Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

<ul>
<li>The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail - 80% of the book - is now. The price today closed at ¥1,665/share. </li>
<li>The Offering has follow-on "non-discretionary" demand which is non-negligible. It is worth understanding the amounts and timing.</li>
<li>The lockups and non-discretionary demand, along with Honda's relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.</li>
</ul>


The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail - 80% of the book - is now. The price today closed at ¥1,665/share. 
The Offering has follow-on "non-discretionary" demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda's relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.


Big Honda (7267) Offering - Flow Timing Matters

<ul>
<li>At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a> by P&amp;C insurers and others. </li>
<li>We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist. </li>
<li>It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.</li>
</ul>


At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&amp;C insurers and others. 
We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist. 
It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.


The Honda (7267) Offering - Much Easier Than It Looks

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.

<ul>
<li>Since the US$3.3 billion secondary placement announcement, <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).</li>
<li>Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.</li>
<li>The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.</li>
</ul>


Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.


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.

<ul>
<li>A group of shareholders aims to raise up to US$3.2bn via selling around 5% of <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP).</a>
</li>
<li>The possibility of such a selldown was flagged by Reuters prior to the deal launch.</li>
<li>In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.</li>
</ul>


A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP).

The possibility of such a selldown was flagged by Reuters prior to the deal launch.
In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.


Honda Motor Placement - Past Large Deals Analysis - Could Do with a Bit More Correction

US-EU Index Rebalances / Quantitative Researcher, Ortex

Dimitris Ioannidis

US-EU Index Rebalances / Quantitative Researcher

Global Financial Data and Analytics Platform

Ortex

ORTEX is a global financial data and analytics platform providing real-time securities lending and short interest data, index rebalance data, holdings and insider transactions, trading signals, corporate actions and news,  stock machine learning and factor scores and other analytics. The majority of the data are downloadable and accessible through APIs.

Event-Driven

<ul>
<li>Despite the significant offering size, passive fund demand is unlikely to materialize due to non-strategic selling shareholders.</li>
<li>Company's number of shares and free float in the main global indices are forecasted to remain the same before and after the offering.</li>
<li>Upcoming buybacks can lead to a decrease in float shares which can even cause passive fund supply at a subsequent quarterly review.</li>
</ul>


Despite the significant offering size, passive fund demand is unlikely to materialize due to non-strategic selling shareholders.
Company's number of shares and free float in the main global indices are forecasted to remain the same before and after the offering.
Upcoming buybacks can lead to a decrease in float shares which can even cause passive fund supply at a subsequent quarterly review.


Honda (7267) : Offering's Underwhelming Global Index Implications

Japan

NISSAN MOTOR CO., LTD. manufactures and distributes automobiles and related parts. It also provides financing services. Nissan delivers a comprehensive range of products under various brands. The Company manufactures in Japan, the United States, Mexico, the United Kingdom and many other countries.

Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, and power products such as generators and farm machinery. The Company also operates a financial credit business. Honda Motor has manufacturing facilities in the US, Canada, the UK, France, Italy, Spain, Brazil, Mexico, India, and Thailand.

Suzuki Motor Corporation manufactures automobiles, motorcycles, and their related parts. The Company has production facilities in USA, Japan, Taiwan, India, Pakistan, Indonesia, Thailand, and Hungary.

Subaru Corp manufactures passenger cars, buses, motor vehicle parts, and industrial machinery.  The Company also produces aircraft parts and supplies it to defense agency and Boeing Co.  The Company sells its passenger cars under the Subaru brand name.

Isuzu Motors Limited manufactures and markets trucks and automobile parts. The Company's products include pickup trucks, light/heavy duty trucks, medium and large-sized buses, recreational vehicles, and sport utility vehicles.

MITSUBISHI MOTORS CORPORATION develops and manufactures passenger cars and its related parts.  The Company has production facilities in Japan, the US, and Thailand.  Mitsubishi Motors Corp provides vehicle-related financing and leasing service through its subsidiary.

