Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

Event-Driven

<p>Last week <a href="https://www.smartkarma.com/entities/nissin-foods-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12548:1" rel="noopener">Nissin Foods Holdings (2897 JP)</a> announced that its board of directors approved a secondary offering of 3.041m shares for international investors. Nissin's press release said that the shareholders, Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation are reducing their shareholdings in the company through this secondary offer, amidst ongoing discussions between the company and shareholders regarding changes to Nissin’s shareholding structure, in response to the changing view of cross-shareholdings by the TSE.</p>

Last week Nissin Foods Holdings (2897 JP) announced that its board of directors approved a secondary offering of 3.041m shares for international investors. Nissin's press release said that the shareholders, Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation are reducing their shareholdings in the company through this secondary offer, amidst ongoing discussions between the company and shareholders regarding changes to Nissin’s shareholding structure, in response to the changing view of cross-shareholdings by the TSE.

Nissin Foods Placement: Could Be a Result of a Discord Between Shareholders and The Company

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

Nissin Foods Holdings / Equity Capital Markets

<p>Three shareholders of Nissin Foods plan to raise around US$226m via a global offering by selling 2.9% of the company. The selldown is being undertaken to reduce the cross shareholding.</p><p>In this insight, we will run the deal through our ECM framework and provide our thoughts on the deal.</p>

Three shareholders of Nissin Foods plan to raise around US$226m via a global offering by selling 2.9% of the company. The selldown is being undertaken to reduce the cross shareholding.In this insight, we will run the deal through our ECM framework and provide our thoughts on the deal.

Nissin Foods Placements - Shouldn't Have a Large Impact

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• BEST &amp; WORST • </strong></p><p style="text-align: left;">Japan starts 2021 is a subdued mood as the Yen trending towards ¥100 against the US dollar, daily COVID case counts reach new highs. Tokyo and the surrounding prefectures will likely enter a month-long State of Emergency from Saturday, which will impose a nighttime 'curfew' and recommend a 60% WFH ratio. We kick off 2021 Results and Revisions Updates with Tuesday's best and worst pairing of <a href="https://www.smartkarma.com/entities/nissin-foods-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12548:1" rel="noopener">Nissin Foods (2897 JP)</a> and <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP)</a>.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/113/original/2021-01-06_06-25-57.png?1609881978" class="editor-image img-responsive" data-smartkarma-image-id="181113"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/114/original/2021-01-06_06-25-19.png?1609881991" class="editor-image img-responsive" data-smartkarma-image-id="181114"></figure></section><div style="text-align: center;" class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>

• BEST &amp; WORST • Japan starts 2021 is a subdued mood as the Yen trending towards ¥100 against the US dollar, daily COVID case counts reach new highs. Tokyo and the surrounding prefectures will likely enter a month-long State of Emergency from Saturday, which will impose a nighttime 'curfew' and recommend a 60% WFH ratio. We kick off 2021 Results and Revisions Updates with Tuesday's best and worst pairing of Nissin Foods (2897 JP) and Daiseki (9793 JP).Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/05 - Daiseki, San-A, Nissin Foods

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

Equity Bottom-Up

<p>Investing in <a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a> prior to the pandemic has yielded a phenomenal amount of return, beating many other sectors and obviously the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> . The panic buying, lockdown, and uncertainty on when the vaccines are publicly available that propelled revenue growth are the key reasons why investors fell in love with Nissin Foods during this pandemic. </p>
<p>As the COVID-19 daily infection cases and lockdown in both China and Hong Kong ease off, prompting the government to relax the stay home and dine-in requirement, it is unlikely that the increase in revenues will be repeated although the increase in the margin may stay. Taking a comparison with <a href="https://www.smartkarma.com/entities/nongshim-co-ltd" target="_blank" data-smartkarma-citation="entities:14122:1" rel="noopener">Nongshim Co Ltd (004370 KS)</a> , the company's share price peaked in August 2020 and started to taper off since then. Nissin Food's share price should follow suit. </p>

Investing in Nissin Foods (1475 HK) prior to the pandemic has yielded a phenomenal amount of return, beating many other sectors and obviously the Hong Kong Hang Seng Index (HSI INDEX) . The panic buying, lockdown, and uncertainty on when the vaccines are publicly available that propelled revenue growth are the key reasons why investors fell in love with Nissin Foods during this pandemic. 
As the COVID-19 daily infection cases and lockdown in both China and Hong Kong ease off, prompting the government to relax the stay home and dine-in requirement, it is unlikely that the increase in revenues will be repeated although the increase in the margin may stay. Taking a comparison with Nongshim Co Ltd (004370 KS) , the company's share price peaked in August 2020 and started to taper off since then. Nissin Food's share price should follow suit. 

