In today’s briefing:
- Big Aisin (7259) Offering Sets Stage for First Toyota Group Full Unwind
- Aisin Corp Placement – US$1.1bn Selldown by Toyota and DENSO
- Aisin (7259 JP): A US$1.1 Billion Secondary Offering
- Brilliance China (1114 HK): Reversing Out of Passive Portfolios
- LG Electronics’ Indian Subsidiary Is Gearing up for an IPO on the Indian Stock Market
- Initial Thoughts on LG Electronics India IPO
- Webtoon Entertainment IPO Trading – Not Cheap Given the Lack of Growth
- Kolmar Holdings: Aggressive Plans to Cancel Outstanding Shares + Improving Returns to Shareholders
- Oriental Watch FY24: Weaker H2, Value Intact But Outlook Challenging
- Sariguna Primatirta (CLEO IJ) – Crystal Clear
Big Aisin (7259) Offering Sets Stage for First Toyota Group Full Unwind
- Today (27 June 2024) after the close, Aisin (7259 JP) announced three Toyota Group companies (Toyota, Toyota Industries, and Denso) would sell shares in Aisin in a ¥180bn offering.
- This is ALL of Denso’s holdings, 63% of Toyota Industries stake, and ~12% of Toyota’s stake. Separately, Aisin announced a 17mm share (6.3%) ¥100bn buyback and a 3:1 split Oct1.
- The recent yuho shows us the progress of Aisin’s promised selldown of crossholdings. There are three large chunks left. One is easy. The climb to capital allocation credibility easier too.
Aisin Corp Placement – US$1.1bn Selldown by Toyota and DENSO
- Denso Corp (6902 JP), Toyota Motor (7203 JP) and Toyota Industries (6201 JP) are looking to raise US$1.1bn from selling some of their stakes in Aisin (7259 JP).
- While the deal appears well-flagged, given that it is part of the cross-shareholding unwind theme in Japan, the timing of such a selldown isn’t always certain.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Aisin (7259 JP): A US$1.1 Billion Secondary Offering
- Aisin (7259 JP) has announced a secondary offering of up to 38.9 million shares (including overallotment) and a buyback worth a maximum of JPY100 billion or 17 million shares.
- Denso Corp (6902 JP), Toyota Industries (6201 JP), and Toyota Motor (7203 JP) are the selling shareholders. The offering aims to reconfigure the company’s shareholder mix and reduce cross-shareholdings.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 8 and 10 July (likely 8 July).
Brilliance China (1114 HK): Reversing Out of Passive Portfolios
- Brilliance China Automotive (1114 HK) is up 220% on a total return basis since we first published our insight in August 2023.
- The company paid a special dividend in April this year and will pay a large special dividend of HK$4.3/share going ex-div on 3 July.
- The resultant drop in market cap will result in deletion of the stock from large global passive portfolios at the close on 3 July.
LG Electronics’ Indian Subsidiary Is Gearing up for an IPO on the Indian Stock Market
- LG Electronics’ Indian subsidiary, fully owned, saw 2023 sales grow 17% to ₩3.3T and net profit rise 14% to ₩231.3B, driven by strong appliance demand.
- LG Electronics aims for a ₩5T-₩6T valuation, planning to sell 15-20% of their Indian subsidiary to raise at least $500M.
- LG Electronics plans to invest the $500M raised into their EV components business, moving quickly with the IPO due to urgent funding needs in the downturn-hit sector.
Initial Thoughts on LG Electronics India IPO
- According to local media, LG Electronics is reviewing for a potential IPO of LG Electronics India. LG Electronics has approached JP Morgan and Morgan Stanley to be potential IPO underwriters.
- If LG Electronics’ Indian subsidiary is listed, it is expected to be able to raise at least $500 million from the stock market.
- Post IPO, the market value of LG Electronics India is estimated to be between $2.1 billion (3 trillion won) and $4.3 billion (6 trillion won).
Webtoon Entertainment IPO Trading – Not Cheap Given the Lack of Growth
- Webtoon Entertainment (WBTN US) raised around US$315m in its US IPO, after pricing the deal at the top of the range at US$21/share.
- Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
- In our previous notes, we talked about the company’s historical performance, undertook a peer comparison and shared our thoughts on valuation. In this note, we talk about the trading dynamics.
Kolmar Holdings: Aggressive Plans to Cancel Outstanding Shares + Improving Returns to Shareholders
- On 26 June, Kolmar Holdings announced it plans to cancel 2.5 million treasury shares (6.7% of outstanding shares) as part of its participation in the corporate value-up program.
- Previously, Kolmar Holdings announced that it would return more than 50% of its net profit to shareholders in accordance with the shareholder return policy announced in July 2023.
- According to our NAV analysis, it suggests an implied NAV of 555 billion won or NAV per share of 15,088 won, which represents a 39% upside from current price.
Oriental Watch FY24: Weaker H2, Value Intact But Outlook Challenging
- Oriental Watch (398 HK) reported revenue/profits down 2%/15% YoY for the full year (vs our expectation of 10%). H2 revenue/profitability fell 12%/22% YoY due to a weak Q4.
- Cash and investments fell from 1.1 bn to 920 mn HKD, owing to dividend payments, increased inventories, and reduced payables. Cash represents 55% of market capitalization.
- The company maintains a 100% dividend payout, but dividends declined in line with earnings to 51.5 cents (FY23: 60 cents), representing a 15% dividend yield.
Sariguna Primatirta (CLEO IJ) – Crystal Clear
- Sariguna Primatirta (CLEO IJ) is Indonesia’s fastest growing bottled water players with an edge over competition is that it sells “pure” water, which is filtered using nanotechnology from the US.
- The company sell both gallon and bottled water in sustainable innovative packaging and has a well-developed distribution coverage. It continues to build new factories to drive future growth across Indonesia.
- Sariguna Primatirta (CLEO IJ) is a rising star in the consumer staples space in Indonesia, with a strong track record in executing its expansion. Valuations are attractive versus growth.
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