In this briefing:
- Hitachi (6501 JP): A Bold but Risky Acquisition of ABB’s Power Grids
- Smartkarma’s Week that Was in JP/KR: Softbank, JDI, Pioneer Corp and Doosan Bobcat
- SoftBank Corp IPO Valuation: Bull/Bear Case DCF Scenarios
1. Hitachi (6501 JP): A Bold but Risky Acquisition of ABB’s Power Grids
Hitachi Ltd (6501 JP) announced the acquisition of an 80.1% stake in ABB Ltd (ABBN VX)’s power grids business for $6.4 billion. ABB will retain the remaining stake in the divested unit, which is valued at an EV of $11 billion. ABB’s power grids is a global #1 player and makes transformers, long distance electricity-transmission systems and energy storage units.
Setting aside the huge cultural and integration challenges, we believe that Hitachi’s acquisition of ABB’s power grids is a bold but a risky move.
2. Smartkarma’s Week that Was in JP/KR: Softbank, JDI, Pioneer Corp and Doosan Bobcat
Below is the list of the Japan/Korea-related posts put on the Smartkarma platform during the week.
Insight | Insight Provider | Published |
Japan | ||
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Korea | ||
10/12/2018 | ||
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14/12/2018 | ||
14/12/2018 |
3. SoftBank Corp IPO Valuation: Bull/Bear Case DCF Scenarios
Softbank Group (9984 JP) is set to raise JPY2.65 trillion ($23.5 billion) through the Softbank Corp (9434 JP) IPO, Japan’s biggest-ever IPO. However, SoftBank Corp’s IPO which is set for 19 December is oversubscribed by less than double, according to press reports. This level of oversubscription is well below blockbuster Japanese stock debuts such as Mercari Inc (4385 JP) and Recruit Holdings (6098 JP).
Based on client discussion on SoftBank Corp’s intrinsic value, we have put together a DCF-based valuation along with scenario analysis. Our conclusion remains the same that SoftBank Corp is overvalued at the proposed IPO price of JPY1,500 per share.
