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/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>'s FY21 results beat consensus revenue by 8% but came below consensus EBIT by 3%, based on CapitalIQ data.</li>
<li>The management did their best to dampen sentiment by pointing out slowing growth momentum and margin compression due to significant growth investments in 2022.  </li>
<li>We think that the results/outlook do little to increase the attractiveness of the offer. We would be buyers up to HK$2.5 per share (implies 65% deal probability).</li>
</ul>



Razer Inc (1337 HK)'s FY21 results beat consensus revenue by 8% but came below consensus EBIT by 3%, based on CapitalIQ data.
The management did their best to dampen sentiment by pointing out slowing growth momentum and margin compression due to significant growth investments in 2022.  
We think that the results/outlook do little to increase the attractiveness of the offer. We would be buyers up to HK$2.5 per share (implies 65% deal probability).


Razer's Offer Spread Risk/Reward – FY21 Results

<ul>
<li>
<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>'s scheme document will be released after the FY21 results, which are on 17 March. The headcount test is a key challenge. </li>
<li>
<a href="https://www.smartkarma.com/entities/logitech-international-sa" target="_blank" data-smartkarma-citation="entities:22422:1" rel="noopener">Logitech International SA (LOGN SW)</a>’s investor/analyst day on 3 March underscores Razer’s opportunity and adds to minorities’ grievances that the offer price is unattractive. </li>
<li>Current deal probability implies broadly a 50/50 chance of success with a gross spread of 19%. We would be buyers up to HK$2.5 per share (implies 65% deal probability).</li>
</ul>



Razer Inc (1337 HK)'s scheme document will be released after the FY21 results, which are on 17 March. The headcount test is a key challenge. 

Logitech International SA (LOGN SW)’s investor/analyst day on 3 March underscores Razer’s opportunity and adds to minorities’ grievances that the offer price is unattractive. 
Current deal probability implies broadly a 50/50 chance of success with a gross spread of 19%. We would be buyers up to HK$2.5 per share (implies 65% deal probability).


Razer's Offer Spread Risk/Reward – Takeaways from Logitech’s Investor Day

<ul>
<li>
<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a> announced that all the pre-conditions were fulfilled. The scheme document will be released after the FY21 results (scheduled on or before 17 March).  </li>
<li>The headcount test is a key challenge. While the deal's success benefits from the de-rating of technology shares, it is also undermined by <a href="https://www.smartkarma.com/entities/logitech-international-sa" target="_blank" data-smartkarma-citation="entities:22422:1" rel="noopener">Logitech International SA (LOGN SW)</a>’s strong 3Q. </li>
<li>The shares are broadly fairly valued at last close both on a SoTP and deal probability basis. We would be buyers up to HK$2.5 per share (implies 65% deal probability).</li>
</ul>



Razer Inc (1337 HK) announced that all the pre-conditions were fulfilled. The scheme document will be released after the FY21 results (scheduled on or before 17 March).  
The headcount test is a key challenge. While the deal's success benefits from the de-rating of technology shares, it is also undermined by Logitech International SA (LOGN SW)’s strong 3Q. 
The shares are broadly fairly valued at last close both on a SoTP and deal probability basis. We would be buyers up to HK$2.5 per share (implies 65% deal probability).


Razer's Offer Spread Risk/Reward – Pre-Conditions Fulfilled

<ul>
<li>The gross spread to the HK$2.82 per share offer has retouched the high of 23%. The headcount test is a key challenge as some minorities voice displeasure over the price.  </li>
<li>Based on the unaffected price of HK$1.81 and at the last close of HK$2.30, the deal probability retouched lows of 48.5%. A 65% deal probability would imply HK$2.47 per share. </li>
<li>In the event of a failed deal, <a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>’s strong fundamentals provide solid valuation support. Our SoTP valuation is HK$2.96 per share, 5% higher than the privatisation price.</li>
</ul>


