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

Invincible Investment / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/invincible-investment-corp" target="_blank" data-smartkarma-citation="entities:3617:1" rel="noopener">Invincible Investment (8963 JP)</a> plans to raise around US$230m to fund the acquisition of six hotel assets in Japan.</li>
<li>The stock has done well over the past year and so have most of its deals which we have covered in the past.</li>
<li>In this note, we talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>



Invincible Investment (8963 JP) plans to raise around US$230m to fund the acquisition of six hotel assets in Japan.
The stock has done well over the past year and so have most of its deals which we have covered in the past.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.


Invincible Investment Corp Placement - Decent Accretion Despite the Large Dilution

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>The merger ratio is 0.67 <a href="https://www.smartkarma.com/entities/kenedix-office-investment-co" target="_blank" data-smartkarma-citation="entities:16263:1" rel="noopener">Kenedix Office Investment Co (8972 JP)</a>/KDO units per <a href="https://www.smartkarma.com/entities/kenedix-residential-investment" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Investment (3278 JP)</a>/KDR unit and 0.84 KDO units per <a href="https://www.smartkarma.com/entities/kenedix-retail-reit-corp" target="_blank" data-smartkarma-citation="entities:188:1" rel="noopener">Kenedix Retail REIT (3453 JP)</a>/KRR unit.</li>
<li>The merger is sensible due to scale (the merged entity will be the third-largest J REIT by asset size), expansion opportunities and improved capital recycling. </li>
<li>The merger requires approval from all three sets of unitholders. We think this is likely as the deal metrics are fair for all three sets of unitholders. </li>
</ul>


The merger ratio is 0.67 Kenedix Office Investment Co (8972 JP)/KDO units per Kenedix Residential Investment (3278 JP)/KDR unit and 0.84 KDO units per Kenedix Retail REIT (3453 JP)/KRR unit.
The merger is sensible due to scale (the merged entity will be the third-largest J REIT by asset size), expansion opportunities and improved capital recycling. 
The merger requires approval from all three sets of unitholders. We think this is likely as the deal metrics are fair for all three sets of unitholders. 


Kenedix Office Investment (8972 JP): Merger with Kenedix Residential and Kenedix Retail REIT

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<div>
<a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> (STR) has a 22.06% stake in ARA Asset Management, after adding 1.1% in <a href="https://links.sgx.com/FileOpen/R706A%20Announcement.ashx?App=Announcement&amp;FileID=627835" target="_blank" rel="noopener">May</a> of last year for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.  STR's stake in ARA, based on that stake increase, is worth ~60% of its current market cap. Yet that figure is likely conservative based on the increase in ARA's AUM. 
Yesterday ARA <a href="https://ara.listedcompany.com/newsroom/ARAPress_Release_SMBC0Joins-ARAasStrategicShareholder_17052021.pdf" target="_blank" rel="noopener">announced</a> a $500mn round of equity financing from SMBC. With SMBC joining as a strategic shareholder, this has all the hallmarks of an imminent IPO.
</div>
<div>
STR is cheap. Either major shareholder Tecity takes the company private; or you buy the company as an indirect investment into an expected listing of ARA. 
</div>
<div>
As always, more below the fold.
</div>


Straits Trading (STRTR SP) (STR) has a 22.06% stake in ARA Asset Management, after adding 1.1% in May of last year for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.  STR's stake in ARA, based on that stake increase, is worth ~60% of its current market cap. Yet that figure is likely conservative based on the increase in ARA's AUM. 
Yesterday ARA announced a $500mn round of equity financing from SMBC. With SMBC joining as a strategic shareholder, this has all the hallmarks of an imminent IPO.


STR is cheap. Either major shareholder Tecity takes the company private; or you buy the company as an indirect investment into an expected listing of ARA. 


As always, more below the fold.


