In today’s briefing:
- Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher
- The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For
- Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break
- Japan Value | Effissimo Takes Significant Stake in Konica
- EQD | Short-Term BUY Opportunity For The Nikkei 225
Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher
- Tokyo Metro (9023 JP) priced its IPO at the top end (JPY 1200/share), raised JPY 348.6bn (US$2.3bn) and the company is valued at JPY 697bn (US$4.62bn).
- The stock starts to trade today, and the grey market is indicating an open 20% higher. Not surprising considering that the IPO was heavily oversubscribed.
- Even at a price of JPY 1440/share, the estimated dividend yield is 2.78% and that should keep the stock supported. Index inclusions will result in more buying next week.
The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For
- The Tokyo Metro (9023 JP) IPO is one of the largest IPOs of recent years, well-flagged, and it is hot hot hot! A super stable, well-known, well-respected, service provider.
- There are numerous attractions but I expect people have not thought too deeply about the demand and supply dynamics of different holder types. It’s worth thinking about.
- This was priced “cheap” but everyone knows that so there may be flippers. This is probably more Japan Post Bank than Japan Post Insurance.
Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break
- At first glance, the Shinko Electric Industries (6967 JP) and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.
- The aftermath of China Traditional Chinese Medicine (570 HK) has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread.
- Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.
Japan Value | Effissimo Takes Significant Stake in Konica
- Konica Minolta, a key player in the Japanese office equipment market, presents an attractive investment opportunity, particularly in light of the recent actions by activist investor Effissimo.
- The investment case for Konica Minolta hinges on several factors, including potential structural reforms, M&A activity, and undervaluation.
- Given Effissimo’s track record with Ricoh and the broader industry dynamics, the thesis for a bullish outlook on Konica Minolta is compelling.
EQD | Short-Term BUY Opportunity For The Nikkei 225
- The Nikkei 225 INDEX continues to move chaotically in highly unpredictable and fragmented fashion. At the moment it’s been falling for 2 weeks (CC=-2 to be confirmed on Friday).
- Since the index is in a phase where it keeps going up and down with no trend, we see an opportunity to accumulate short-term LONG positions on the current pullback.
- A small bounce from current levels, rising towards the 41k target, could generate some good returns in a short span of time. This would be a reversal trade.
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