Yamaha Motor Co., Ltd. manufactures motorcycles.  The Company also produces motor vehicle engines for Toyota Motor Corp. and Ford Motor Co.  Yamaha Motor's specialty products include motor boats, snowmobiles, golf carts, and electric power generators.  Yamaha Motor sells products in Japan, North America, Europe, Asia, and South America.

Mazda Motor Corporation manufactures and sells automobiles, trucks, auto parts, and its accessories.  The Company operates its business worldwide.

NISSAN SHATAI CO., LTD. develops, designs, and assembles automobiles including sedans, Recreational Vehicles(RV), station wagons, and buses for Nissan Motor. The Company also manufactures parts for motor vehicles.

PT Astra International Tbk assembles and distributes automobiles, motorcycles, and their related spare parts.  Through its subsidiaries, the Company also operates in the mining, development of plantations, financial and information technology.

Geely Automobile Holdings Limited operates as a passenger vehicles manufacturing company. The Company provides passenger vehicles development, manufacturing, sales, and other services. Geely Automobile Holdings also exports passenger vehicles.

Great Wall Motor Company Limited, through its subsidiaries, manufactures and sells pick-up trucks and sport-utility vehicles (SUVs) in China under branded names. The Company also researches and develops, and manufactures principal automotive parts and components for use in the assembly of pick-up trucks and SUVs.

Hyundai Motor Company manufactures, sells, and exports passenger cars, trucks, and commercial vehicles. The Company also sells various auto parts and operates auto repair service centers throughout South Korea. Hyundai Motor provides financial services through its subsidiaries.

Kia Corporation manufactures, sells, and exports passenger cars, mini-buses, trucks and commercial vehicles. The Company also manufactures auto-parts and tools using hybrid electric and fuel cell technology. Kia markets its products worldwide.

Tata Motors Limited manufactures cars and commercial automotive vehicles in India. The Company designs, manufactures and sells heavy commercial, medium commercial and small commercial vehicles including trucks, tankers, vans, buses, ambulances and minibuses. Tata also manufactures small cars and sports utility vehicles.

Maruti Suzuki India Limited manufactures and exports automobiles. Maruti collaborated with Suzuki of Japan to produce affordable cars for the average Indian.

Stellantis NV manufactures and markets automobiles and commercial vehicles. The Company also produces metallurgical products and production systems for the automobile industry, as well as owns publishing and insurance companies. Stellantis serves customers worldwide.

Hero MotoCorp Ltd. designs, manufactures and distributes motorcycles. The Company's products also include motorcycle parts and accessories.

Bajaj Auto Limited manufactures and distributes motorized two-wheeled and three-wheeled scooters, motorcycles and mopeds.

Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, and power products such as generators and farm machinery. The Company also operates a financial credit business.  Honda Motor has manufacturing facilities in the US, Canada, the UK, France, Italy, Spain, Brazil, Mexico, India, and Thailand.

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Honda Motor Co Ltd (Adr) (HMC US)

Big Honda (7267) Offering - Flow Timing Matters

The Honda Offering is BIG at ¥500bn but over time, the net overhang is substantially reduced by behavioural expectations, passive buying, a...

Travis Lundy

The Honda (7267) Offering - Much Easier Than It Looks

Honda's mega-offering is not mega. It is two-thirds covered by non-active investor demand over the next two months. 80+% if the stock falls post...

Travis Lundy

Honda (7267 JP): The Current Playbook

The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Arun George

Honda Motor Placement - Past Large Deals Analysis - Could Do with a Bit More Correction

A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP). In this note, we talk about the updates since...

Sumeet Singh

Honda (7267) : Offering's Underwhelming Global Index Implications

Passive fund demand is unlikely to be generated despite significant offering size, due to non-strategic selling shareholders. Upcoming share...

Dimitris Ioannidis

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