In today’s briefing:
- Asahi Group (2502 JP): The Current Playbook
- T&K Toka (4636 JP): Bain Decision Time as Progress Made on a Pre-Condition
- Recruit Holdings (6098) | 2024 High Conviction
- Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
- Arcs’ Online Expansion with Amazon a Worry for Rakuten and Aeon
- Unification of Quarterly Securities Reports with Financial Summary to TSE Is Generally Appropriate
Asahi Group (2502 JP): The Current Playbook
- Since the US$1.3 billion secondary placement announcement, Asahi Group Holdings (2502 JP)’s shares are down -6.2% from the undisturbed price of JPY5,804 per share (16 November).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asahi’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 28 November. Investors participating in previous large Japanese placements tend to secure positive returns.
T&K Toka (4636 JP): Bain Decision Time as Progress Made on a Pre-Condition
- T&K Toka Co Ltd (4636 JP) has satisfied the precondition of selling its Hangzhou Toka Ink stake to hold less than 30%. The offer is targeted for early January.
- Due to Dalton’s stake building, the shares have consistently traded above Bain’s pre-conditional JPY1,400 offer. Bain can either launch the tender with unchanged terms or bump the offer.
- A bump is likely as, despite the irrevocables, satisfying the minimum acceptance condition is challenging. The Board will struggle to recommend the offer if the shares remain above terms.
Recruit Holdings (6098) | 2024 High Conviction
- We are bullish on Recruit at the current share price and believe that the stock has around 40% upside potential to our fair value estimate of Y7,700.
- We believe that investors have been overly concerned with the cyclical slowdown in the job market as it normalizes from the post-Covid recovery
- Indeed.com remains a disruptor in the HR recruiting market and the potential monetization of this asset is significantly under-appreciated by the market.
Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
- Today, Macnica Fuji Electronics Hol (3132 JP) (Macnica Holdings) announced that it would launch a tender offer to buy 100% of Glosel (9995 JP), a semiconductor trading company.
- Glosel is special because it has three main assets. 1) 61% of net assets are inventory (<3mo), 2) 34% of net assets are net receivables (<3mos), 3) 8+% is securities.
- For that, Glosel’s Board decided 0.71x book was OK. Nah. The register is reasonably wide open, and this is a delayed start. Someone might get noisy, but < 50/50 bet.
Arcs’ Online Expansion with Amazon a Worry for Rakuten and Aeon
- Amazon Netsuper is competing head to head with Rakuten’s online food platform in an online food sector that has grown 80% in four years.
- Last month Amazon confirmed that Arcs, one of the largest supermarkets in Japan and the biggest in northern Japan, will join Life, Valor and Seijo Ishii in using its system.
- Arcs’ online supermarket was already growing strongly but the tie-up with Amazon will take it to the next level, helping to compete with Aeon and Rakuten.
Unification of Quarterly Securities Reports with Financial Summary to TSE Is Generally Appropriate
- Since there’s little opposition to the argument that quarterly securities reports should no longer be mandatory, securities reports in 1Q/3Q are almost identical content to the disclosures to TSE.
- To ensure the reliability of the financial statements submitted to TSE, which are replacing current statutory documents, the requirement of review by auditor could be a solution to the problem.
- In this review, the addition of the cash flow statement and segment information in 1Q and 3Q financial statements is very useful and a step forward.
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