This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. The Honda (7267) Offering – Much Easier Than It Looks
- At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others.
- We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist.
- It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.
2. ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact
- A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
- For the two large banks, this will be a cleanup of their cross-shareholding.
- In this note, we will talk about the placement and run the deal through our ECM framework.
3. Big Honda (7267) Offering – Flow Timing Matters
- The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share.
- The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
- The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.
4. Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out
- Hyundai Motor (005380 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
- HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
- In our previous note, we looked at the company’s past performance. In this note, we undertake a peer comparison.
5. Honda (7267 JP): The Current Playbook
- Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.
6. Timee IPO: Forecasts and Valuation
- Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
- We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
- Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.
7. Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction
- A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP).
- The possibility of such a selldown was flagged by Reuters prior to the deal launch.
- In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.
8. ECM Weekly (15th July 2024) – Kokusai, Wiwynn, Kelun-Biotech, Timee, Shift Up, Sanil, Avanse
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, there were a number of listing in the past week, most of which performed as per our expectations.
- On the placement front, Japan continued to dominate the ECM flows.
9. Sanil Electric IPO Book Building Results Analysis
- Sanil Electric reported excellent IPO book building results. The IPO price has been determined at 35,000 won, which is 16.7% higher than the high end of the IPO price range.
- The demand ratio from 2,205 institutional investors was 414 to 1. Sanil Electric (062040 KS) IPO will start trading on 29 July 2024.
- Our base case valuation of Sanil Electric is market cap of 1.8 trillion won or target price of 58,593 won (67% higher than the IPO price of 35,000 won).
10. Gigabyte GDR Offering – Not Wholly Convinced, but Discount at Wide End Is Inline with the Average
- Gigabyte Technology (2376 TT) is looking to raise up to US$307m in its global depository receipts (GDRs) offering. The firm is also looking to raise another US$300m via convertible bonds.
- Similar to previous GDR listings, the firm has undergone a long drawn out process prior to launching the deal, having to jump through a number of board/shareholder/regulatory approval loops.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
