Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Equity Capital Markets

Seibu is a tough stock to write about, but in the short-term, crowding trumps everything.&nbsp;When such a large discount is on offer for such a large stock in such a large market (Japan), in what is a stable business (hotels, rails, golf courses), this would normally be a reason to buy. But the offering just launched&nbsp;whereby long-suffering Cerberus &amp; its affiliates sell down a portion of what&nbsp;they were unable to sell down in the initial offering&nbsp;signals the beginning of the unwind of an overhang.&nbsp;To take or not take the deal at the bottom end of the range is a tough call. At the bottom of the range (-7.4% vs the close), it is a big discount. And it is a big, big block, which means it will have to be placed well by the broker running the block. To me this suggests the possibility of a reverse enquiry driving a chunk of this deal. In which case, buying the minority stake at that discount is a decent bet, because the trade-able increase in float would be smaller. But that is a short-term play. In today, out tomorrow. And even with that kind of discount, I think it is not a great bet. It might simply be Cerberus getting around to trying to sell a chunk of stock and not knowing where it is going to go. &nbsp;I would avoid this deal. It is a tough sell. And I expect, as the lady in the pink coat responds to Forrest Gump when he asks "Isn't this&nbsp;your bus?".... "There'll be another one along shortly."But this deal creates the occasion for investors to take a deeper look at what is for sale. It's worth a look.

Seibu is a tough stock to write about, but in the short-term, crowding trumps everything.&nbsp;When such a large discount is on offer for such a large stock in such a large market (Japan), in what is a stable business (hotels, rails, golf courses), this would normally be a reason to buy. But the offering just launched&nbsp;whereby long-suffering Cerberus &amp; its affiliates sell down a portion of what&nbsp;they were unable to sell down in the initial offering&nbsp;signals the beginning of the unwind of an overhang.&nbsp;To take or not take the deal at the bottom end of the range is a tough call. At the bottom of the range (-7.4% vs the close), it is a big discount. And it is a big, big block, which means it will have to be placed well by the broker running the block. To me this suggests the possibility of a reverse enquiry driving a chunk of this deal. In which case, buying the minority stake at that discount is a decent bet, because the trade-able increase in float would be smaller. But that is a short-term play. In today, out tomorrow. And even with that kind of discount, I think it is not a great bet. It might simply be Cerberus getting around to trying to sell a chunk of stock and not knowing where it is going to go. &nbsp;I would avoid this deal. It is a tough sell. And I expect, as the lady in the pink coat responds to Forrest Gump when he asks "Isn't this&nbsp;your bus?".... "There'll be another one along shortly."But this deal creates the occasion for investors to take a deeper look at what is for sale. It's worth a look.

SEIBU HOLDINGS:  Tough deal to swallow, long-term there's hope.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Cerberus Private Equity and Affiliates plan to sell&nbsp;US$865 MM worth of&nbsp;Seibu Holdings (9024 JP) or 9.9% of the company through a secondary placement.We would avoid the deal given that Cerberus has a lot more stock left to sell (apparently had a disagreement with the founder at the time of IPO and didn't sell any stock then) and this will likely keep more deals coming and could prove to be an overhang for the stock. In addition, while the stock has more than doubled since its IPO last year but the company's earnings outlook remains far from exciting.

Cerberus Private Equity and Affiliates plan to sell&nbsp;US$865 MM worth of&nbsp;Seibu Holdings (9024 JP) or 9.9% of the company through a secondary placement.We would avoid the deal given that Cerberus has a lot more stock left to sell (apparently had a disagreement with the founder at the time of IPO and didn't sell any stock then) and this will likely keep more deals coming and could prove to be an overhang for the stock. In addition, while the stock has more than doubled since its IPO last year but the company's earnings outlook remains far from exciting.

Cerberus could keep the supply coming, while management's outlook doesn't appear exciting

Japan

Keihan Holdings Co., Ltd. mainly provides passenger rail and bus transportation in Osaka and Kyoto prefectures.  The Company operates department stores, hotels, travel agents, and restaurants in the vicinity of its railway system.  The Company leases and sells real estate and offers a wide range of construction works.

TOKAI Holdings Corporation is a holding company established through reorganization of TOKAI CORPORATION and VIC TOKAI CORPORATION.  The Group mainly provides energy business and information-communication business.  TOKAI Holdings Corporation also provides construction and real estate, bridal and insurance and security businesses.

Nisshinbo Holdings Inc. manufactures cotton fabrics, synthetic textiles, and chemical products used in apparel and industrial materials.  The Company also makes a variety of paper products, electronics products for wireless communication devices and semiconductors, and specialized machines for industrial manufacturing. In addition, Nisshinbo makes brakes for automobiles.

