Weekly Top Ten Equity Capital Markets – Sep 1, 2024

1. Terumo (4543 JP) Secondary Offering – Smaller Than It Looks

By Travis Lundy, Quiddity Advisors

• On Thursday 29 August, Terumo Corp (4543 JP) announced a secondary offering where 7 major cross-holders would sell just under 5% of the shares outstanding to international investors. 
• In recent quarters, Terumo has seen better consensus EPS growth than Peers in recent quarters, and Peers have underperformed. Right now, Terumo isn’t ‘cheap’ but consensus growth is strong.
• This back-end demand in this case has enough moving parts that it bears a closer look. 

2. Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics

By Clarence Chu, Aequitas Research

• A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 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.

3. Initial Thoughts on the Kioxia IPO – Impact on SK Hynix and Samsung Electronics

By Douglas Kim, Douglas Research Advisory

• Kioxia is getting ready to complete its IPO in Japan as soon as in October. Kioxia’s valuation is expected to exceed JPY 1.5 trillion (about USD 10.3 billion).
• SK Hynix’s stake in Kioxia (through Bain led consortium) is 19%. SK Hynix’s stake in Kioxia would rise to 34% if the CBs are converted into equity. 
• The IPO of Kioxia has mixed implications for SK Hynix which is a major shareholder. However, the IPO of Kioxia has a more direct negative impact on Samsung Electronics.

4. Kioxia IPO Early Re-Look – Better Placed This Time Around

By Sumeet Singh, Aequitas Research

• Kioxia Holdings (6600 JP) aims to list in Japan by Oct 2024 at a valuation of over US$10bn, as per media reports. 
• Kioxia is a manufacturer and a global leader in flash memory and solid state drives for smartphones, PCs, enterprise servers and data centers
• In this note, we take an early look at the possible listing.

5. Terumo (4543 JP): A US$1.4 Billion Secondary Offering

By Arun George, Global Equity Research Ltd

• Terumo Corp (4543 JP) has announced a secondary offering of up to 73.2 million shares, worth JPY203 billion (US$1.4 billion) at the last close. 
• The secondary offering facilitates the exit of large shareholders. Terumo also announced a buyback worth a maximum of JPY30 billion or 15 million shares.
• Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 10 and 12 September (likely 10 September).

6. Interglobe Aviation (Indigo) Placement – Another US$800m+ Deal, This Time by the Correct Co-Founder

By Sumeet Singh, Aequitas Research

• InterGlobe Aviation Ltd (INDIGO IN)’s co-founder, Rakesh Gangwal, aims to raise around US$850m via selling around 3.8% stake in Indigo.
• He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. He has sold many times before.
• In this note, we will talk about the lockup dynamics and possible placement.

7. Keppel Infra Trust Placement – While the Raising Is Relatively Large, Its past Deals Have Done Well

By Clarence Chu, Aequitas Research

• Keppel Infrastructure Trust (KIT SP) is looking to raise around S$206m (US$158m) in its primary placement.
• Proceeds will be used to pay down its bridge loan facility linked to its Ventura acquisition. KIT also appears to have secured its unitholders’ approval for the raising earlier. 
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

8. Hyundai Motor India IPO Valuation Analysis

By Douglas Kim, Douglas Research Advisory

• Our base case valuation of Hyundai Motor India is market cap of US$18.6 billion, based on P/E of 24.4x our estimated net profit of 64.1 billion INR in FY25. 
• There have been some increasing concerns about Hyundai Motor India paying out higher royalty to its parent Hyundai Motor and dividend to shareholders, which could lower profit.
• According to a recent article by livemint, the expected valuation of Hyundai Motor India has fallen to about USD16 billion to USD20 billion.

9. STCube: Rights Offering Capital Raise of 89 Billion Won

By Douglas Kim, Douglas Research Advisory

• STCube announced it plans to increase capital by 89 billion won (13 billion won through a third party rights offering and 75.7 billion won through shareholder preferred capital increase).
• We have a positive view of STCube’s capital raise and there could be some alpha generating returns in our view.
• The fact that the company’s share price surged nearly 5x from the last rights offering in May 2022 (to October 2022) is likely to positively impact capital raise this time. 

10. Hamamatsu Photonics (6965) – Toyota Selling Yet Another Cross-Holding

By Travis Lundy, Quiddity Advisors

• Today after the close we got news that after a year-plus of Hamamatsu Photonics Kk (6965 JP)‘s sliding stock price, Toyota Motor (7203 JP) is selling their 5+% stake.
• The offering is standard. Probably prices 9 Sep 2024. HP’s amended buyback program and probable index upweights offset most of the offering size over the next several months.
• So investors have to decide whether they want to catch the falling knife.