In today’s briefing:
- Snow Peak (7816 JP): Bain Contemplating Backing an MBO at JPY1,200
- Merger Arb Mondays (19 Feb) – Outsourcing, JSR, Shinko, YSK, Vinda, Altium, Azure, Ansarada
- Shiseido (4911 JP): Japan On Track While China Was Weak
- ECM Weekly (19th Feb 2024) – Toei Ani, KB Fin, IIF, Trial, Juniper, Bharti Hexacom, Octillion Energy
- Keisei Electric Rail (9009): Can Be Higher
- Kyowa Kirin (4151 JP): Recent Portfolio Strengthening Initiatives to Accelerate Long-Term Growth
Snow Peak (7816 JP): Bain Contemplating Backing an MBO at JPY1,200
- The Nikkei reports that Snow Peak Inc (7816 JP) is set to disclose a Bain-sponsored MBO this week “in the range of 1,200 yen per share.”
- Mergermarket first disclosed a potential MBO on Friday. Snow Peak responded that while it is true that we are considering going private, no decision has been made at this time.
- The rumoured JPY1,200 offer price is light vs historical trading ranges but attractive vs peer and historical multiples. The probability of an offer materialising is high.
Merger Arb Mondays (19 Feb) – Outsourcing, JSR, Shinko, YSK, Vinda, Altium, Azure, Ansarada
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Probiotec Ltd (PBP AU), Shinko Electric Industries (6967 JP), Genetron Holdings Ltd (GTH US), JSR Corp (4185 JP), Lithium Power International (LPI AU), Altium Ltd (ALU AU).
- Lowest spreads – Tietto Minerals Ltd (TIE AU), Pact Group Holdings (PGH AU), Orecorp Ltd (ORR AU), QV Equities Ltd (QVE AU), Yaizu Suisankagaku Industry (2812 JP).
Shiseido (4911 JP): Japan On Track While China Was Weak
- Shiseido Company (4911 JP) reported 4Q23 results last week. Overall, operating profit of Y40bn in FY23 was Y5bn higher than previous company guidance of Y35bn.
- However, Shiseido’s China business weakened materially in 4Q23, and 2024/25 guidance seems a bit light.
- I believe FY24 should not be used as a base for valuation because the nuclear wastewater impact is likely to linger a while longer during FY24.
ECM Weekly (19th Feb 2024) – Toei Ani, KB Fin, IIF, Trial, Juniper, Bharti Hexacom, Octillion Energy
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, Trial Holdings (5882 JP) was back in the market, a year after ditching its previous attempt, while Juniper Hotels is trying to ride the India wave.
- For placements, more signs of REIT coming back to life, this time in Japan. A relatively large deal in Toei Animation (4816 JP) as well was launched.
Keisei Electric Rail (9009): Can Be Higher
- Keisei Electric Railway Co (9009 JP) share price has increased but not run ahead of its fundamentals.
- Weak Yen, COVID rebound, friendlier visa policy by the Japanese government, and the potential for more Chinese tourists visiting Japan are tailwinds for Keisei.
- Valuation may look expensive, but with the high growth rate, investors should consider to use PEG rather than PER or PBR.
Kyowa Kirin (4151 JP): Recent Portfolio Strengthening Initiatives to Accelerate Long-Term Growth
- Kyowa Kirin Co Ltd (4151 JP) has announced partnership with Bridgebio Pharma Inc (BBIO US) for an exclusive license on infigratinib for achondroplasia, hypochondroplasia, and other skeletal dysplasias in Japan.
- This month, Kyowa Kirin has enrolled first patient in a Phase 2 clinical trial evaluating tivozanib eye drops (KHK4951) in patients with diabetic macular edema (DME).
- The company’s top selling drug Crysvita is growing steadily since launch. Crysvita led to better-than-expected result in 2023. However, higher R&D expenses will negatively impact 2024 operating profit.
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