In today’s briefing:
- Kokusai Electric IPO – Weaker Demand Than We Expected
- Kokusai Electric IPO – Not Wholly Convinced, One Needs to Look past the Cycle
- TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights
- Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
- Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
Kokusai Electric IPO – Weaker Demand Than We Expected
- Kokusai Electric announced its pricing range today, setting it rather tightly at ¥1,830-1,840.
- This is slightly below the initial indicative price of ¥1,890 pointing to modest demand.
- That is a rather more tepid response than we initially expected given that this is the first sizable offering in some time.
Kokusai Electric IPO – Not Wholly Convinced, One Needs to Look past the Cycle
- KKR is looking to raise around US$730m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
- KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
- In our previous notes we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations.
TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights
- At the October rebalance, Free Float Weight (FFW) will be reduced on 284 stocks and increased on 458 stocks. 43 stocks will be removed from Phased Weight Reduction.
- Estimated one-way turnover is 1.77% resulting in a one-way trade of ¥1.45tn. 364 stocks have over 4 days ADV to trade, 97 stocks have over 8 days ADV to trade.
- Over the last 6 months, the stocks with inflows (>US$25m) have outperformed the stocks with outflows (>US$25m) with most of the outperformance coming in the last three months.
Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
- The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
- With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
- All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.
Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
- Rakuten Bank (5838 JP) (RB), the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
- RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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