In today’s briefing:
- Hyundai Motor India IPO Preview
- Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase
- Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share
- [JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
- Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context
- Webtoon Entertainment (WBTN US) IPO: Valuation Insights
- L’Occitane (973.HK) – The Privatization Is About to Succeed
- L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump
- KOSDAQ150 Adhoc Index Rebalance: Eco&Dream to Replace Paradise Co
- Infocom (4348 JP): Blackstone’s Long-Awaited JPY6,060 Tender Offer
Hyundai Motor India IPO Preview
- Hyundai Motor India is getting ready to complete its IPO in 2H 2024. Hyundai Motor India plans to offer up to 142.2 million shares (17.5% stake) to investors.
- Hyundai Motor (005380 KS) currently owns a 100% stake in Hyundai Motor India. The IPO of Hyundai Motor India could raise as much as US$3 billion.
- If Hyundai Motor India (HMI) is valued at US$25 billion and HMC sells a 17.5% stake in the company, HMC’s remaining stake in HMI would be worth nearly US$21 billion.
Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase
- In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
- At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
- Friday they announced the Offering. Today shares fell 8+%. This is now cheap.
Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share
- 15 weeks ago, a specialised media outlet suggested Teijin Ltd (3401 JP) was in process to sell its stake in Infocom Corp (4348 JP).
- I caught up later, after the stock had run up significantly, but writing bullishly here and here. Since then, the stock is up another 33-35%.
- Today we finally got the announced deal. Blackstone will buy the stock at a valuation of ¥280bn, paying ¥6,060/share for the minority stake, and buying back Teijin’s stake at ¥4,340/share.
[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
- Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
- Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
- My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.
Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context
- Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
- Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
- ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.
Webtoon Entertainment (WBTN US) IPO: Valuation Insights
- Webtoon Entertainment (WBTN US) is a global storytelling platform. Webtoon has launched a Nasdaq IPO to raise US$270-315 million at a US$18.00 to US$21.00 price range.
- We previously discussed the IPO in Webtoon Entertainment IPO: The Bull Case and Webtoon Entertainment (WBTN US) IPO: The Bear Case.
- In this note, we outline our forecasts and valuation. Our valuation analysis suggests that Webtoon is attractively valued at the IPO price range.
L’Occitane (973.HK) – The Privatization Is About to Succeed
- So far, about 49.8% of disinterested shares from Irrevocable Undertakings/Non-binding Letters of Support would accept the Share Offer. Success is within reach based on a “good enough” privatization price.
- The Share Alternative is mainly aimed at investors who are hoping for the future re-listing of L’Occitane in the overseas markets – They can still get a vantage point.
- However, re-listing seems still distant/uncertain. The value of Rollover Shares in the future remains uncertain. Investors would face risks if they choose the Share Alternative. The Cash Alternative is preferred.
L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump
- In a long-awaited development, L’Occitane (973 HK) announced during the lunchbreak yesterday, a scrip alternative. Plus Pleasant Lake Partners (PLP) (3.25%) will accept the Offer (either in cash or scrip).
- This was positive news. And the market reacted accordingly, up ~1.0% in the afternoon session.
- One quirk in the doc was the perception those electing the scrip alternative may get a higher % in the unlisted Offeror. A back-end bump for PLP? (Hint: No).
KOSDAQ150 Adhoc Index Rebalance: Eco&Dream to Replace Paradise Co
- Paradise Co Ltd (034230 KS) will move from the KOSDAQ Market to the KOSPI Market from the open of trading on 24 June.
- E&D Co Ltd (101360 KS) will be added to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 21 June to replace Paradise Co Ltd (034230 KS).
- Paradise Co Ltd (034230 KS) belongs to the Consumer Discretionary sector and there is a possibility of inclusion to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.
Infocom (4348 JP): Blackstone’s Long-Awaited JPY6,060 Tender Offer
- Following months of press speculation, Infocom Corp (4348 JP) announced a Blackstone (BX US) tender offer at JPY6,060 per share, a 177.3% premium to the undisturbed price.
- After the share consolidation, Infocom will repurchase Teijin Ltd (3401 JP)’s stake at a share repurchase price of JPY4,231. The process is expected to be completed in early October.
- The offer is a knockout bid helped by auction. This is a done deal with payment commencing from 7 August. At the last close, the gross spread was 0.5%.
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