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

On 17 September, <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> announced a non-binding privatisation proposal from DCP Capital Partners, a PE firm in Asia. The bid of $79.05 in cash per common share represents a premium of 16.05% to the undisturbed price on 16 September and a premium of 18.82% to the VWAP during the last 30 days. <div class="content-highlight">As 51job is incorporated in the Cayman Islands, for the privatisation to succeed, shareholders representing two-thirds of shares present and voting need to approve the deal. DCP has not disclosed a shareholding. 51job’s two largest shareholders are <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> (35.0% stake) and Rick Yan, co-founder and CEO (19.3% stake). The share price closed at $79.42 per ADS, marginally above the privatisation price indicating a chance of a bump to the price. We think that privatisation succeeds as the most likely scenario is that Recruit and Rick Yan participate as rollover shareholders.  </div>

On 17 September, 51 Job Inc Adr (JOBS US) announced a non-binding privatisation proposal from DCP Capital Partners, a PE firm in Asia. The bid of $79.05 in cash per common share represents a premium of 16.05% to the undisturbed price on 16 September and a premium of 18.82% to the VWAP during the last 30 days. As 51job is incorporated in the Cayman Islands, for the privatisation to succeed, shareholders representing two-thirds of shares present and voting need to approve the deal. DCP has not disclosed a shareholding. 51job’s two largest shareholders are Recruit Holdings (6098 JP) (35.0% stake) and Rick Yan, co-founder and CEO (19.3% stake). The share price closed at $79.42 per ADS, marginally above the privatisation price indicating a chance of a bump to the price. We think that privatisation succeeds as the most likely scenario is that Recruit and Rick Yan participate as rollover shareholders.  

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
HR solutions provider <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> has announced it has received a preliminary non-binding <a href="https://sec.report/Document/0001104659-20-105912/" target="_blank" rel="noopener">Proposal</a> from DCP Capital Partners to acquire all of its shares for US$79.05/common share.
The Proposal represents a premium of 18.82% to 51job's 30-day VWAP, and a premium of 16.05% to 51job's last close.
DCP Capital? It is an international private equity firm in Asia, where the team previously led KKR and Morgan Stanley’s private equity businesses in Asia.
This Offer makes a change from the usual management buyouts in which the Offer consideration often finds minority shareholders left wanting.
However, pricing appears opportunistic after 51job was down 20% YTD, ahead of the Offer. Currently, trading through terms at US$79.42.
There are no super-voting rights in 51job. Directors hold 22.8% of shares including Rick Yau (co-founder, CEO) with 19.2%. The major shareholder is <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> with 35%.
As always, more below the fold.
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HR solutions provider 51 Job Inc Adr (JOBS US) has announced it has received a preliminary non-binding Proposal from DCP Capital Partners to acquire all of its shares for US$79.05/common share.
The Proposal represents a premium of 18.82% to 51job's 30-day VWAP, and a premium of 16.05% to 51job's last close.
DCP Capital? It is an international private equity firm in Asia, where the team previously led KKR and Morgan Stanley’s private equity businesses in Asia.
This Offer makes a change from the usual management buyouts in which the Offer consideration often finds minority shareholders left wanting.
However, pricing appears opportunistic after 51job was down 20% YTD, ahead of the Offer. Currently, trading through terms at US$79.42.
There are no super-voting rights in 51job. Directors hold 22.8% of shares including Rick Yau (co-founder, CEO) with 19.2%. The major shareholder is Recruit Holdings (6098 JP) with 35%.
As always, more below the fold.





You're Hired! DCP's Proposal For 51job.Inc.

