Daily Brief Financials: Rakuten Bank, Industrials REIT, JDC Group AG, Regional REIT Ltd and more

• It appears that Rakuten Bank (5838 JP) received a significant number of subscriptions at the revised offer range, leading the company to set the IPO price at ¥1,400 per share.
• The grey market trading suggests that shares are currently trading close to the lower end of the previous IPO price range, indicating a potential upside of 20% on the debut.
• The IPO has potential to rise beyond 20% on debut. However, in the event that it does not pop more than 100%, we would looking to buy more shares.

• Blackstone launches a recommended 168p/share cash offer (via a scheme of arrangement) for Industrials REIT, which needs funding to increase its portfolio (and scale) and lower its blended cost ratio. 
• The asset class seems attractive in an economic upturn. The offers represents a 42% premium, 1.04x to latest reported NTA, 1.2x P/23e BVPS; 22.1x Fwd P/E (source IBES). 
• The offer should succeed, although irrevocables are just 6.3% (plus 22.4% letters of intent). Spread is 0.89%/4.52% (gross/annualised). While not terribly exciting, I would be long, in case of sweetening.

JDC Group (JDC) reported FY22 results that were in line with the preliminary results published on 9 March. After slower than expected growth in H222, JDC expects 2023 revenue growth to accelerate again to 17% at the midpoint of guidance and the EBITDA margin to improve. Nevertheless, we have lowered our 2023 and 2024 revenue estimates by 5% and 6% and our EBITDA estimates by 7% and 12%, respectively, due to a lower FY22 base. JDC trades at an FY24e EV/EBITDA multiple of 12.0x on consensus estimates, which we believe is very undemanding for what is essentially a fast-scaling platform business. Our DCF calculation provides a valuation of €32.51/share (versus €36.40/share previously).

Regional REIT (RGL) delivered a good income performance in FY22, led by strong leasing (well above pre-pandemic levels) and continued strong rent collection. DPS of 6.6p was fully covered and we forecast the same for FY23. Market-wide valuation yield widening reduced NAV and increased gearing, but RGL notes that it has ample headroom available across its debt facilities, which are fixed at a cost of 3.5%. In this note we explain why we think DPS is sustainable and review some of the key issues that appear to be weighing on the valuation.