Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

The Amended FamilyMart Document Is A MUST READ For Investor-Stewards

FamilyMart Tender Offer - Winnie and HunnyPot Redux

Quiddity Advisors

Event-Driven

Imasen Electric Industrial / Event-Driven

On 9 November, along with <a href="http://www.imasen.co.jp/pdf/e_tanshin2009.pdf" target="_blank" rel="noopener">Q2 earnings</a> (which showed revenues down a sharp 35.7% in H1, with OP and NP turning sharply negative), Japanese auto parts maker (known for seat adjustment mechanisms, lamps, and various servos and relays)  <a href="https://www.smartkarma.com/entities/imasen-electric-industrial" target="_blank" data-smartkarma-citation="entities:18685:1" rel="noopener">Imasen Electric Industrial (7266 JP)</a> announced that larger auto parts maker (predominantly seats) <a href="https://www.smartkarma.com/entities/ts-tech-co-ltd" target="_blank" data-smartkarma-citation="entities:7774:1" rel="noopener">Ts Tech Co Ltd (7313 JP)</a> would launch a partial Tender Offer and would buy shares in a third party placement if the partial Tender Offer were unsuccessful with the goal of getting to xx%.TS Tech currently owns 638,000 shares (3.06%) and the Tender Offer to be launched would buy up to 5,209,500 shares (25.00%). Once they have achieved 25% in the Tender Offer, they would then be a Special Related Shareholder and would purchase 3.181mm shares in a third-party placement which would take them to 34.00%. This somewhat skirts the intent of the TOB Rules but I expect it will be difficult to get it struck down.  <div class="content-highlight">
The Tender Offer Price of PBR is ¥930/share, however, is ludicrous. 
The value on the books of net cash and securities holdings is ¥677/share as of end-Sep 2020. Add net receivables to that and you get ¥1,012/share. Book Value Per Share is ¥2,255/share (45 days of inventories is ¥529/share of that).
166% of Tender Offer Market Cap is Net Cash + Securities + Inventories + Net Receivables.
It beggars belief that a company which has strong customer relationships and substantial net cash (a bit more than half the market cap at Tender Offer Price) should see the Board sell negative control of the company (34%) at 0.4x book and an Enterprise Value of 1.1x 5-year EBITDA.  Add the cross-holdings into the "cash" column and the takeover price is roughly 0.5x five-year EBITDA.
The Tender Offer Price is set at a price which is below where the shares were in January 2020, which at the time were hovering at ten-year lows.
Large and famous Japanese investment banks SMBC Nikko and Nomura Securities signed off on DCF ranges which allow the Board to consider that price fair.
</div>As I suggested in <a href="https://www.smartkarma.com/insights/japan-needs-more-cowbell" target="_blank" data-smartkarma-citation="insights:41191" rel="noopener">Japan Needs More Cowbell</a>...<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/563/original/image?1605402722" class="editor-image img-responsive" data-smartkarma-image-id="171563"></figure><div class="content-highlight">
Independent shareholders need to speak up. If you do not, you tacitly approve.
More below the fold.
</div></section>

On 9 November, along with Q2 earnings (which showed revenues down a sharp 35.7% in H1, with OP and NP turning sharply negative), Japanese auto parts maker (known for seat adjustment mechanisms, lamps, and various servos and relays)  Imasen Electric Industrial (7266 JP) announced that larger auto parts maker (predominantly seats) Ts Tech Co Ltd (7313 JP) would launch a partial Tender Offer and would buy shares in a third party placement if the partial Tender Offer were unsuccessful with the goal of getting to xx%.TS Tech currently owns 638,000 shares (3.06%) and the Tender Offer to be launched would buy up to 5,209,500 shares (25.00%). Once they have achieved 25% in the Tender Offer, they would then be a Special Related Shareholder and would purchase 3.181mm shares in a third-party placement which would take them to 34.00%. This somewhat skirts the intent of the TOB Rules but I expect it will be difficult to get it struck down.  
The Tender Offer Price of PBR is ¥930/share, however, is ludicrous. 
The value on the books of net cash and securities holdings is ¥677/share as of end-Sep 2020. Add net receivables to that and you get ¥1,012/share. Book Value Per Share is ¥2,255/share (45 days of inventories is ¥529/share of that).
166% of Tender Offer Market Cap is Net Cash + Securities + Inventories + Net Receivables.
It beggars belief that a company which has strong customer relationships and substantial net cash (a bit more than half the market cap at Tender Offer Price) should see the Board sell negative control of the company (34%) at 0.4x book and an Enterprise Value of 1.1x 5-year EBITDA.  Add the cross-holdings into the "cash" column and the takeover price is roughly 0.5x five-year EBITDA.
The Tender Offer Price is set at a price which is below where the shares were in January 2020, which at the time were hovering at ten-year lows.
Large and famous Japanese investment banks SMBC Nikko and Nomura Securities signed off on DCF ranges which allow the Board to consider that price fair.
As I suggested in Japan Needs More Cowbell...
Independent shareholders need to speak up. If you do not, you tacitly approve.
More below the fold.


Imasen Electric Partial Tender - Set Governance to Ludicrous Mode