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>Today after the close it was <a href="https://www.globenewswire.com/news-release/2020/10/06/2103999/0/en/Danone-intends-to-sell-its-stake-in-Yakult.html" target="_blank" rel="noopener">announced</a> that <a href="https://www.smartkarma.com/entities/danone-sa" target="_blank" data-smartkarma-citation="entities:21403:1" rel="noopener">Danone SA (BN FP)</a> - currently the largest shareholder in <a href="https://www.smartkarma.com/entities/yakult-honsha-co-ltd" target="_blank" data-smartkarma-citation="entities:17153:1" rel="noopener">Yakult Honsha (2267 JP)</a> - intended to sell down the last of its stake after a 20-year run.</p><p>The press release notes <em>"Danone's collaboration with Yakult began in 2004."</em></p><p>That's saying it nicely. Danone bought 5% in 2000 then bought up to 20% in the market in 2003 in an effort to get Yakult to collaborate. It was not done with Yakult's permission, but it got their attention.</p><div>
<p>Yakult and Danone signed an <em>Alliance Agreement</em> in March 2004. That agreement was renewed in 2008 so the agreement would stay in place until 2012. In 2012, negotiations on the future alliance were extended and extended and finally, in late April 2013 - after a year-plus of jawboning and speculation of a hostile bid, occasionally dampened by public promises to the contrary by Danone executives - the two companies decided they could not, in the end, agree, and they cancelled their <em>Strategic Alliance</em> and signed a <em>Memorandum of Understanding on a Collaborative Relationship</em>.</p>
<p>The lack of hostile action by Danone may have been the result of the fact that Yakult-friendly Japanese corporate investors bought shares in the meantime, lifting the share price by 60-70% in a year and lifting the friendly ownership to over 50%, making hostile action essentially futile. </p>
</div><div>
<p>That relationship basically stood as a standstill agreement with 3 Danone appointees named to the Yakult board, and ongoing JV operation in their 50/50 Vietnam and 80/20 (Yakult/Danone) Joint Ventures and ongoing 'collaboration' in the probiotics business. Since the big buy in 2003, including dividends, Danone was up 500% on its investment as of February 2018 when it decided to sell down a very large stake after activist Corvex Management had taken on Danone and urged it to reduce capital assets which didn't provide much. At the time, Yakult traded at 20x EV/EBITDA and 36x PER. </p>
<h2>The NEW News</h2>
<p>Danone is bailing on the rest of the stake while the existing commercial partnerships, "including joint-ventures in India and Vietnam remain in place" (according to the <a href="https://ml-eu.globenewswire.com/Resource/Download/768c55f8-a7c0-4ba7-b4e8-9f01bf4bef68" target="_blank" rel="noopener">announcement</a>).</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/665/original/Screenshot%202020-10-06%20at%204.58.37%20PM.png?1601974734" class="editor-image img-responsive" data-smartkarma-image-id="163665"></figure><p></p>
<p>The weekly chart shows they did not catch the top last time (14 Feb 2018 announcement when the stock was ¥7940/share), but they enjoyed a nice run-up from a year prior. At the time, both TOPIX and TOPIX FOOD Sector indices had taken a sharp drop.</p>
<p>After the announcement the last time, the shares fell 6.8% on the next day. That time was a Public Offering which required a book building phase and then delivery saw a couple of weeks of large volume. The shares traded in line with market and sector before falling in April and May 2018. Since then, the shares have largely underperformed both TOPIX and the sector.</p>
<p>This deal is an Accelerated Block Offering. It makes things more interesting. Valuations are different than last time and the shareholder structure is different too. </p>
<p>Much more below the fold.</p>
</div>

