In today’s briefing:
- USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%
- Tokyo Metro IPO Valuation Analysis
- Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap
- Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025
- TOPIX Inclusions: Who Is Ready (Oct 2024)
- Nikon (7731) | Eyeing the Future? Nikon and Essilor’s Partnership in AR
- Rigaku Holdings (268A JP) IPO: Valuation Insights
- EQD | The Nikkei Is At The Top But Could Rally A Bit More…
- EQD | Nikkei 225 – Persistent Volatility Amid Election Uncertainty: Tactical Opportunities Explored
- Medley (4480 JP): Strong Base Business; No Fear from Fx; Digital Healthcare Push to Benefit
USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%
- Ubiquitous used car auction house USS Co Ltd (4732 JP) today announced MUFJ Bank’s Retirement Benefit Trust account would sell its 3.5% stake in an offering.
- Given how much cash the company has and how little cross-holding there is, this seems a bit odd, but they are doing a buyback for half the offer.
- Small offer. Low ADV count. Well-liked by numerous foreign active holders. This should get taken easily.
Tokyo Metro IPO Valuation Analysis
- Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
- Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
- Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO.
Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap
- Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.4bn 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.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025
- Rigaku Holdings (268A JP) listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
- At the reported indicative IPO price of JPY 1230/share, Rigaku Holdings (268A JP) will be valued at JPY 277.1bn (US$1.87bn).
- The stock should be added to the TOPIX INDEX on 28 November while inclusion in global indices will take place in February and June next year.
TOPIX Inclusions: Who Is Ready (Oct 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Our long-term pre-event candidate CELSYS (3663 JP) has moved to TSE Prime. There will be a TOPIX Inclusion event on 30-Oct-24. The stock has outperformed TOPIX by 43% since July.
- PKSHA Technology (3993 JP) and GENOVA (9341 JP) also moved to the TSE Prime market in September and will be having TOPIX Inclusion events at the end of October 2024.
Nikon (7731) | Eyeing the Future? Nikon and Essilor’s Partnership in AR
- Essilor’s investment underscores Nikon’s undervalued potential, spotlighting its advanced optical technologies as strategic growth drivers in emerging high-tech sectors like AR.
- Nikon’s established expertise in precision optics is highly adaptable for AR applications, positioning the company to capitalize on rising demand for wearable and immersive technology.
- Increased collaboration with EssilorLuxottica may enhance Nikon’s R&D capabilities, promising new innovations and potential revenue streams, which could strengthen Nikon’s profitability and share value long-term.
Rigaku Holdings (268A JP) IPO: Valuation Insights
- Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement, and testing instruments. It is seeking to raise up to US$737 million.
- We previously discussed the IPO in Rigaku Holdings (268A JP) IPO: The Bull Case and Rigaku Holdings (268A JP) IPO: The Bear Case.
- In this note, we discuss valuation. Our analysis suggests that Rigaku is attractively valued at the IPO price compared to peer multiples.
EQD | The Nikkei Is At The Top But Could Rally A Bit More…
- In our last Nikkei 225 insight we predicted that the Nikkei 225 INDEX was overbought and about to pullback and that is exactly what happened the following week.
- We also reiterated our view about the index’s overall trend, not looking good, and the fact that our seasonal quantitative model point to a coin flip scenario (up/down) for October.
- This week the index gapped up and the current SHORT pattern model is showing a good chance to rally from here. Let’s check how high it can go.
EQD | Nikkei 225 – Persistent Volatility Amid Election Uncertainty: Tactical Opportunities Explored
- Nikkei 225 (NKY INDEX) volatility is trading at historically high levels, and the skew is steep.
- National, regional and global catalysts provide the potential for further near-term market turbulence. Downside risk persists.
- The current vol environment lends itself to tactical option trades, such as put spreads or risk reversals.
Medley (4480 JP): Strong Base Business; No Fear from Fx; Digital Healthcare Push to Benefit
- Medley (4480 JP) is a safe bet for hiding from the negative impact of strengthening yen. The company should benefit from digital healthcare push from the newly elected Prime Minister.
- Although Medley has reported mixed 2Q24 result, with robust topline and declining profitability, the long-term growth potential remains intact. The company guided for 43% YoY revenue growth in 2024.
- Continued shortage of human resource, including doctors and nurses at medical care facilities in Japan and underpenetrated market remain the main growth engines of the company.
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