In today’s briefing:
- Integral Corporation IPO: Trading Debut
- Yodogawa Steel (5451) | Steeling for a Capital Allocation Battle
- EQD | Nikkei 225 (NKY) Enters WEEKLY OVERBOUGHT Resistance Area
- Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders
- It Is Time to Identify True Value and Growth Stocks Rather than High and Low P/Bs
- Seibu Giken IPO – Quick Note – Not Particularly Enticing
- Integral Corporation IPO Trading – Low Demand but Somewhat Cornered
Integral Corporation IPO: Trading Debut
- Integral Corporation (5842 JP) priced its IPO at JPY2,400 per share to raise gross proceeds of US$122 million. The shares will start trading on 20 September.
- We previously discussed the IPO in Integral Corporation IPO: The Bull Case, Integral Corporation IPO: The Bear Case and Integral Corporation IPO: New Price Range Is Tempting.
- The market sentiment on the sector has steadily improved since the prospectus’ release. Our analysis suggests that the IPO price remains attractive.
Yodogawa Steel (5451) | Steeling for a Capital Allocation Battle
- Activist investor, Strategic Capital, has taken a significant 5% stake in the underperforming steel company
- Yodogawa stacks up in line with the sector on operating metrics but its under leveraged balance sheet has crimped Returns on Equity and valuations
- We expect that the activist will seek to improve the company’s ROE through an improvement in capital allocation. That is bullish
EQD | Nikkei 225 (NKY) Enters WEEKLY OVERBOUGHT Resistance Area
- The Nikkei 225 INDEX is getting WEEKLY OVERBOUGHT after just +1 week up. Rallying further during the next 2-3 weeks may be hard, it could stall or fall.
- If the index rallies further this week, it could fall the following week. Alternatively it could stall this week and rally the following week/s, but OVERBOUGHT status won’t go away.
- 34256 is the Q3 resistance target on CC=+3, this should be a hard barrier to breach. An earlier barrier is Q3 resistance on the Gen.Pattern Boxplot = 33835.
Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders
- Seven & I Holdings (3382 JP)‘s share price has remained below ¥6,600 since the end of its bull run in March 2023.
- Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
- Seven & I faces valuation risks, trading near peak multiples with diminishing growth prospects.
It Is Time to Identify True Value and Growth Stocks Rather than High and Low P/Bs
- If a company with P/B less than 1 conducts share buyback, its P/B will decrease; if a company with P/B greater than 1 conducts share buyback, its P/B will increase.
- A company with P/B below 1x can be a great value stock if it can demonstrate to investors that it will generate ample cash flow, in addition to repurchasing shares.
- Even if a company’s P/B is well above 1x, it is required to explain to investors whether there are any gaps in its cash flow growth scenario.
Seibu Giken IPO – Quick Note – Not Particularly Enticing
- Seibu Giken (6223 JP) (SG) is looking to raise around US$93m in its Japan IPO via selling a mix of primary and secondary shares.
- SG sells desiccant dehumidifiers and VOC concentrators in over fifty countries globally. Its two main products accounted for over 90% of its revenue in 2022.
- In our previous note, we looked at the company’s past performance. In this note, we talk about valuations.
Integral Corporation IPO Trading – Low Demand but Somewhat Cornered
- Integral Corporation (5842 JP) raised around US$123m in its Japan IPO.
- Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
- In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
