bid; Trump Indicated; NUGGET: BayCurrent-Japan's Digital/Salary Gap Winner

SPX up as Tech rally continues; Trump indicated; IN Japan , Equities to close quarter with >6% gains; TSE ramps up rhetoric againsts low PBR...

Mark Chadwick

Toshiba (6502 JP): JIP’s JPY4,620 Tender Offer, Now for the Really Hard Part

The shares will react positively initially. However, it should start drifting again once it becomes apparent that there is a considerable risk that...

Arun George

The BIG March 2023 "Wednesday Thursday Trade"

This year, there is a US$12bn buy to do on 29 March at the close. Historically, performance is pretty good both on a 2-day period, then slumps....

Travis Lundy

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