In today’s briefing:
- Denso Corp Placement – Possible Placement by Toyota to Raise US$4.7bn
- Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying
- Asahi Offering: Discount Presents a Good Entry Point As Price Hikes & Tax Reforms Strengthen Asahi
- Asics (7936) | Stepping Ahead with New MTP
- Kaken Pharmaceutical (4521 JP): Key Operating Parameters Weakened in H1; H2 Not Seem to Be Better
- AViC (9554 JP) – Moving To Achieve Mission With a Better Hand
Denso Corp Placement – Possible Placement by Toyota to Raise US$4.7bn
- As per Reuters, Toyota Motor (7203 JP) could look to sell up to 10% of Denso Corp (6902 JP) to raise around US$4.7bn before the end of the year.
- Toyota is the company’s largest shareholder and its largest customer.
- In this note, we will talk about the deal dynamics.
Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying
- There could be a US$4.6bn secondary placement in Denso Corp (6902 JP) before year-end as Toyota Motor (7203 JP), Toyota Industries (6201 JP) and Aisin Corp (7259 JP) unwind cross-holdings.
- Denso Corp (6902 JP) was down 4.85% yesterday (and even more intra-day) and the stock could remain under pressure for the next few weeks.
- There will be limited passive buying in conjunction with the secondary offering and active investors will need to buy a lot of stock.
Asahi Offering: Discount Presents a Good Entry Point As Price Hikes & Tax Reforms Strengthen Asahi
- Two weeks ago, Asahi Group Holdings (2502 JP) revealed plans for a secondary offering, aiming to sell 33.48m common shares in international markets.
- In this insight, we delve into the fundamentals of the business, identifying an opportunity if the offering is priced at a decent discount compared to Asahi’s current price.
- We think recent price hikes and ongoing alcohol tax reforms position Asahi to outperform Kirin Holdings (2503 JP) in the next 3-4 years.
Asics (7936) | Stepping Ahead with New MTP
- Asics unveils MTP with focus on financial milestones: 7-10% Sales CAGR to 660 billion yen and Operating profit of 80 billion yen by 2026.
- The biggest risk to the MTP looks to be market share goals in the US. However, we think overall sales and margin targets are achievable.
- The share price is up 80% YTD and stock is no longer cheap. However, plugging in the MTP assumptions into a DCF reveals further 17% upside
Kaken Pharmaceutical (4521 JP): Key Operating Parameters Weakened in H1; H2 Not Seem to Be Better
- Kaken Pharmaceutical (4521 JP) reported 2% YoY decline in revenue H1FY24, while operating profit decreased 33% YoY. Top selling products are impacted by NHI drug price revision and increasing competition.
- The company has reiterated FY24 guidance of flat revenue, 5% YoY decline in operating profit, and 23% YoY growth in net profit. Profitability is expected to deteriorate in H2.
- Kaken is not expected to see any immediate respite as the small contribution from the new products will not compensate for the revenue loss from its top selling products.
AViC (9554 JP) – Moving To Achieve Mission With a Better Hand
- Touting a mission of “improving people, companies, and society through marketing,” AViC is involved in the commissioned handling of internet advertising and provision of SEO (search engine optimization) consulting services with the goal of providing high quality digital marketing services to clients with small- to medium-sized advertising budgets.
- Having transformed FACT Inc., which offers support services for EC mall sales promotion optimization, into a wholly-owned subsidiary in October 2023, the company is also moving forward with mutually supplementing its lineup of services and conducting cross-sales to clients.
The company’s competitiveness comes from (1) the deep understanding of various media algorithms possessed by its management team, particularly the company’s representative who was the chief executive of the internet advertisement business at CyberAgent, and content backed by experience and a track record
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