Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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Toshiba plans to raise US$475m through a sale of its 30% stake in Topcon.The deal scores well on our framework and we would be inclined to take it, given: 1) The deal seems well anticipated, as evidenced by the share price holding up well post the deal announcement; 2) The company has demonstrated a good track record over the past few years and remains on track to meet its mid-term targets; 3) Valuation remains reasonable, given the growth outlook, and analysts continue to be bullish; 4) The deal will lead to an increase in index weightage on the date of deal completion and hence, should benefit from index related flows.Apart from weak markets, the main risks remains in the markets ability to digest the large stake sale and the deal structure itself which is skewed towards retail investors, despite their relatively low percentage holding.

Toshiba plans to raise US$475m through a sale of its 30% stake in Topcon.The deal scores well on our framework and we would be inclined to take it, given: 1) The deal seems well anticipated, as evidenced by the share price holding up well post the deal announcement; 2) The company has demonstrated a good track record over the past few years and remains on track to meet its mid-term targets; 3) Valuation remains reasonable, given the growth outlook, and analysts continue to be bullish; 4) The deal will lead to an increase in index weightage on the date of deal completion and hence, should benefit from index related flows.Apart from weak markets, the main risks remains in the markets ability to digest the large stake sale and the deal structure itself which is skewed towards retail investors, despite their relatively low percentage holding.

Well positioned with good track record and valuation, although high retail split could spell trouble

Japan

Topcorn Corporation manufactures and sells measuring equipment and medical equipment primarily for ophthalmologist use. The Company also manufactures industrial products including projectors and optical devices.

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Topcon Corp (7732 JP)

Well positioned with good track record and valuation, although high retail split could spell trouble

Toshiba plans to raise US$475m through a sale of its 30% stake in Topcon.The deal scores well on our framework and we would be inclined to take it,...

Sumeet Singh

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