In today’s briefing:
- JPX Proposes BIG Changes To TOPIX Rules, Affects IPOs More Than Market
- Guzman Y Gomez IPO: Listing & Index Inclusion Timeline
- Hyundai Motor’s Special Shareholder Return Plan Likely Unveiled in August IR Event
- How Netflix bring Asian Content to the Global Audience with Minyoung Kim
- Webtoon Entertainment IPO – Further Thoughts on Valuation – Acquisitions, Buyouts
- Guzman Y Gomez IPO Trading – Strong Demand, Not All Shares in Escrow
- Bloks Group IPO: Exceptional Revenue Hyper-Growth and Profitability Are Unique Among Toy Makers
- United Arrows: Premium Growth
- The Key to Higher Valuations for Mid-To-Small Caps Is Management’s Strong Will to Achieve Its Goals
- Geo Holdings (2681 JP) – Investing for Growth
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JPX Proposes BIG Changes To TOPIX Rules, Affects IPOs More Than Market
- In 2021 the JPX established new Listing Rules, and in April 2022 introduced new market segments (Prime/Standard/Growth) to much fanfare. Today, the TSE basically said those changes were meaningless.
- Today, the TSE announced proposed new rules for TOPIX constituent selection. There is a 2-month consultation period, then rules come out end-Sep 2024. Expect few changes from the Proposal.
- NextGen TOPIX will be created October 2026. 3-4 dozen ADDs, 500-600 DELETEs to create an index of 1,100-1,200 names. Some obvious large impacts 2+yrs from now, but this changes IPOs.
Guzman Y Gomez IPO: Listing & Index Inclusion Timeline
- Guzman Y Gomez (0817833D AU) has raised A$335.1m in a primary + secondary offering, valuing the company at A$2.23bn. The stock starts trading on the ASX Ltd (ASX AU) today.
- Just over 54% of the shares are escrowed which means there is a lot of stock that will be available for sale on listing day.
- Guzman Y Gomez (0817833D AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.
Hyundai Motor’s Special Shareholder Return Plan Likely Unveiled in August IR Event
- Hyundai’s IR team appears to have communicated that a new shareholder return policy would be unveiled at the rescheduled CEO Investor Day in August.
- Hyundai aims to boost shareholder returns above 30% by canceling ₩800B to ₩1T in shares annually. The new dividend strategy won’t debut in August; last year’s three-year plan stands.
- Equal cancellation ratios apply to common and three types of preferred shares. August’s timing, with ISA tax reforms potentially favoring preferred shares, may enhance prefs’ price impact relative to ords.
How Netflix bring Asian Content to the Global Audience with Minyoung Kim
- Understanding the audience is the number one rule in content creation and building relationships is important globally
- Min Yong Kim started her career in food and nutrition but transitioned to the entertainment industry, eventually joining Netflix
- Lessons learned include the importance of knowing your audience and the shift in thinking about content from traditional media to digital platforms
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Webtoon Entertainment IPO – Further Thoughts on Valuation – Acquisitions, Buyouts
- Webtoon Entertainment (WBTN US) is looking to raise up to US$315m in its US IPO, down from an earlier reported float of US$500m.
- 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 share additional thoughts on valuation.
Guzman Y Gomez IPO Trading – Strong Demand, Not All Shares in Escrow
- Guzman Y Gomez raised around US$221m in its upsized Australian IPO.
- GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
- We have looked at the company’s performance and valuation in our past notes. In this note, we talk about the trading dynamics.
Bloks Group IPO: Exceptional Revenue Hyper-Growth and Profitability Are Unique Among Toy Makers
- Bloks Group, a fast-growing toy company and leader of assembly character toys, filed for a Hong Kong IPO. The company is headquartered in Shanghai, PRC, and has 410 full-time employees.
- Bloks Group has raised $200M+ to date from investors, including YF Capital, Legend Capital, Source Code Capital, Gaorong Capital and SinoMedia Asia Pacific.
- The Chinese toy maker has delivered an exceptional revenue hyper-growth of 169% y/y in 2023. Elite operating metrics and impressive financial profile make IPO attractive for investors.
United Arrows: Premium Growth
- The premium fashion market in Japan is growing again and it is not just department stores.
- One of the leader is United Arrows, whose main urban chains are on a roll, up double digits, but is being held back by lower priced suburban chains.
- It will now focus more on the premium market through aggressive category expansion, new brands and M&A.
The Key to Higher Valuations for Mid-To-Small Caps Is Management’s Strong Will to Achieve Its Goals
- Even companies with high valuations and return on capital have room to further raise their return on capital and valuations because of cash allocation challenges.
- Companies whose valuations have not changed over the past year have low ROE and ROA, yet have high policy shareholdings. They have not taken steps to improve return on capital.
- As for whether many companies without high foreign ownership can raise their return on capital and valuations, strong will of management to achieve their goals is necessary.
Geo Holdings (2681 JP) – Investing for Growth
- Market leader with growth potential – GEO HOLDINGS operates second-hand store chains 2nd STREET, GEO, OKURA, and off-price chain store Luck Rack.
- Its 2,027 domestic stores give it the leading market share in Japan.
- The company is making significant investments to extend its home advantage and build on its 2018 expansion overseas where it has 81 stores.