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/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> notes that the pre-condition for JIC’s tender has been satisfied. The offer price remains unchanged at JPY4,350 per share. </li>
<li>The offer remains attractive despite the material re-rating of peers. The tender should succeed when combined with shareholder fatigue and a lack of vocal opposition. </li>
<li>The tender requires a 66.7% minority acceptance rate. The gross and annualised spread for a 23 April payment is 0.6% and 7.1%, respectively.</li>
</ul>



JSR Corp (4185 JP) notes that the pre-condition for JIC’s tender has been satisfied. The offer price remains unchanged at JPY4,350 per share. 
The offer remains attractive despite the material re-rating of peers. The tender should succeed when combined with shareholder fatigue and a lack of vocal opposition. 
The tender requires a 66.7% minority acceptance rate. The gross and annualised spread for a 23 April payment is 0.6% and 7.1%, respectively.


JSR Corporation (4185 JP): JIC Tender Starts and Should Succeed Despite Shin-Etsu’s Re-Rating

<ul>
<li>Bloomberg reports that JIC will start the <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> tender as early as 19 March. Separately, SUNY RF filed a response to Inpria/JSR’s 6 March filing last night.</li>
<li>My reading of JSR and SUNY RF’s filings suggests that the Court is unlikely to conclude that SUNY RF’s lawsuit will be harmed if JIC proceeds with the tender offer.</li>
<li>JIC seems comfortable taking on the litigation risk (if required). The key risk remains timing. For a late April payment, gross/annualised spread is 0.6%/4.0%.   </li>
</ul>


Bloomberg reports that JIC will start the JSR Corp (4185 JP) tender as early as 19 March. Separately, SUNY RF filed a response to Inpria/JSR’s 6 March filing last night.
My reading of JSR and SUNY RF’s filings suggests that the Court is unlikely to conclude that SUNY RF’s lawsuit will be harmed if JIC proceeds with the tender offer.
JIC seems comfortable taking on the litigation risk (if required). The key risk remains timing. For a late April payment, gross/annualised spread is 0.6%/4.0%.   


JSR Corporation (4185 JP): SUNY RF Responds as JIC Tender Rumoured for a 19 Mar Start

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> has filed a solid response to SUNY RF’s lawsuit. SUNY RF will counter with a response by 13 March. </li>
<li>The response suggests that SUNY RF’s lawsuit will not be harmed if JIC proceeds with TOB, which is the strongest indication that JIC is comfortable taking on the litigation risk. </li>
<li>A media article stating that SAMR has allowed JIC to withdraw its merger control filing helps explain the current tight spread. However, the article needs to be treated with caution. </li>
</ul>



JSR Corp (4185 JP) has filed a solid response to SUNY RF’s lawsuit. SUNY RF will counter with a response by 13 March. 
The response suggests that SUNY RF’s lawsuit will not be harmed if JIC proceeds with TOB, which is the strongest indication that JIC is comfortable taking on the litigation risk. 
A media article stating that SAMR has allowed JIC to withdraw its merger control filing helps explain the current tight spread. However, the article needs to be treated with caution. 


JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a>’s shares rose 4.8% due to a <a href="https://www.nikkan.co.jp/articles/view/00703806" target="_blank" rel="noopener">Nikkan Kogyo article</a> that states that JIC will start the tender within the month due to concluding negotiations with SAMR. </li>
<li>Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.</li>
<li>Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating. </li>
</ul>



JSR Corp (4185 JP)’s shares rose 4.8% due to a Nikkan Kogyo article that states that JIC will start the tender within the month due to concluding negotiations with SAMR. 
Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.
Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating. 


JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

Equity Bottom-Up

<ul>
<li>Q423 revenues of ¥105.1 billion, about 5% better than forecasted, up 5% QoQ but down ~10% YoY.</li>
<li>Q124 revenues forecasted to decline 17% QoQ to ¥87 billion. Not surprisingly, EBITDA will also decline 33% QoQ to ¥22.1 billion.</li>
<li>On a brighter note, demand growth driven by generative AI will roughly double wafer demand for servers (AI+General) by 2027</li>
</ul>


Q423 revenues of ¥105.1 billion, about 5% better than forecasted, up 5% QoQ but down ~10% YoY.
Q124 revenues forecasted to decline 17% QoQ to ¥87 billion. Not surprisingly, EBITDA will also decline 33% QoQ to ¥22.1 billion.
On a brighter note, demand growth driven by generative AI will roughly double wafer demand for servers (AI+General) by 2027


SUMCO's Sobering Outlook For Silicon Wafers

Japan

Shin-Etsu Chemical Co., Ltd. produces and distributes synthetic resins and other chemical products such as fertilizers. The Company also manufactures electronic materials such as semiconductor silicon, synthetic, and rare earth quartz. Shin-Etsu Chemical operates in Japan and overseas.

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Shin Etsu Chemical (4063 JP)

JSR Corporation (4185 JP): JIC Tender Starts and Should Succeed Despite Shin-Etsu’s Re-Rating

The offer remains attractive despite the material re-rating of peers. The gross and annualised spread for a 23 April payment is 0.6% and 7.1%,...

Arun George

JSR Corporation (4185 JP): SUNY RF Responds as JIC Tender Rumoured for a 19 Mar Start

SAMR approval looks done. JIC seems comfortable taking on the litigation risk (if required). The key risk remains timing. For a late April payment,...

Arun George

JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval

JSR has filed a solid response to SUNY RF’s lawsuit. Crucially, the response implies that JIC is comfortable taking on litigation risk. Separately,...

Arun George

JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What

While a tender start by March-end is possible, we would treat the news article cautiously. Based on current information, there are five possible...

Arun George

SUMCO's Sobering Outlook For Silicon Wafers

Q423 revenues of ¥105.1 billion, +5% QoQ but -10% YoY. Q124 revenues -17% QoQ to ¥87 billion. EBITDA -33% QoQ to ¥22.1 billion. AI demand will...

William Keating

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