Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Yesterday, <a href="https://www.smartkarma.com/entities/tokyo-rakutenchi-co-ltd" target="_blank" data-smartkarma-citation="entities:2078:1" rel="noopener">Tokyo Rakutenchi (8842 JP)</a>'s #1 shareholder <a href="https://www.smartkarma.com/entities/toho-co-ltd" target="_blank" data-smartkarma-citation="entities:7806:1" rel="noopener">Toho Co Ltd (9602 JP)</a> agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.</li>
<li>The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.</li>
<li>The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR &gt;1.0, but Price/NAV of the takeover is 0.7x, without synergies included. </li>
</ul>


Yesterday, Tokyo Rakutenchi (8842 JP)'s #1 shareholder Toho Co Ltd (9602 JP) agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.
The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.
The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR &gt;1.0, but Price/NAV of the takeover is 0.7x, without synergies included. 


Toho Takeout of Rakutenchi - Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tokyo-rakutenchi-co-ltd" target="_blank" data-smartkarma-citation="entities:2078:1" rel="noopener">Tokyo Rakutenchi (8842 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/toho-co-ltd" target="_blank" data-smartkarma-citation="entities:7806:1" rel="noopener">Toho Co Ltd (9602 JP)</a>’s tender offer of JPY6,720 per share, a 51.5% premium to the undisturbed (6 December). </li>
<li>The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 24.29% ownership ratio.</li>
<li>Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate. This acceptance rate is doable as the offer represents a ten-year high. </li>
</ul>



Tokyo Rakutenchi (8842 JP) has recommended Toho Co Ltd (9602 JP)’s tender offer of JPY6,720 per share, a 51.5% premium to the undisturbed (6 December). 
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 24.29% ownership ratio.
Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate. This acceptance rate is doable as the offer represents a ten-year high. 


Tokyo Rakutenchi (8842 JP): Toho’s Tender Offer at JPY6,720

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.

Mitsubishi UFJ Financial (MUFG) / Event-Driven

<ul>
<li>Following up on our earlier cross-shareholding notes, in this note we look at <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>’s cross-shareholding.</li>
<li>MUFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$19bn.</li>
<li>In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.</li>
</ul>


Following up on our earlier cross-shareholding notes, in this note we look at Mitsubishi UFJ Financial (MUFG) (8306 JP)’s cross-shareholding.
MUFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$19bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.


MUFG Cross-Shareholding - At Least US$20bn of Cross-Shareholding to Sell, Taking It Slow

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC IPOs & Placements

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fadu-inc" target="_blank" data-smartkarma-citation="entities:39896:1" rel="noopener">Fadu (440110 KS)</a> is looking to raise up to US$147m in its Korean IPO.</li>
<li>Fadu is a South Korean fabless semiconductor maker mainly engaged in flash storage technology innovation. Its core products are Enterprise Solid State Drive (SSD) and Enterprise SSDs. </li>
<li>Fadu’s revenue growth has been stupendous, to say the least. However, the firm’s revenues are derived mainly from two customers, which exposes it to a large degree of concentration risk.</li>
</ul>



Fadu (440110 KS) is looking to raise up to US$147m in its Korean IPO.
Fadu is a South Korean fabless semiconductor maker mainly engaged in flash storage technology innovation. Its core products are Enterprise Solid State Drive (SSD) and Enterprise SSDs. 
Fadu’s revenue growth has been stupendous, to say the least. However, the firm’s revenues are derived mainly from two customers, which exposes it to a large degree of concentration risk.


Fadu Pre-IPO - Stupendous Revenue Growth but Heavily Reliant on Two Key Customers

<ul>
<li>
<a href="https://www.smartkarma.com/entities/i-pex-inc" target="_blank" data-smartkarma-citation="entities:12587:1" rel="noopener">I-PEX (6640 JP)</a> has recommended an MBO at JPY2,950, 85.2% premium to the last close of JPY1,593.</li>
<li>While attractive compared to peer multiples and historical trading ranges, it is light due to an implied P/B below 1x and 11% below the mid-point IFA DCF valuation range.</li>
<li>The lack of activists on the register suggests a done deal.  The tender offer runs from 8 November to 19 December (30 business days), with payment commencing from 26 December. </li>
</ul>



I-PEX (6640 JP) has recommended an MBO at JPY2,950, 85.2% premium to the last close of JPY1,593.
While attractive compared to peer multiples and historical trading ranges, it is light due to an implied P/B below 1x and 11% below the mid-point IFA DCF valuation range.
The lack of activists on the register suggests a done deal.  The tender offer runs from 8 November to 19 December (30 business days), with payment commencing from 26 December. 


I-PEX (6640 JP): MBO at an 85% Takeover Premium but Implies P/B <1x

Japan

TOKYO RAKUTENCHI CO., LTD. leases real estate properties mainly in Kinshi-cho, Tokyo.  The Company also operates restaurants, saunas, bowling alleys, game centers, karaoke places, and theaters.

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Tokyo Rakutenchi (8842 JP)

Toho Takeout of Rakutenchi - Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.

Toho (9602) is taking out a real estate operations affiliate Tokyo Rakutenchi. It is doing so at 1.2x book but probably 0.7x NAV. And the Board...

Travis Lundy