In today’s briefing:
- Otsuka Holdings – Family Co Selldown for ¥56bn – Take It Vs Peers
- Otsuka Holdings Placement – While Enticing Discount, Management Selling Will Raise Eyebrows
- SHL Japan (4327 JP) Takeover – Illiquid, Easy, Non-Transparent, but a Done Deal
- Appier (4180) | It’s Doubled, so What’s Next
- SBI Sumishin Net Bank IPO: The Investment Case
- Japan Consumer Staples Sector : Inflation Looks a Blessing in Disguise for Those with Pricing Power
Otsuka Holdings – Family Co Selldown for ¥56bn – Take It Vs Peers
- Today after the close, one of the very large brokers in Japan (N_m_r_) has a block for sale of Otsuka Holdings (4578 JP).
- It is only 2.4% of total shares out, and as such, it looks small. But it isn’t that small. The shareholder structure is crowded with non-Real World Float holders.
- The discount offered is large compared to absolute and sector-relative volatility.
Otsuka Holdings Placement – While Enticing Discount, Management Selling Will Raise Eyebrows
- Otsuka Estate is looking to raise US$389m via trimming its stake in Otsuka Holdings (4578 JP).
- The deal is a relatively large one on an ADV basis, at 14.6 days of three month ADV.
- In this note, we will talk about the firm’s track record and run the deal through our ECM framework.
SHL Japan (4327 JP) Takeover – Illiquid, Easy, Non-Transparent, but a Done Deal
- The parent company of SHL Japan Ltd (4327 JP)‘s largest shareholder is buying out its main customer in Japan.
- This is an LBO/MBO situation, and friends and family get it to 63% or so. A tiny sliver from others gets it over the hump.
- Should get done easily, but the corporate governance here is not encouraging. Yes, a premium, but no explanation, and it’s a bit low.
Appier (4180) | It’s Doubled, so What’s Next
- ChatGPT has focused the investment community on the potential of AI to drive business performance and investment returns.
- Forbes picked Adobe as its top AI pick in 2023. We pick Appier, which is a faster-growing alternative in the digital marketing space.
- Appier’s revenue grew by over 50% last year and unlike many SaaS companies, it is profitable.
SBI Sumishin Net Bank IPO: The Investment Case
- SBI Sumishin Net Bank (7163 JP), an online bank in Japan, has revived its listing plans to raise up to US$440 million (vs the 2022 target of US$1 billion).
- Founded in 2007, SBI Sumishin Net Bank is owned 50% by SBI Holdings (8473 JP) and 50% by Sumitomo Mitsui Trust Holdings (8309 JP).
- The investment case rests on market share gains, the rude health of the digital bank segment, the nascent BaaS segment turning profitable and ambitious medium-term goals.
Japan Consumer Staples Sector : Inflation Looks a Blessing in Disguise for Those with Pricing Power
- Having reached a 30 year high of 4% in December 2022, which is two times the BOJ’s target, Japanese companies are finding it hard to absorb cost inflation.
- This macro environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain average pricing growth even in a deflationary environment.
- With a lasting pricing-power and a relatively inelastic demand than competitors, we think Yakult Honsha (2267 JP) and Nissin Foods Holdings (2897 JP) are in a great position to outperform competition.
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