This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon
- Today, Sanrio (8136 JP) announced a large secondary offering where banks would sell down shares and the Tsuji family would sell a few shares at the margin.
- The stock has been on a rocket for two years. It’s expensive. Growth slows next year. Will this cause momentum to turn? Maybe. The offering is 38% of Max RWF.
- I think one could give this a pass, and even sell it if it opens down small.
2. HULIC (3003 JP) – Crossholders Show Up with a BIG (Relative) Secondary Offering
- Today, Hulic Co Ltd (3003 JP) announced a large secondary offering where about a quarter of the crossholdings will sell down holdings. Some exit entirely. Some partially.
- After this selldown, there is a fair bit more to go later, but more of that will be corporate. It’s a BIG offering: 55d of ADV and 55% of MRWF.
- It is “only” about $800mm and retail gets 80% of it. The high div yield will be a selling point but there is a lot of debt.
3. Kansai Electric Power (9503 JP): The Current Playbook
- Since the US$3.5 billion primary/secondary offering announcement, Kansai Electric Power (9503 JP)’s shares have been down 20.6% from the undisturbed price of JPY2,397 per share (13 November).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, KEPCO’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 26 November. The average large Japanese placement tends to generate positive returns.
4. FineToday Holdings (289A JP) IPO: The Bear Case
- FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.
- In FineToday Holdings (289A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on the weak 3Q24 revenue performance, mid-tier revenue growth, leveraged balance sheet, share overhang and pre-IPO dividend.
5. Sanrio Placement – Opportunistic >US$800m Selling at All-Time Highs
- A group of domestic financial institutions and the firm’s executives are looking to raise US$840m from trimming their stakes in Sanrio (8136 JP).
- While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
- In this note, we will talk about the placement and run the deal through our ECM framework.
6. Sanrio (8136 JP): A US$840 Million Secondary Offering
- Sanrio (8136 JP) has announced a secondary offering of up to 25.9 million shares (29.8 million including overallotment), worth around US$840 million (US$970 million including overallotment).
- Sanrio’s goal with the secondary offering is (i) to reduce cross-shareholdings and (ii) to expand and diversify the shareholder base, which should further enhance liquidity.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 10 and 13 December (likely 10 December).
7. Meiji Holdings Placement – Momentum Leading into This Cross-Shareholding Selldown Isn’t the Greatest
- A group of investors are looking to raise US$264m from trimming a portion of their stakes in Meiji Holdings (2269 JP).
- While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
- In this note, we will talk about the placement and run the deal through our ECM framework.
8. Kioxia Pre-IPO – Peer Comparison
- Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our earlier notes. In this note we undertake a peer comparison.
9. Kioxia Pre-IPO – Thoughts on Valuations
- Kioxia Holdings (285A JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our earlier notes. In this note we talk about valuations.
10. Kioxoa Pre-IPO – The Negatives – Still a Follower of the Cycle
- Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- In this note, we talk about the not-so-positive aspects of the deal.
