In today’s briefing:
- Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO
- Wiwynn GDR Offering – US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong
- Kokusai Electric (6525 JP): A US$2.0 Billion Secondary Offering
- Trading Strategy of Shift Up on the First Day of IPO
- Kokusai Electric Placement – US$1.7bn Selldown for a Good Quality Name
- Timee IPO: Strong Business Model with Improving Financials
- Pre-IPO B&K Corporation – Valuation Performance Could Be Disappointing
Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO
- Today post-close we got confirmation of yesterday’s Reuters scoop of a secondary selldown on Kokusai Electric (6525 JP) after the stock fell 7.2% in heavy volume.
- KKR HKE LP and KSP Kokusai LLC (Koch) will together sell 52.5mm shares plus another 7.8mm+ in the greenshoe. Split is 50/50 domestic/international.
- This is 60+mm shares against 51mm shares held by non-passive holders ex-Capital (who has been selling). It’s a lot of stock at a high price.
Wiwynn GDR Offering – US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong
- Wiwynn Corp (6669 TT) is looking to raise around US$850m in its global depository receipts (GDRs) offering.
- Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
Kokusai Electric (6525 JP): A US$2.0 Billion Secondary Offering
- Kokusai Electric (6525 JP) has announced a secondary offering of up to 60.4 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY326 billion (US$2.0 billion).
- The secondary offering facilitates KKR and KSP Kokusai Investments’ ability to crystallise substantial IPO gains—the shares are trading at 3.2x the IPO price of JPY1,840.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 22 and 24 July (likely 22 July).
Trading Strategy of Shift Up on the First Day of IPO
- In this insight, we discuss a trading strategy for Shift Up which starts trading on 11 July. Shift Up is one of the most anticipated IPOs in Korea this year.
- Our base case (6 months – 1 year) target price of Shift Up is 95,510 won, which is 59% higher than the IPO price.
- We recommend investors to take some profits (about 50% of invested capital) if the share price shoots higher by 100% or more from the IPO price on the first day.
Kokusai Electric Placement – US$1.7bn Selldown for a Good Quality Name
- KKR & Co (KKR US) and KSP Kokusai Investments are looking to raise approximately US$1.7bn through an extended secondary follow-on offering, selling approximately 52.5m shares of Kokusai Electric (6525 JP)’s stock.
- The deal is a large one to digest at 19 days of three month ADV.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Timee IPO: Strong Business Model with Improving Financials
- Timee Inc (215A JP) operates an on-demand job platform in Japan and the company has filed for an IPO where existing shareholders will offer shares worth of $290m.
- The company’s top line saw accelerated growth during last 4-5 years driven by increase in no. of clients/workers while Timee also has turned around its profitability during the last 2-years.
- In this insight, we have discussed the company’s business model and financials in detail and we will discuss our forecasts and valuation in a follow-up insight.
Pre-IPO B&K Corporation – Valuation Performance Could Be Disappointing
- The growth factor drug market is highly competitive. Many competing products have been on the market for many years with NRDL reimbursement coverage and also accumulated rich recognition from doctors/patients.
- Even if Pro-101 is approved for market launch, B&K may have to reduce its price largely and invest heavily in market education/promotion. B&K’s commercialization capability still needs to be verified.
- Valuation of B&K would be lower than peers. It is hard for B&K to receive expected valuation premium since its latest round of post investment valuation is already RMB3.3 billion.
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