The gross spread to the HK$2.82 per share offer has retouched the high of 23%. The headcount test is a key challenge as some minorities voice displeasure over the price.  
Based on the unaffected price of HK$1.81 and at the last close of HK$2.30, the deal probability retouched lows of 48.5%. A 65% deal probability would imply HK$2.47 per share. 
In the event of a failed deal, Razer Inc (1337 HK)’s strong fundamentals provide solid valuation support. Our SoTP valuation is HK$2.96 per share, 5% higher than the privatisation price.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a> announced a pre-conditional privatisation offer from Mr Tan, Mr Lim and CVC at HK$2.82 per share, a 55.8% premium to the unaffected price. </li>
<li>The pre-condition is anti-trust approval in several countries. Key conditions are the headcount test and approval by at least 75% disinterested shareholders (&lt;10% of all disinterested shareholders rejection).  </li>
<li>While the offer will leave many disappointed (such as IPO investors), it is reasonable compared to historical share prices and multiples. The gross spread at the last close is 14.6%. </li>
</ul>



Razer Inc (1337 HK) announced a pre-conditional privatisation offer from Mr Tan, Mr Lim and CVC at HK$2.82 per share, a 55.8% premium to the unaffected price. 
The pre-condition is anti-trust approval in several countries. Key conditions are the headcount test and approval by at least 75% disinterested shareholders (&lt;10% of all disinterested shareholders rejection).  
While the offer will leave many disappointed (such as IPO investors), it is reasonable compared to historical share prices and multiples. The gross spread at the last close is 14.6%. 


Razer’s Privatisation Bid by Founders and CVC

Switzerland

Logitech International S.A. manufactures personal computer input devices.  The Company produces computer mice which help the user move the cursor around the computer screen quickly, trackballs, game controllers, keyboards, PC video cameras, and multimedia speakers.  The Company sells its products worldwide.

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Logitech International SA (LOGN SW)

Razer's Offer Spread Risk/Reward – FY21 Results

The management did their best to sound downbeat by pointing out slowing growth and margin compression in 2022. We think that the results/outlook do...

Arun George

Razer's Offer Spread Risk/Reward – Takeaways from Logitech’s Investor Day

Logitech’s investor day on 3 March underscores Razer’s opportunity. Current deal probability implies broadly a 50/50 chance of success with a gross...

Arun George

Razer's Offer Spread Risk/Reward – Pre-Conditions Fulfilled

While the privatisation's success benefits from the de-rating of technology shares, it is also undermined by Logitech’s strong 3Q. We would be...

Arun George

Razer's Offer Spread Risk/Reward

The gross spread to the HK$2.82 per share offer has retouched the high of 23%. In the event of a failed deal, the strong fundamentals provide solid...

Arun George

Razer’s Privatisation Bid by Founders and CVC

While the HK$2.82 per share offer will leave many disappointed (such as IPO investors), it is reasonable compared to historical share prices and...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Razer's Offer Spread Risk/Reward – FY21 Results

The management did their best to sound downbeat by pointing out slowing growth and margin compression in 2022. We think that the results/outlook do...

Arun George

Razer's Offer Spread Risk/Reward – Takeaways from Logitech’s Investor Day

Logitech’s investor day on 3 March underscores Razer’s opportunity. Current deal probability implies broadly a 50/50 chance of success with a gross...

Arun George

Razer's Offer Spread Risk/Reward – Pre-Conditions Fulfilled

While the privatisation's success benefits from the de-rating of technology shares, it is also undermined by Logitech’s strong 3Q. We would be...

Arun George

Razer's Offer Spread Risk/​Reward

The gross spread to the HK$2.82 per share offer has retouched the high of 23%. In the event of a failed deal, the strong fundamentals provide solid...

Arun George

Razer’s Privatisation Bid by Founders and CVC

While the HK$2.82 per share offer will leave many disappointed (such as IPO investors), it is reasonable compared to historical share prices and...

Arun George

Razer's Offer Spread Risk/Reward