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/485/original/2020-09-01_16-17-11.png?1598992358" class="editor-image img-responsive" data-smartkarma-image-id="156485"></figure>
<div class="content-caption">Source for all charts: Japan Analytics</div>
DAILY RESULTS &amp; REVISIONS REVIEW - We resume our series of daily Insights reviewing the results and revisions released by Japanese companies in the last 24 hours. Our purpose is to provide brief commentary on notable changes in trends in earnings for individual companies as well as offering an early warning system on any sector and peer group trends. Where relevant, we shall also comment on valuation and relative price outliers using our proprietary models. Our coverage covers all listed companies until the number of reporting companies precludes it. Since our last 'R&amp;R' Insight covering 14th August, both our aggregate Results Score and Revision Score have continued to set new lows, the latter driven mostly by interim revisions. The companies currently reporting are mainly those with January, April, July, and October year-ends. Accordingly, the results reflect the period of greatest COVID-19 economic dislocation.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/486/original/2020-09-01_18-43-01.png?1598993171" class="editor-image img-responsive" data-smartkarma-image-id="156486"></figure>
SECTOR TIMELINES - The significant Sector changes since our last Insight have been declines in the Commercial Services<a href="https://www.smartkarma.com/entities/funai-soken-holdings-inc" target="_blank" data-smartkarma-citation="entities:4622:1" rel="noopener">Funai Soken (9757 JP)</a> and <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit (6098 JP)</a>) and Other Commercial Products (<a href="https://www.smartkarma.com/entities/toppan-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:11875:1" rel="noopener">Toppan Printing (7911 JP)</a>) Sectors.  Only three Sectors -  Internet, Information Technology, and Non-Bank Finance have positive Scores. The Energy Sector has the strongest positive earnings momentum, while Transportation &amp; Logistics has the worst negative trend.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/487/original/2020-09-02_06-40-13.png?1598996429" class="editor-image img-responsive" data-smartkarma-image-id="156487"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/489/original/2020-09-02_06-41-01.png?1598996496" class="editor-image img-responsive" data-smartkarma-image-id="156489"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/490/original/2020-09-02_06-42-02.png?1598996538" class="editor-image img-responsive" data-smartkarma-image-id="156490"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/491/original/2020-09-02_06-44-36.png?1598996694" class="editor-image img-responsive" data-smartkarma-image-id="156491"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/492/original/2020-09-02_06-46-39.png?1598996814" class="editor-image img-responsive" data-smartkarma-image-id="156492"></figure>

DAILY STATS - With only nine announcements, our statistics section is brief. All four results scored negatively with an average Results Score of -6.0. The average year-on-year quarterly revenue change was -12%, and OPM declined by 2.7 percentage points. Only one of the five revisions scored positively - the average Forecast/Revision Score was -15.6.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/493/original/2020-09-01_16-10-30.png?1598997263" class="editor-image img-responsive" data-smartkarma-image-id="156493"></figure>
MEANWHILE - The Bank of Japan appears content with current market levels and has only intervened once in the last twenty trading sessions and for 20% less than the previous sixteen occasions.


Source for all charts: Japan Analytics
DAILY RESULTS &amp; REVISIONS REVIEW - We resume our series of daily Insights reviewing the results and revisions released by Japanese companies in the last 24 hours. Our purpose is to provide brief commentary on notable changes in trends in earnings for individual companies as well as offering an early warning system on any sector and peer group trends. Where relevant, we shall also comment on valuation and relative price outliers using our proprietary models. Our coverage covers all listed companies until the number of reporting companies precludes it. Since our last 'R&amp;R' Insight covering 14th August, both our aggregate Results Score and Revision Score have continued to set new lows, the latter driven mostly by interim revisions. The companies currently reporting are mainly those with January, April, July, and October year-ends. Accordingly, the results reflect the period of greatest COVID-19 economic dislocation.

SECTOR TIMELINES - The significant Sector changes since our last Insight have been declines in the Commercial ServicesFunai Soken (9757 JP) and Recruit (6098 JP)) and Other Commercial Products (Toppan Printing (7911 JP)) Sectors.  Only three Sectors -  Internet, Information Technology, and Non-Bank Finance have positive Scores. The Energy Sector has the strongest positive earnings momentum, while Transportation &amp; Logistics has the worst negative trend.






DAILY STATS - With only nine announcements, our statistics section is brief. All four results scored negatively with an average Results Score of -6.0. The average year-on-year quarterly revenue change was -12%, and OPM declined by 2.7 percentage points. Only one of the five revisions scored positively - the average Forecast/Revision Score was -15.6.

MEANWHILE - The Bank of Japan appears content with current market levels and has only intervened once in the last twenty trading sessions and for 20% less than the previous sixteen occasions. 