Straits Trading: ARA's Pre-IPO Funding From SMBC

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Although Japan is not out of the woods in terms of COVID-19 and the vaccine is not yet found, let alone distributed, investors have rushed to own <a href="https://www.smartkarma.com/entities/tkp-corp" target="_blank" data-smartkarma-citation="entities:28305:1" rel="noopener"> TKP Corporation (3479 JP)</a> as it was seemingly cheap in terms of PBR. The reality was that COVID-19 economic impact caused a weak earning and a secondary offering that boosted the book value has made the company's PBR looks cheap. TKP is the only one with negative earnings compared to its peers, underlining the economic reality that the company is more exposed to.
TKP's share price has risen more than doubled to some of its peers amidst the tough business outlook. Its peers such as <a href="https://www.smartkarma.com/entities/kenedix-inc" target="_blank" data-smartkarma-citation="entities:11321:1" rel="noopener">Kenedix Inc (4321 JP)</a> and <a href="https://www.smartkarma.com/entities/katitas-co-ltd" target="_blank" data-smartkarma-citation="entities:26073:1" rel="noopener">Katitas Co Ltd (8919 JP)</a> share price rose almost double but their business remains profitable during COVID-19 while TKP's earnings have turned negative. Turned Bearish on TKP on slow business condition improvement and the meteoric share price increase.

Although Japan is not out of the woods in terms of COVID-19 and the vaccine is not yet found, let alone distributed, investors have rushed to own  TKP Corporation (3479 JP) as it was seemingly cheap in terms of PBR. The reality was that COVID-19 economic impact caused a weak earning and a secondary offering that boosted the book value has made the company's PBR looks cheap. TKP is the only one with negative earnings compared to its peers, underlining the economic reality that the company is more exposed to.
TKP's share price has risen more than doubled to some of its peers amidst the tough business outlook. Its peers such as Kenedix Inc (4321 JP) and Katitas Co Ltd (8919 JP) share price rose almost double but their business remains profitable during COVID-19 while TKP's earnings have turned negative. Turned Bearish on TKP on slow business condition improvement and the meteoric share price increase. 

TKP (3479): Slow Recovery yet Share Price Has More than Doubled?

Travis Lundy

Friday morning, the Nikkei said there was a deal in the offing where Mitsui Fudosan would bid for <a href="https://www.smartkarma.com/entities/tokyo-dome-corp" target="_blank" data-smartkarma-citation="entities:6421:1" rel="noopener">Tokyo Dome Corp (9681 JP)</a>.  As someone concerned with the governance weakness shown too many times in Japanese takeover situations, I am almost automatically disappointed to see such headlines. It leads me to expect that later the same day I will be mumbling words at my monitor that I should not say aloud. 
I did Friday.
My constant question is HOW can independent directors of companies with unique and valuable assets deign to sell them at such inexpensive prices? Often those unique and valuable assets are uniquely valuable items such as cash, portfolios of listed securities, and land and property assets with an easily external valuation. 
Sometimes cash and securities get tossed into a DCF as being assets which need to be discounted 9-11% a year on their ability to throw off cash, never mind the fact that the equity holdings are purchased at cash flow yields of 2-3% and bonds are bought with yields of 0-1%. Real estate holdings are usually purchased at yields of 4-6%. So automatically, anything of any real value and inherently low cash-flow yield gets marked down for the friendly buyer. Extra cash is almost never dividended out, and there is never (with the one exception of the takeover of <a href="https://www.smartkarma.com/entities/asatsu-dk-inc" target="_blank" data-smartkarma-citation="entities:8715:1" rel="noopener">Asatsu Dk Inc (9747 JP)</a> a few years ago) any tally of what the non-operating assets are worth to create an Adjusted Enterprise Value. 
This time is no different. 
This is a big fat piece of land in central Tokyo, and a fair number of unique, quite unreplaceable assets and businesses which should command a moat. And earnings have been penalized for years by a total lack of effective maintenance and stewardship by management. 
Oasis proposed buying the company at ¥1300/share in January but said the stock was worth well over ¥2000/share in its public <a href="https://static1.squarespace.com/static/5dd62b05f226644911c6d4e1/t/5efabd9b2d98f71482b79156/1593490878125/OASIS+-+A+Better+Tokyo+Dome+Presentation.pdf" target="_blank" rel="noopener">presentation</a> at the same time. Mitsui Fudosan - a professional strategic owner of prime property assets - bid ¥1200/share earlier this month before being asked to bid ¥1350/share. They bid ¥1300/share.
I am not sure the conversation ends there.
My analysis continues below.

