In today’s briefing:
- Timee (215A JP) IPO: The Bull Case
- Shinko Electric (6967) – Break/Gap Risk Early July 2024 Update
- Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- Eisai Co Ltd (4523 JP): New Competition Is Coming for Alzheimer’s Disease Drug; No Immediate Threat
- The Challenge Is to Raise the Quality of Engagement. To Do So, Active Funds Need to Be Increased
Timee (215A JP) IPO: The Bull Case
- Timee Inc (215A JP), a leading part-time job platform in Japan, is seeking to raise up to US$286 million. Book-building runs from 9 to 23 July.
- Timee’s app allows users to work shifts as short as one hour at restaurants, convenience stores, and hotels, with quick payment for their work.
- The bull case rests on favourable market trends, best-in-class revenue growth, good retention rates, credible growth drivers, and top-quartile EBITDA margins.
Shinko Electric (6967) – Break/Gap Risk Early July 2024 Update
- When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
- Nearly 6mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 16+wks ago, recommended taking profits.
- Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Gross spread is now 4.6% but time is shorter so annualised is 10+% even out to December launch.
Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.
- Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies.
- Of these, they have a combined stake of over US$1bn in 23 companies.
Eisai Co Ltd (4523 JP): New Competition Is Coming for Alzheimer’s Disease Drug; No Immediate Threat
- On July 2, Eli Lilly & Co (LLY US) has received FDA approval for its Alzheimer’s disease drug Kisunla, which will compete head-on-head with Eisai Co Ltd (4523 JP)‘s Leqembi.
- Efficacy and indications of both the drugs are similar. Price comparison is tricky. However, Kisunla can be stopped when amyloid plaques are removed, which is not the case for Leqembi.
- Eisai is not expected to face immediate competition and should comfortably meet Leqembi FY25 revenue target of ¥56.5B, including ¥43.5B from the U.S. Recently, Leqembi has been launched in China.
The Challenge Is to Raise the Quality of Engagement. To Do So, Active Funds Need to Be Increased
- The reason why investor engagement is effective is in the exercise of voting rights. Engagement is considered to have been effective around 2014, when foreign ownership exceeded 30%.
- Engagement is generally effective in the funds entrusted to GPIF, according to the results of the study. GPIF should raise fees to allow investment managers to engage in fruitful engagement.
- This tends to be a generic question for passive funds. If we expect engagement to be more effective in the future, we need to increase the number of active funds.
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