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/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>’s JPY8,620 offer for <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.</li>
<li>MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer. </li>
<li>The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump. </li>
</ul>



Kirin Holdings (2503 JP)’s JPY8,620 offer for Fancl Corp (4921 JP) closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.
MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer. 
The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump. 


Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump

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.

Equity Bottom-Up

Mandarin Oriental International / Equity Bottom-Up

<ul>
<li>This is the final installment in our series on the APAC Luxury Industry, where we highlighted that luxury travel might offer more appealing opportunities than traditional luxury goods.</li>
<li>While travel has surpassed pre-pandemic levels, traditional luxury goods have shown very low demand in recent months.</li>
<li>Below, we analyze recent trends in luxury travel for <a href="https://www.smartkarma.com/entities/mandarin-oriental-international-ltd" target="_blank" data-smartkarma-citation="entities:4773:1" rel="noopener">Mandarin Oriental International (MAND SP)</a>, <a href="https://www.smartkarma.com/entities/minor-international-pcl" target="_blank" data-smartkarma-citation="entities:2154:1" rel="noopener">Minor International (MINT TB)</a>, and <a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a>.</li>
</ul>


This is the final installment in our series on the APAC Luxury Industry, where we highlighted that luxury travel might offer more appealing opportunities than traditional luxury goods.
While travel has surpassed pre-pandemic levels, traditional luxury goods have shown very low demand in recent months.
Below, we analyze recent trends in luxury travel for Mandarin Oriental International (MAND SP), Minor International (MINT TB), and Shiseido Company (4911 JP).


APAC Luxury Industry Series Update: Travel Rebounds While Goods Decline

<ul>
<li>The <a href="https://www.smartkarma.com/entities/l-occitane-international-sa" target="_blank" data-smartkarma-citation="entities:6772:1" rel="noopener">L'Occitane (973 HK)</a> IFA opines that Reinold Geiger’s conditional voluntary cash (HK$34.00) or scrip offer (10 rollover shares for each share, subject to a cap) is fair and reasonable.</li>
<li>Irrevocable/Letters of support have nudged lower from 49.83% (17 June) to 47.66% of disinterested shares due to Southeastern Asset Management selling its shares. </li>
<li>Nevertheless, the scrip option, an attractive offer and no vocal opposition should facilitate achieving the minimum acceptance condition. At the last close, the gross spread was 2.4%.</li>
</ul>


The L'Occitane (973 HK) IFA opines that Reinold Geiger’s conditional voluntary cash (HK$34.00) or scrip offer (10 rollover shares for each share, subject to a cap) is fair and reasonable.
Irrevocable/Letters of support have nudged lower from 49.83% (17 June) to 47.66% of disinterested shares due to Southeastern Asset Management selling its shares. 
Nevertheless, the scrip option, an attractive offer and no vocal opposition should facilitate achieving the minimum acceptance condition. At the last close, the gross spread was 2.4%.


L’Occitane (973 HK): Conditional Offer Opens

<ul>
<li>
<a href="https://www.smartkarma.com/entities/l-occitane-international-sa" target="_blank" data-smartkarma-citation="entities:6772:1" rel="noopener">L'Occitane (973 HK)</a> announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.</li>
<li>The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer. </li>
<li>Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).</li>
</ul>



L'Occitane (973 HK) announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.
The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer. 
Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).


L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> recommended <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price. </li>
<li>The timing looks opportunistic as Fancl's shares are down 20% YTD. The offer period is from 17 June to 29 July.</li>
<li>While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light. </li>
</ul>



Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price. 
The timing looks opportunistic as Fancl's shares are down 20% YTD. The offer period is from 17 June to 29 July.
While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light. 


Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

Japan

Shiseido Company, Limited manufactures cosmetic and toiletry products. The Company offers an array of makeup and skin-care products, toiletries, beauty salon, pharmaceuticals, foodstuffs, and fine chemicals.

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Shiseido Company (4911 JP)

Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump

Kirin has extended the tender offer period from 29 July to 13 August (40 business days). Kirin believes the JPY2,690 offer sufficiently reflects...

Arun George

APAC Luxury Industry Series Update: Travel Rebounds While Goods Decline

Luxury travel has exceeded pre-pandemic levels, demand for traditional luxury goods has remained very low in recent months.

Oshadhi Kumarasiri

L’Occitane (973 HK): Conditional Offer Opens

The scrip option, an attractive offer and no vocal opposition should facilitate achieving the minimum acceptance condition. At the last close, the...

Arun George

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

The timing is opportunistic. While the offer is attractive compared to peer multiples, it is light compared to historical trading ranges. Securing...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump

Kirin has extended the tender offer period from 29 July to 13 August (40 business days). Kirin believes the JPY2,690 offer sufficiently reflects...

Arun George

APAC Luxury Industry Series Update: Travel Rebounds While Goods Decline

​Luxury travel has exceeded pre-pandemic levels, demand for traditional luxury goods has remained very low in recent months.

Oshadhi Kumarasiri

L’Occitane (973 HK): Conditional Offer Opens

The scrip option, an attractive offer and no vocal opposition should facilitate achieving the minimum acceptance condition. At the last close, the...

Arun George

L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional

An attractive offer and the share alternative facilitate meeting the 90% minimum acceptance condition. This looks like a done deal. At the current...

Arun George

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

The timing is opportunistic. While the offer is attractive compared to peer multiples, it is light compared to historical trading ranges. Securing...

Arun George

Luxury travel has exceeded pre-pandemic levels, demand for traditional luxury goods has remained very low in recent months.