In today’s briefing:
- Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
- Can Investors Tolerate the Current Pace of Capital Profitability Improvement?
- SanBio Co Ltd (4592 JP): 1H FY01/25 flash update
- Tokyo Communications Group (7359 JP) – 2Q Follow-Up – Sep 4, 2024
Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one.
- But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
- Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.
Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
- Trancom Co Ltd (9058 JP) recommended a Bain-sponsored MBO at JPY10,300, a 40.5% and 42.9% premium to the last close and undisturbed price, respectively.
- The offer represents an all-time high but is lower than the midpoint of the IFA’s DCF valuation range and implies multiples below precedent transaction multiples.
- While the Dalton irrevocable has a counteroffer clause, Mr Takebe (the largest shareholder) does not. Therefore, there is a low probability of a competing bidder emerging.
Can Investors Tolerate the Current Pace of Capital Profitability Improvement?
- Few Japanese stocks that have advantages in profitability has led to the fact that investors who invest long-term in quality stocks have few Japanese stocks to choose from globally.
- It’s the profit margin on sales that has had the greatest impact on changes in ROE. Companies must now get their core competencies once again to regain competitiveness and profitability.
- Even if business selection and investment in promising businesses were to be implemented, it would be several years before they bear fruit. For many investors, this pace seems unacceptable.
SanBio Co Ltd (4592 JP): 1H FY01/25 flash update
- In 1H FY01/25, the company reported no operating revenue, an operating loss of JPY1.6bn, and R&D expenses of JPY1.0bn.
- Non-operating income was JPY401mn, primarily from foreign-exchange gains, while non-operating expenses totaled JPY16mn, resulting in a recurring loss of JPY1.2bn.
- The company received conditional marketing approval for SB623 in July 2024, with expected sales to begin in Q1 FY01/26.
Tokyo Communications Group (7359 JP) – 2Q Follow-Up – Sep 4, 2024
- On August 7, 2024, Tokyo Communications Group, Inc. (hereafter, the “Company”) announced its 1H FY2024/12 financial results.
- Net sales fell 7.3% YoY to ¥2,771 mn, EBITDA was in the red with a loss of ¥16 mn (versus a positive EBITDA of ¥132 mn in 1H FY2023/12), and operating loss was at ¥211 mn, coming in worse than the ¥30 mn loss recorded in 1H FY2023/12.
- Ordinary losses increased from ¥56 mn to ¥88 mn, and 1H net loss expanded from¥87 mn to ¥158 mn.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
