In today’s briefing:
- The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
- Alibaba Potential IPOs – Part 2 – An Early Look at Cainiao, US$10bn+
- Alibaba’s Cainiao IPO: The First Look
- Kokusai Electric (6525 JP) IPO – Index Demand On The Follow
- Rakuten Bank (5838) One Month Later
- Leapmotor IPO Lock-Up – US$3.3bn Lockup Expiry, Everyone in the Money, CCASS Movement to Boot
- YFO Reloads Toyo Construction Takeover Proposal at ¥1255/Share
- EcoPro Materials: IPO & Index Inclusion
- Kokusai Electric Pre-IPO – The Negatives – Can’t Avoid the Cycles
- Toyo Construction (1890 JP): YFO’s Potential Revised Offer at JPY1,255
The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
- Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
- But there may be ¥800bn+ to buy on one day into the close later this month (+ another ¥200-300bn on two other days). Then a ¥500bn sell two days later.
- Over the past ten years, the two day return on the March trade is great. In Sep, not so much. This year there are Extra Special Flows.
Alibaba Potential IPOs – Part 2 – An Early Look at Cainiao, US$10bn+
- On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
- Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
- In our previous note, we highlighted which division could list. In this note, we will look at Cainiao.
Alibaba’s Cainiao IPO: The First Look
- Alibaba (ADR) (BABA US) aims to complete the IPO of Cainiao Smart Logistics (1437124D HK) in the next 12 to 18 months. Alibaba holds a 67% stake in Cainiao.
- Cainiao’s revenue growth, while on a declining trend, remains in double digits. Encouragingly. narrowing losses set a path to profitability.
- On 30 March, Bloomberg reported that Cainiao is currently valued at more than US$20 billion. Our valuation analysis suggests that such a valuation is justifiable.
Kokusai Electric (6525 JP) IPO – Index Demand On The Follow
- Niche Japanese Semiconductor Production Equipment specialist Kokusai Electric (6525 JP) last Thursday announced the TSE approved its late October IPO (with indicative pricing, shares to be sold, and initial prospectus).
- This insight looks at initial shareholder structure, selling group, post-IPO shareholder structure with index inclusion timing, and follow-on flow possibilities.
- At ¥435bn indicative market cap, it will be the largest IPO in Japan since pre-covid, despite coming in a cycle trough. I expect it will be hot.
Rakuten Bank (5838) One Month Later
- On 31 August, I published Rakuten Bank (5838) – 4 Months On, Volume Decay and RB’s Place Among Banks. It’s up 40.6% since the day after I wrote, reasons unclear.
- TOPIX Banks Index is up 10.4% since then, with post-BOJ meeting price movements indicating a kind of momiai.
- For Rakuten Bank, while growth means it may not be “expensive” it is no longer dirt cheap. And I cannot identify the culprit, so time to take profits.
Leapmotor IPO Lock-Up – US$3.3bn Lockup Expiry, Everyone in the Money, CCASS Movement to Boot
- Leapmotor (9863 HK) (LM) raised around US$800m in its Hong Kong IPO. The stock was listed in Sep 2022, its lockup on pre-IPO investors will expire on 29th Sep 2023.
- LM is a smart EV company based in China, founded in 2015.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
YFO Reloads Toyo Construction Takeover Proposal at ¥1255/Share
- Last night Reuters teased a headline saying the Nintendo Family Office called YFO (and related entities) would raise its proposed takeover price for Toyo Construction to ¥1255/share.
- Recently, the company had agreed to start an investigation and YFO had dropped its demands for an EGM. In Q1, the company reporetd Revenues +18.6%yoy, reasonably in-line with original guidance.
- This new price comes at a 1% premium to previous close, and is meant to start discussions. The Board has indicated it will start deliberations tomorrow.
EcoPro Materials: IPO & Index Inclusion
- EcoPro Materials (ECO123 KS) was founded in 2017 and specializes in manufacturing cathode material precursors, a core material for lithium secondary cells.
- EcoPro Materials (ECO123 KS) could raise between US$387m-US$492m, valuing the company between US$1.9bn-US$2.42bn. Float will depend on voluntary lock-ups and allocation to strategic investors.
- Inclusion in global indices is likely to take place between February to June, while the highest probability of Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion is in December 2024.
Kokusai Electric Pre-IPO – The Negatives – Can’t Avoid the Cycles
- KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
- KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
- In this note, we talk about the not-so-positive aspects of the deal.
Toyo Construction (1890 JP): YFO’s Potential Revised Offer at JPY1,255
- YFO has returned with a potential tender offer price of JPY1,255 per share for Toyo Construction (1890 JP), 25.5% above its previous offer of JPY1,000 per share.
- The offer is conditional on due diligence access to confirm the feasibility of the medium-term management plan and no material accounting, tax, or legal issues.
- The due diligence will take a month, with the offer expected to commence in late December. Expect due diligence access as the revised offer represents a 10-year high.
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