Today after the close it was announced that Danone SA (BN FP) - currently the largest shareholder in Yakult Honsha (2267 JP) - intended to sell down the last of its stake after a 20-year run.The press release notes "Danone's collaboration with Yakult began in 2004."That's saying it nicely. Danone bought 5% in 2000 then bought up to 20% in the market in 2003 in an effort to get Yakult to collaborate. It was not done with Yakult's permission, but it got their attention.
Yakult and Danone signed an Alliance Agreement in March 2004. That agreement was renewed in 2008 so the agreement would stay in place until 2012. In 2012, negotiations on the future alliance were extended and extended and finally, in late April 2013 - after a year-plus of jawboning and speculation of a hostile bid, occasionally dampened by public promises to the contrary by Danone executives - the two companies decided they could not, in the end, agree, and they cancelled their Strategic Alliance and signed a Memorandum of Understanding on a Collaborative Relationship.
The lack of hostile action by Danone may have been the result of the fact that Yakult-friendly Japanese corporate investors bought shares in the meantime, lifting the share price by 60-70% in a year and lifting the friendly ownership to over 50%, making hostile action essentially futile. 

That relationship basically stood as a standstill agreement with 3 Danone appointees named to the Yakult board, and ongoing JV operation in their 50/50 Vietnam and 80/20 (Yakult/Danone) Joint Ventures and ongoing 'collaboration' in the probiotics business. Since the big buy in 2003, including dividends, Danone was up 500% on its investment as of February 2018 when it decided to sell down a very large stake after activist Corvex Management had taken on Danone and urged it to reduce capital assets which didn't provide much. At the time, Yakult traded at 20x EV/EBITDA and 36x PER. 
The NEW News
Danone is bailing on the rest of the stake while the existing commercial partnerships, "including joint-ventures in India and Vietnam remain in place" (according to the announcement).

The weekly chart shows they did not catch the top last time (14 Feb 2018 announcement when the stock was ¥7940/share), but they enjoyed a nice run-up from a year prior. At the time, both TOPIX and TOPIX FOOD Sector indices had taken a sharp drop.
After the announcement the last time, the shares fell 6.8% on the next day. That time was a Public Offering which required a book building phase and then delivery saw a couple of weeks of large volume. The shares traded in line with market and sector before falling in April and May 2018. Since then, the shares have largely underperformed both TOPIX and the sector.
This deal is an Accelerated Block Offering. It makes things more interesting. Valuations are different than last time and the shareholder structure is different too. 
Much more below the fold.


Danone Sells The Last of Their Yakult - Buy the Cleanup

Japan

NISSIN FOODS HOLDINGS CO.,LTD. produces instant noodle and processed food products.  The Company also develops pharmaceuticals.  NISSIN FOODS operates production facilities in overseas countries including Hong Kong, India, U.S., Singapore, and other countries.

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Nissin Foods Holdings (2897 JP)

Nissin Foods Placement: Could Be a Result of a Discord Between Shareholders and The Company

Nissin's LT investors are reducing their shareholdings, amidst discussions regarding changes to the shareholding structure, in response to the...

Oshadhi Kumarasiri

Nissin Foods Placements - Shouldn't Have a Large Impact

Three shareholders of Nissin Foods plan to raise around US$226m via a global offering by selling 2.9% of the company. The selldown is being...

Sumeet Singh

🇯🇵 JAPAN • Results & Revisions 01/05 - Daiseki, San-A, Nissin Foods

Japan starts 2021 is a subdued mood as the Yen trending towards ¥100 against the US dollar, daily COVID case counts reach new highs.

Campbell Gunn

Nissin Food (1475 HK): 2H Repeat?

Investing in Nissin Foods (1475 HK) prior to the pandem

Henry Soediarko

Danone Sells The Last of Their Yakult - Buy the Cleanup

Today after the close it was announced that $Danone

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nissin Foods Placement: Could Be a Result of a Discord Between Shareholders and The Company

Nissin's LT investors are reducing their shareholdings, amidst discussions regarding changes to the shareholding structure, in response to the...

Oshadhi Kumarasiri

Nissin Foods Placements - Shouldn't Have a Large Impact

Three shareholders of Nissin Foods plan to raise around US$226m via a global offering by selling 2.9% of the company. The selldown is being...

Sumeet Singh

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/05 - Daiseki, San-A, Nissin Foods

Japan starts 2021 is a subdued mood as the Yen trending towards ¥100 against the US dollar, daily COVID case counts reach new highs.

Campbell Gunn

Nissin Food (1475 HK): 2H Repeat?

Investing in Nissin Foods (1475 HK) prior to the pandem

Henry Soediarko

Danone Sells The Last of Their Yakult - Buy the Cleanup

Today after the close it was announced that $Danone

Travis Lundy

🇯🇵 JAPAN • Results & Revisions 01/05 - Daiseki, San-A, Nissin Foods