In today’s briefing:
- Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out
- Azure Minerals Block – Removal of Overhang but Still a Risky Bet
- Union Bank of India QIP – Well-Flagged and Just in Time for Index Inclusion
- Brainbees Solutions (FirstCry) IPO | Channel Feedback
- Trial Holdings Pre-IPO – Updated Peer Comparison and Valuation
- Pre-IPO Numans Health Food Holdings – Due to Flawed Business Model, Future Growth Is Uncertain
Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out
- Today after the close, KDDI Corp (9433 JP) and Gree Inc (3632 JP) announced that KDDI would offer its 8,000,000 shares in Gree in an international offering through Mizuho Intl.
- The deal comes at a decently large discount and the stock is quite downtrodden. Especially when compared to its venture assets and cash, assuming invested amount is remotely viable.
- The problem is that too much of revenue isn’t earning much, so this sits in a Value Trap category. Shareholder structure makes it difficult to do buybacks.
Azure Minerals Block – Removal of Overhang but Still a Risky Bet
- Mineral Resources (MIN AU) is looking to raise up to A$229m (US$150m) via a secondary block trade in Azure Minerals (AZS AU), which will be a clean-up.
- The deal is a large one to digest, at approximately 51.6 days of three month ADV and 13.8% of current mcap.
- In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.
Union Bank of India QIP – Well-Flagged and Just in Time for Index Inclusion
- Union Bank Of India (UNBK IN) is looking to raise up to US$370m (INR30bn) via its QIP.
- The company last undertook a QIP in Aug 2023, which we covered in Union Bank of India QIP – Well-Flagged Deal, Recent Momentum Has Been Strong.
- This deal too is a very well flagged one, with the firm having earlier reported that it would look to do a QIP to boost its free float and capital.
Brainbees Solutions (FirstCry) IPO | Channel Feedback
- We visited FirstCry Franchisee stores in Ajmer (Rajasthan), and Hosur (Tamil Nadu).
- FirstCry has a high brand recall, limited competition, and healthy franchisee relations.
- The ability to leverage FirstCry and Baby Oye is a good margin lever.
Trial Holdings Pre-IPO – Updated Peer Comparison and Valuation
- Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m in its Japan IPO, after having canceled its prior listing attempt last year.
- TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
- We have looked at the company’s past performance in our previous notes. In this note, we provide our updated thoughts on valuation.
Pre-IPO Numans Health Food Holdings – Due to Flawed Business Model, Future Growth Is Uncertain
- Numans values light asset model, which helps reduce cost/expenditures, and thereby increase profits. However, such business model has flaws – no R&D/production, only terminal sales/brand operation, no control over upstream.
- Revenue growth of core business Algal oil DHA products declined.Numans attempts to change its monotonous product line and enter milk powder industry, but the results weren’t ideal. Numans suffered losses.
- If Numans only plays the role of a “porter” of finished products from abroad and lacks core competitiveness/technological content, it will face multiple challenges to achieve sustained high performance growth.
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