In today’s briefing:
- Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses
- Tokyo Metro (9023 JP) IPO: The Bear Case
- Rigaku Holdings IPO: Initial Thoughts
- Asics (7936) | Q3 Preview; Revision of MTP
- Rigaku IPO – The Positives – Catering to a Range of End Industries, and Track Record Has Been Strong
- Japan Metropolitan Fund Placement – Relatively Small Deal to Digest
- Tokyo Metro IPO – The Negatives – Hasn’t Recovered Fully but Div and Debt Have
- Has the “Unit of Investment” Principle Spoiled the Companies?
- Rakuten Mart Launching This Month
Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses
- 3D Investment Partners bought 5% of Tohokushinsha Film (2329 JP) by Mar-2023. A year later they had 17+%. 3D proposed changes. In July, 3D proposed a takeover, asking for DD.
- Tohokushinsha responded to the proposals, then offered due diligence to 3D based on terms set by a Special Committee. 3D did not want those strict DD terms.
- Yesterday, Tohokushinsha said “Fine.” The stock today fell 10% today. This is not a stalemate, but it means 3D may start to play harder.
Tokyo Metro (9023 JP) IPO: The Bear Case
- Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
- In Tokyo Metro (9023 JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on mid-tier revenue growth, low revenue diversification, the highest leverage among peers and a sizeable post-IPO share overhang.
Rigaku Holdings IPO: Initial Thoughts
- Rigaku Holdings (268A JP) provides cutting-edge analytical solutions centered on X-ray technology globally. The company is one of the largest players globally in X-ray diffraction instrument market.
- The company has filed for an IPO on the Tokyo Stock Exchange and plans to raise proceeds of around US$900m from the IPO at a potential valuation of US$2bn.
- In this insight, we discuss Rigaku’s business model, key drivers, financials and outlook for the company.
Asics (7936) | Q3 Preview; Revision of MTP
- Asics is seeing robust D2C sales growth, now 40% of total sales, driving gross margins to 55.5% (+4.5 pp YoY) in 1H24.
- High-Margin models and strong sales in Onitsuka Tiger and Sportsstyle categories support a forecasted 13% YoY sales increase in 2H24.
- Asics’ strategic transformation, focusing on structural reforms and emerging markets, to drive upgraded MTP though FY26.
Rigaku IPO – The Positives – Catering to a Range of End Industries, and Track Record Has Been Strong
- Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
- Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
- In this note, we will talk about the positive aspects of the deal.
Japan Metropolitan Fund Placement – Relatively Small Deal to Digest
- Japan Metropolitan Fund Investment Corporation (8953 JP) aims to raise around US$140m to partly fund the acquisition of four assets.
- The deal will be relatively small, in terms of ADV and dilution.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Tokyo Metro IPO – The Negatives – Hasn’t Recovered Fully but Div and Debt Have
- Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
- Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
- In this note, we talk about the not-so-positive aspects of the deal.
Has the “Unit of Investment” Principle Spoiled the Companies?
- The reason companies object to a reduction in the investment unit is the cost of shareholder relations, not the cost paid to the trust bank.
- We should discuss whether it is better for the “unit of investment” principle to remain in place for the convenience of companies that want to pass company proposals smoothly.
- It will be interesting to see if there will be a discussion on going back to basics and allowing single share holders to exercise their voting rights.
Rakuten Mart Launching This Month
- Rakuten still gets a lot of flak for its mobile business but its core e-commerce operation continues to improve.
- Rakuten will launch Rakuten Mart this month, an online supermarket but with Rakuten Ichiba vendors too.
- Online food retailing is becoming a major source of competition with Amazon, Aeon and Seven & I all investing heavily but Rakuten is holding its own.
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