Friday morning, the Nikkei said there was a deal in the offing where Mitsui Fudosan would bid for Tokyo Dome Corp (9681 JP).  As someone concerned with the governance weakness shown too many times in Japanese takeover situations, I am almost automatically disappointed to see such headlines. It leads me to expect that later the same day I will be mumbling words at my monitor that I should not say aloud. 
I did Friday.
My constant question is HOW can independent directors of companies with unique and valuable assets deign to sell them at such inexpensive prices? Often those unique and valuable assets are uniquely valuable items such as cash, portfolios of listed securities, and land and property assets with an easily external valuation. 
Sometimes cash and securities get tossed into a DCF as being assets which need to be discounted 9-11% a year on their ability to throw off cash, never mind the fact that the equity holdings are purchased at cash flow yields of 2-3% and bonds are bought with yields of 0-1%. Real estate holdings are usually purchased at yields of 4-6%. So automatically, anything of any real value and inherently low cash-flow yield gets marked down for the friendly buyer. Extra cash is almost never dividended out, and there is never (with the one exception of the takeover of Asatsu Dk Inc (9747 JP) a few years ago) any tally of what the non-operating assets are worth to create an Adjusted Enterprise Value. 
This time is no different. 
This is a big fat piece of land in central Tokyo, and a fair number of unique, quite unreplaceable assets and businesses which should command a moat. And earnings have been penalized for years by a total lack of effective maintenance and stewardship by management. 
Oasis proposed buying the company at ¥1300/share in January but said the stock was worth well over ¥2000/share in its public presentation at the same time. Mitsui Fudosan - a professional strategic owner of prime property assets - bid ¥1200/share earlier this month before being asked to bid ¥1350/share. They bid ¥1300/share.
I am not sure the conversation ends there.
My analysis continues below.

Tokyo Dome Sells Itself For the Wrong Price

Japan

Kenedix, Inc. provides real estate investment services such as real estate investment advisory, assets management, and loan (asset backed mortgages) investment.

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Kenedix Inc (4321 JP)

Invincible Investment Corp Placement - Decent Accretion Despite the Large Dilution

Invincible Investment plans to raise around US$230m to fund the acquisition of six hotel assets in Japan. In this note, we talk about the deal...

Sumeet Singh

Kenedix Office Investment (8972 JP): Merger with Kenedix Residential and Kenedix Retail REIT

The merger is sensible due to scale, expansion opportunities and improved capital recycling. All three sets of unitholders will be supportive as...

Arun George

Straits Trading: ARA's Pre-IPO Funding From SMBC

Based on the Scheme value of ARA,, ARA is potentially worth upwards of S$6bn. That backs out a value of S$1.3bn for STR's stake, ~30% above its...

David Blennerhassett

Tokyo Dome Sells Itself For the Wrong Price

Tokyo Dome is the subject of an activist effort to improve shareholder value for everyone with a stated target from improvements of 140+%. So Tokyo...

Travis Lundy

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Invincible Investment Corp Placement - Decent Accretion Despite the Large Dilution

Invincible Investment plans to raise around US$230m to fund the acquisition of six hotel assets in Japan. In this note, we talk about the deal...

Sumeet Singh

Kenedix Office Investment (8972 JP): Merger with Kenedix Residential and Kenedix Retail REIT

The merger is sensible due to scale, expansion opportunities and improved capital recycling. All three sets of unitholders will be supportive as...

Arun George

Straits Trading: ARA's Pre-IPO Funding From SMBC

Based on the Scheme value of ARA,, ARA is potentially worth upwards of S$6bn. That backs out a value of S$1.3bn for STR's stake, ~30% above its...

David Blennerhassett

TKP (3479): Slow Recovery yet Share Price Has More than Doubled?

TKP's share price has risen doubled compared to some of its peers amidst the tough business outlook. Turned Bearish on TKP on slow business...

Henry Soediarko

Tokyo Dome Sells Itself For the Wrong Price

Tokyo Dome is the subject of an activist effort to improve shareholder value for everyone with a stated target from improvements of 140+%. So Tokyo...

Travis Lundy