In today’s briefing:
- Shinko Electric (6967 JP): Tender State of Play
- Sakura Internet (3778) | Estimating the Value of 2,500 GPUs
- Snow Peak: Cheap MBO
- 1Q Follow-Up – LIFUL (2120 JP)
- Trial Holdings IPO Trading – Demand and Valuation Are Towards the Higher Side
- Continued Creation of JPX Prime 150-Type Passive Funds Will Help Solve TOPIX Challenges
Shinko Electric (6967 JP): Tender State of Play
- Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread has narrowed from a high of 10.4% to the current 4.2%.
- The narrowing spread can be attributed to the JSR Corp (4185 JP) tender launch, which suggests likely China SAMR approval, and Ibiden Co Ltd (4062 JP) giving up recent gains.
- Like JSR, we expect China SAMR to allow JIC to withdraw its Shinko merger control filing. There is a good chance the tender launches before the guided late August start.
Sakura Internet (3778) | Estimating the Value of 2,500 GPUs
- The share price of Sakura Internet has risen by over 500%, adding Y230 billion in market cap, since investors began pricing in the AI opportunity
- We use pricing data from Amazon AWS to model the revenue opportunity for Sakura’s GPU AI-cloud
- We estimate that 2,500 H100 GPUs could yield an equity value of Y49 billion, far less than the value the market has ascribed
Snow Peak: Cheap MBO
- Snow Peak agreement with Bain Capital to take the outdoor brand private next month seems to have been in the works for a couple of years.
- Although sales are expected to rebound this year to near record highs, Snow Peak insists the domestic camping boom is over and will look at long-term growth overseas instead.
- Even so, the MBO price looks cheap. Snow Peak is likely to see a rebound in domestic sales in FY2024 and its plans for overseas expansion are solid.
1Q Follow-Up – LIFUL (2120 JP)
- LIFULL reported an 8% increase in net sales to ¥8.1 bn, driven by overseas acquisitions made during the second quarter of the previous FY.
- OP from comparable operations remained steady at around ¥0.15bn. In the previous year, the company recorded an operating profit of ¥0.8bn, but this included ¥0.66bn in profits from the sale of Rakuten LIFULL STAY, a hotel and lodging platform operator, in October of 2022.
- In the current term, the company recorded a net loss of ¥0.05bn, but this included about ¥0.2bn in one-off costs for the transition to a new management structure in the overseas business.
Trial Holdings IPO Trading – Demand and Valuation Are Towards the Higher Side
- Trial Holdings (5882 JP) (TH) raised around US$259m after pricing its IPO at the top-end in its Japan IPO.
- TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
- We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.
Continued Creation of JPX Prime 150-Type Passive Funds Will Help Solve TOPIX Challenges
- TOPIX-Type passive funds have the challenges of buying stocks that aren’t of high quality and of not providing sufficient engagement. JPX Prime 150 is expected to resolve these issues.
- Some believe that JPX Prime 150, a market capitalization-weighted index, shows little difference in performance from TOPIX. However, more careful engagement will contribute to value creation in the long run.
- The continued creation of passive funds linked to the JPX Prime 150 Index is expected to further highlight high quality companies.
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