1. Denso Offering, Buyback, and New Cross-Holding Reduction Policy – It WAS a Trap
- 15 minutes after I published what I thought was a considered analysis, Denso dumps the details. I thought it might be a trap. It looks like a trap.
- A holistic view of the three different documents here suggests, indeed, “It was a trap”.
- This giant offering is not bearish overhang but likely tilts bullish with greenshoe support, a large buyback, a new cross-holding reduction policy, and the follow-on effects from that.
2. Huge Denso (6902) Secondary Sale by Toyota Group – Admiral Ackbar Says “It’s A Trap!”
- Yesterday, Reuters reported that multiple Toyota Group companies would sell ~10% of Denso Corp (6902 JP) worth ¥700bn in a secondary share sale by year-end.
- The sellers would be Toyota, selling down to just over 20%, Toyota Industries (6201) (selling down a bit more than half, and Aisin Seiki (7259 JP) selling its 2% stake.
- Denso would buy back shares. This whole thing is both interesting and complicated so I discuss the interesting complications below. It looks bigger than it probably is.
3. Denso (6902 JP): US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback
- Denso Corp (6902 JP) announced a secondary offering of up to 294.8 billion shares (including overallotment) and a buyback (maximum shares of 125 million or maximum value of JPY200 billion).
- Denso also announced a cross-holding reduction policy. In an unspecified timeframe, it will sell part of its holdings in Toyota Industries (6201 JP) and Aisin (7259 JP).
- Looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 13 and 18 December (likely 13 December).
4. Asahi Group (2502 JP): The Current Playbook
- Since the US$1.3 billion secondary placement announcement, Asahi Group Holdings (2502 JP)’s shares are down -6.2% from the undisturbed price of JPY5,804 per share (16 November).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asahi’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 28 November. Investors participating in previous large Japanese placements tend to secure positive returns.
5. Zensho Placement – Good Price to Raise At, at Least for the Company
- Zensho Holdings (7550 JP) aims to raise around US$300m via a public offering.
- As per the company it will use the proceeds from the deal for potential M&A transactions.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
6. Denso Corp Placement – Toyota to Raise US$4.4bn, as Expected
- Following yesterday’s news release by Reuters that Toyota Motor (7203 JP) could sell up to 10% of Denso Corp (6902 JP), the deal was officially launched today.
- Toyota is the company’s largest shareholder and its largest customer.
- We have covered the deal background in our earlier note, Denso Corp Placement – Possible Placement by Toyota to Raise US$4.7bn. In this note, we talk about the final terms.
7. Zeekr Pre-IPO – Quick Note – Recent Filing Updates – 007, Earnings on Track
- ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
- Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
- We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the updates from its recent filings.
8. Tata Technologies IPO: Trading Debut
- Tata Technologies (TATATECH IN) priced its IPO at Rs500 per share to raise gross proceeds of US$365 million. The shares will start trading tomorrow.
- We previously discussed the IPO in Tata Technologies IPO: The Investment Case and Tata Technologies IPO: Valuation Insights.
- The market sentiment on the sector has improved. In 2023, Indian IPOs with a >US$100 million raise had an average first-day gain of 28.3%. The IPO price is attractive.
9. LS Materials IPO Bookbuilding Results Analysis
- LS Materials IPO price has been determined at 6,000 won per share, which is higher than the high end of the IPO price range (5,500 won).
- A total 2,025 institutional investors participated in this IPO book building. The demand ratio was 396.8 to 1. The IPO offering amount is 87.8 billion won.
- We believe that its share price is likely to trade higher than the high end of our valuation range (7,953 won per share) post IPO.
10. Sino-Synergy Hydrogen IPO – High Potential but Comes with Ample Issues
- Sino-Synergy Hydrogen Energy Technology (9663 HK) (SHET) is looking to raise around US$200m in its Hong Kong IPO.
- SHET is a hydrogen fuel cell company in the PRC focusing on research, development, production and sales of hydrogen fuel cell stacks and hydrogen fuel cell systems.
- In this note, we will look at the company’s background and talk about valuations.
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