In today’s briefing:
- Toshiba (6502) Update – Shares Down Since Last Look, “News” Isn’t Really. IRR Grid.
- Toshiba – The Bidders Emerge
- Bharat FIH IPO: Rife with Bottlenecks
- Nidec (6594) | The Number One EV Play in Japan
Toshiba (6502) Update – Shares Down Since Last Look, “News” Isn’t Really. IRR Grid.
- Overnight, Toshiba Corp (6502 JP) has released an update “Progress Report on Discussions with Potential Investors and Sponsors. Four advance to the second round, including both PE and strategic investors.
- Nikkei reported those advancing were Bain, CVC, Brookfield, and JIP-JIC. Blackstone did not advance. Yesterday, Reuters reported that KKR had declined to bid, but might join another bid.
- Now parties will start due diligence, and Toshiba will examine bids for “measures to enhance corporate value” and certainty of execution (given national security-sensitive issues, and funding).
Toshiba – The Bidders Emerge
- The Nikkei reported yesterday that Toshiba had winnowed the pool of potential partners down to four candidates.
- All four names (Bain, CVC, Brookfield and Japan Industrial Partners/Japan Investment Corp) have been connected to Toshiba previously.
- We wonder whether this pool of candidates points to a higher likelihood of a strategic partnership rather than a full buyout.
Bharat FIH IPO: Rife with Bottlenecks
- Bharat FIH (BFIH IN) is India’s largest Electronic Manufacturing Services (EMS) provider and the largest mobile phone manufacturing and assembly services provider to Xiaomi Corp (1810 HK).
- It has received Sebi approval for an IPO to raise Rs50,038 million (US$625 million), split equally between a primary and secondary raise. The offer will launch in August.
- The fundamentals are challenged due to its reliance on Xiaomi, market share pressure, glacial revenue diversification, low margin and cash burn. We would pass on the IPO.
Nidec (6594) | The Number One EV Play in Japan
- Nidec reported 1Q earnings with clear evidence that near-turn earnings have bottomed. Now the market can focus on what matters, E-Axles
- The E-Axle outlook strong than ever across demand, production, and profitability
- We are bullish on the stock at 30x forward earnings versus the 5-year average of 55x, especially as China accelerates policies to drive EV adoption
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