🇯🇵 JAPAN • Results & Revisions 09/01 - Ito En, Ain, Ride On Express

Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/kakaku-com-inc" target="_blank" data-smartkarma-citation="entities:7408:1" rel="noopener">Kakaku.com Inc (2371 JP)</a> reported weak 1Q FY03/21 results last week. While this was mostly due to the impact of COVID-19, the recovery seems to be slow. However, we continue to like Kakaku for its longer-term prospects, especially that of Tabelog’s, which has been growing in popularity as a restaurant booking platform over its competitors like Hot Pepper Gourmet (operated by <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a>) and <a href="https://www.smartkarma.com/entities/gurunavi-inc" target="_blank" data-smartkarma-citation="entities:13127:1" rel="noopener">Gurunavi Inc (2440 JP).</a> Nevertheless, Kakaku still looks expensive, and we believe it would be worthwhile to wait for further pullback to enter.

Kakaku.com Inc (2371 JP) reported weak 1Q FY03/21 results last week. While this was mostly due to the impact of COVID-19, the recovery seems to be slow. However, we continue to like Kakaku for its longer-term prospects, especially that of Tabelog’s, which has been growing in popularity as a restaurant booking platform over its competitors like Hot Pepper Gourmet (operated by Recruit Holdings (6098 JP)) and Gurunavi Inc (2440 JP). Nevertheless, Kakaku still looks expensive, and we believe it would be worthwhile to wait for further pullback to enter. 

Kakaku.com: Weak 1Q Due to COVID-19; Recovery Has Been Slow

A slowdown in the HR Technology business, which operates the two popular employment websites, indeed.com (Indeed) and glassdoor.com (Glassdoor), is one of many risks for <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> (Recruit) that we have highlighted in our previous notes.We expect Recruit’s HR Technology business revenue growth to decrease by around 27%-32% YoY in 1Q FY03/21. Indeed’s web traffic has picked up slightly in 1Q FY03/21, but we believe the impact of this would be offset by a decline in the ARPU, owing to weak recruitment activity by US employers.As revenue growth decelerates even faster than before due to the impact of COVID-19, we believe that the HR Technology business should rerate to a reasonable EV/Revenue multiple of 3.5-4.0x, implying a downside of c.10%-14% to the current market price (of ¥3,622 as of July 10, 2020).

A slowdown in the HR Technology business, which operates the two popular employment websites, indeed.com (Indeed) and glassdoor.com (Glassdoor), is one of many risks for Recruit Holdings (6098 JP) (Recruit) that we have highlighted in our previous notes.We expect Recruit’s HR Technology business revenue growth to decrease by around 27%-32% YoY in 1Q FY03/21. Indeed’s web traffic has picked up slightly in 1Q FY03/21, but we believe the impact of this would be offset by a decline in the ARPU, owing to weak recruitment activity by US employers.As revenue growth decelerates even faster than before due to the impact of COVID-19, we believe that the HR Technology business should rerate to a reasonable EV/Revenue multiple of 3.5-4.0x, implying a downside of c.10%-14% to the current market price (of ¥3,622 as of July 10, 2020).

Recruit Holdings [Alt Data]: Indeed’s Traffic Picks Up, But Weak Hiring Activity Could Hurt Recruit

Japan

Recruit Holdings Co. Ltd. operates information providing services in human resource, housing, bridal, travel, restaurants, beauty, automobiles, and education and more. The company also operate staffing services and advertising business.

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Recruit Holdings (6098 JP)

51job’s Privatisation Bid from DCP

On 17 September, $jobs us announced a non-binding privatisation proposal from DCP Capital Partners, a PE firm in Asia. The bid of $79.05 in cash...

Arun George

You're Hired! DCP's Proposal For 51job.Inc.

Sina Corp (Class A) (SINA US) looks sets to join the growing list of Chinese companies seeking to delist in the US and relist, ostensibly in Hong...

David Blennerhassett

🇯🇵 JAPAN • Results & Revisions 09/01 - Ito En, Ain, Ride On Express

DAILY RESULTS & REVISIONS REVIEW - We resume our series of daily Insights reviewing the results and revisions released by Japanese companies...

Campbell Gunn

Kakaku.com: Weak 1Q Due to COVID-19; Recovery Has Been Slow

Kakaku.com Inc (2371 JP) reported weak 1Q FY03/21 results last week. While this was mostly due to the impact of COVID-19, the recovery seems to be...

Supun Walpola

Recruit Holdings [Alt Data]: Indeed’s Traffic Picks Up, But Weak Hiring Activity Could Hurt Recruit

A slowdown in the HR Technology business, which operates the two popular employment websites, indeed.com (Indeed) and glassdoor.com (Glassdoor), is...

Supun Walpola

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