Katakura Industries Co., Ltd. operates in a range of business segments. The Company manfucatures and sells clothing and textile products, pharmaceutical products, automobile parts, fire pump cars and agricultural machinery. Katakura also operates shopping and home centers, the leasing of real estate and the provision of building management services.

Mie Kotsu Group Holdings, Inc. through its subsidiaries, provides bus and taxi transportation services in Mie prefecture. The company also sells, leases and manages houses, apartment and commercial facilities. In addition, Mie Kotsu operates department stores, hotels, and leisure-related services and construction works.

Nippi, Incorporated. manufactures gelatin and collagen peptides for food products, health foods, and pharmaceutical, photographic film and printing paper.  The Company manufactures leather for shoes, bags, car interiors and clothing.

Kurita Water Industries Ltd. manufactures, sells, and maintains water treatment equipment and systems.  The Company's products include water purification and waste water treatment equipment as well as soil remediation systems.  Kurita also manufactures and sells chemicals for water treatment related to sanitation, air-conditioning, and construction.

IHI Corporation manufactures heavy machinery. The Company produces aircraft jet engines, rocket propulsion systems, and ships for military and commercial use. Ishikawajima-Harima also constructs petroleum refineries and nuclear power plants.

HOSHIZAKI ELECTRIC CORPORATION manufactures and sells commercial use kitchen equipment such as freezers, refrigerators, food/beverage dispensers.  The Company has sales subsidiaries across Japan as well as overseas.

Sanwa Holdings Corporation heavy & light weight shutters, doors, and window units.  The Company provides integrated service of design, installation, and repair.

Beijing Enterprises Holdings Ltd. is a diversified company.  The Company brews beer; distributes natural gas through pipelines; invests in, designs, constructs and operates water supply and wastewater treatment plants; operates toll roads; disposes of hazardous waste; and offers electronic payment systems.

NWS Holdings Limited operates businesses under three main divisions: Service, Infrastructure, and Ports. Its Service division comprises facilities, contracting, transport, financial, and environmental. The Infrastructure portfolio includes roads and bridges, energy, and water treatment and waste management. Its port division includes container handling, logistics, and warehousing.

Far Eastern New Century Corporation manufactures, processes and markets textile products.  The Company's products include polyester materials, natural and synthetic yarns,fabrics, towels, bed sheets, and woven and knitted garments. Throughits subsidiary companies, Far Eastern sells cellular phones and accessories.

Apar Industries Ltd. manufactures aluminum conductors for power transmission. The Company also manufactures polymers, synthetic rubbers, latexes, transformer oils, pharmaceutical oils and other specialty oils.

JG Summit Holdings Inc. operates in the consumer foods, agro-industrial and commodity food products, and textiles industries. The Company also invests in real estate, manages hotel, and provides apartment management services. In addition, JG also provides banking and financial services, and invests in telecommunications, petrochemicals, and air transportation businesses.

Aboitiz Equity Ventures Inc., through its subsidiaries, distributes and generates power, provides financial services, manufactures food, and provides inter-island transportation services.

Sime Darby Berhad is an investment holding company. The Group's principal activities include plantations, property development, heavy equipment and motor vehicle distribution, and energy and utilities.

San Miguel Corporation operates food, beverage, packaging, power, fuel and oil, infrastructure and telecommunications businesses.  The Company produces beverages, poultry, animal feed, meat, 
flour, dairy products, and glass and plastic packaging; generates electricity; refines and markets petroleum products; builds infrastructure; and provides telecommunications services.

The Bidvest Group Limited is the holding company for a group of companies operating in a range of sectors. Subsidiaries manufacture and distribute food and allied products to the catering industry, as well as packaging, stapling, fastening and adhesive tapes, office products, cosmetics, toiletries and skin care products. Bidvest also provides laundering services.

Turkiye Sise ve Cam Fabrikalari AS (Sisecam)  manufactures glass.  The Company produces flat glass, bottles, household glassware, glass wire, chromium chemicals, glass fibre, and glass reinforced plastics.  Sisecam also offers packaging materials and machinery, composites and marketing, chemicals, trade, insurance and brokerage services.

Seibu Holdings Inc. offers diversified operation. The Company through its subsidiary companies operates transportation, construction, hotel, leisure facilities, and real estate business. Seibu Holdings provides group enterprises strategy planning, operation management, asset management and supply, and business promotions.

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Seibu Holdings (9024 JP)

SEIBU HOLDINGS: Tough deal to swallow, long-term there's hope.

Seibu is a tough stock to write about, but in the short-term, crowding trumps everything. When such a large discount is on offer for such a large...

Travis Lundy

Cerberus could keep the supply coming, while management's outlook doesn't appear exciting

Cerberus Private Equity and Affiliates plan to sell US$865 MM worth of Seibu Holdings (9024 JP) or 9.9% of the company through a secondary...

Sumeet Singh

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