In today’s briefing:
- Rakuten Bank IPO: Valuation Insights
- MSCI India May QCIR: Potential Changes & Special Treatment of Adani Group Stocks
- Rakuten Bank IPO: New Price Range Is a Steal
- Pre-Positioning Targeting Solactive Global Lithium Index’s October Rebalancing
- Rakuten Bank IPO – Lower Range Makes It Even More Attractive
- Toyo Construction FY23 Profit Forecast – 105% Payout = 6.5%, Lots of Shares Changing Hands
- DB Group: Kim Family Feud Leading to a Potential M&A Fight?
- GQG Calls Adani Names 5Yr “Multi-Baggers” – It Works at 30% EPS CAGR if You Torture the Numbers
- MSCI Japan May QCIR: Couple of Potential Changes
- Good Morning Japan |Recession Fears Dominate; NUGGET: Panasonic+Stellantis =Expanded Battery Profits
Rakuten Bank IPO: Valuation Insights
- Rakuten Bank (5838 JP) is an online bank in Japan. It is looking to raise up to $878m. Pricing is on 5 April and the listing is on 21 April.
- We previously discussed the IPO in Rakuten Bank IPO: The Investment Case and Rakuten Bank Vs SBI Sumishin Net Bank.
- In this note, we discuss valuation. Our analysis suggests that Rakuten Bank is fairly valued at the IPO price range of JPY1,630-1,960 per share. We would participate in the IPO.
MSCI India May QCIR: Potential Changes & Special Treatment of Adani Group Stocks
- Currently, we see 1 high probability inclusion and 2 high probability deletions from the MSCI India Index at the May QCIR. Plus there are stocks close to the cutoffs.
- There will be selling on two Adani Group stocks following a lowering of the Foreign Inclusion Factor (FIF). That could increase if one of them is deleted from the index.
- As expected, Hindustan Aeronautics Ltd (HNAL IN) has continued to move higher post the placement and there could be more buying in the weeks ahead.
Rakuten Bank IPO: New Price Range Is a Steal
- Rakuten Bank (5838 JP) has set its IPO price at JPY1,300-1,400 per share which is 20%-29% lower than the IPO reference price range of JPY1,630-1,960 per share.
- We previously discussed the IPO in Rakuten Bank IPO: The Investment Case, Rakuten Bank Vs SBI Sumishin Net Bank and Rakuten Bank IPO: Valuation Insights.
- The new price range values Rakuten Bank at a discount vs peers for the ROE it delivers. SBI Sumishin Net Bank (7163 JP) strong post-IPO performance suggests strong sector sentiment.
Pre-Positioning Targeting Solactive Global Lithium Index’s October Rebalancing
- LG Energy Solution and Samsung SDI will remain in the index as top stocks of pack makers, respectively. Ecopro BM will almost certainly replace L&F in the category of Cathode.
- SK IE Technology will newly join the index with Separator’s top stock. On the other hand, Lotte Energy Materials and SKC are unlikely to be included.
- This event can be a critical inflection point in predicting the counter-flow for short positions against Ecopro BM and L&F in advance.
Rakuten Bank IPO – Lower Range Makes It Even More Attractive
- Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$630m in its Japan listing in April 2023.
- RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
- In our earlier notes, we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations in the IPO price range.
Toyo Construction FY23 Profit Forecast – 105% Payout = 6.5%, Lots of Shares Changing Hands
- Two weeks ago, Toyo Construction (1890 JP) released a new Mid-Term Management Plan with a new investment plan, and a new capital plan (100% payout, ¥50/share minimum div til Mar-2026).
- Obvious goal: get the stock above ¥1,000/share so YFO’s ¥1,000 bid looks unattractive. Then they attacked on a FEFTA basis, saying YFO’s foreign entities need permission to go over 10%.
- Now Toyo has released a March 2024 forecast, with a ¥63/share dividend and 105% guided payout. The stock popped. LOTS of shares trading. Now only up small.
DB Group: Kim Family Feud Leading to a Potential M&A Fight?
- In this insight, we discuss another very interesting situation brewing which is the potential family feud at the DB Group.
- One of the scenarios of the Kim family at DB Group is a sibling conflict between Nam-Ho Kim (Chairman) and his sister Ju-Won Kim.
- Our base case valuation of DB Inc is target market cap of 488 billion won or 2,428 won per share, which is 36% higher than current price.
GQG Calls Adani Names 5Yr “Multi-Baggers” – It Works at 30% EPS CAGR if You Torture the Numbers
- The Adani names are seeing new news and commentary. SEBI is probing offshore deals for rules violations, SEBI filed an interim report Sunday with the Court, Cements are refinancing US$4bn.
- GQG’s Jain was interviewed by Bloomberg TV in NY saying he sees his Adani basket being a “multi-bagger in five years.”
- Assuming growth and margins equivalent to peer max rates, all profits reinvested, and 100% gain in stock price in 5yrs, NP CAGR=33%, 2028 EV/EBITDA average of four names is 29.4x.
MSCI Japan May QCIR: Couple of Potential Changes
- Based on the last close, we expect Kawasaki Kisen Kaisha (9107 JP) to replace Nihon M&A Center (2127 JP) in the MSCI Japan Index at the May QCIR.
- Passive trackers will need to buy less than 1x ADV on Kawasaki Kisen Kaisha (9107 JP) while selling over 5x ADV on Nihon M&A Center (2127 JP).
- Kawasaki Kisen Kaisha (9107 JP) trades cheaper than its closest peers and there are some interesting market neutral trades there.
Good Morning Japan |Recession Fears Dominate; NUGGET: Panasonic+Stellantis =Expanded Battery Profits
- OVERSEAS. SPX -0.2% as Equities continued with Recession trade overnight with Defensive >Cyclicals; Tech, Discretionary, Industrials stocks hit; ADP Employment+Services PMI add fuel to Recession narrative; Next up: Non-Farm Payrolls
- JAPAN. NKY Futs -0.4% vs Cash; USDJPY 131.4; As US recession narrative strenghtens, expect selling of US exposed Discretionary; China weighs export ban on Rare earths;Rakuen cuts Bank IPO price
- NUGGET. Panasonic+Stellantis=Expansion of Battery Profits. IF Panasonic and Stellantis can agree, it could mean significant share price upside.
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