Japan/Asia Long-Short, LightStream Research

Mio Kato

Over 15 years analysing Japanese and Asian stocks from a long/short perspective

I focus on cyclically driven sectors such as Gaming, Factory Automation and Autos

An eclectic background as a long-short analyst, upper management at a financial data startup through its listing, and as the founder of a team analysing big/alternative data, all of which supports independent and differentiated views... we hope

An appreciation for Mathematics drives the development of a "Micro-Quantamental" process which can provide a data-driven, historically-informed and semi-automated foundation upon which to layer more qualitative and judgemental analysis, thus improving investment decision-making speed and accuracy

Japan/Asia Long-Short

Thoughts on Amazon –What Does Its Valuation Tells Us?

Netflix & Amazon Expand in Korea – Not a Coincidence

Okja: The Fight Between Netflix Vs. CJ CGV

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

Yakult was down 6.8% today as it was announced that top shareholder Danon would sell down its 20% stake in the company to approximately 7%, possibly at the behest of activist investor Corvex.  We do not expect the move to have a significant impact on Yakult's operations and if anything may prompt the companies to be more aggressive in their collaborations such as through Danone distributing Yakult's products in Europe where sales have been anemic.<h2>Terms</h2>Discount Range: 3.0%, 4.0%, 5.0%Offering size: Up to JPY 195.3 bn (USD 1.8 bn) (based on closing price of JPY 7,940 on February 14th, 2018; 1 USD=JPY 107)Buyback: Yakult will repurchase up to 5m shares up to a maximum JPY36bn from 16-28 Feb 18 via ToSTNeT-3 (Since updated to 4.86m shares at JPY7,400 on 16 Feb). Danone is expected to sell a portion of its Yakult stock through the repurchase transaction. The number of shares to be sold in the global offering will be determined after taking into account the number of shares sold by Danone through such share repurchase transaction.Total shares offered: Up to 24,600,000 secondary shares (Base offering up to 21,391,600 shares and over-allotment (“OA”) of up to 3,208,400 shares)International tranche: Up to 9,840,000 shares (40%; 8,556,700 base shares and 1,283,300 OA)Domestic tranche: Up to 14,760,000 shares (60%; 12,834,900 base and 1,925,100 OA)Shares outstanding (excluding 10,549,711 treasury shares): 165,360,507 sharesJoint Global Coordinators: Mizuho Securities Co., Ltd. and Citigroup Global Markets Japan Inc.-International Tranche: Citigroup, Mizuho, J.P. Morgan-Japanese Tranche: Mizuho, Citigroup, DaiwaLock-up Period: 180 days from and including the delivery date for Yakult and Danone <h2>Offering schedule:</h2>Launch: February 14, 2018 (Wed)Domestic/International roadshow: February 16, 2018 (Fri) ~ February 27, 2018 (Tue)Bookbuilding (International): February 26, 2018 (Mon) ~ 1 business day before pricing (Earliest Mar 2, 2018 (Fri))Pricing: One business day between March 5, 2018 (Mon) and March 7, 2018 (Wed)&lt;International&gt;Payment &amp; Delivery: 6 business days after pricing (Earliest March 13, 2018 (Tue))&lt;Domestic&gt;Domestic subscription period: 1~2 business days after pricing (Earliest March 6, 2018 (Tue) ~ March 7, 2018 (Wed))Delivery: 6 business days after pricing (Earliest March 13, 2018 (Tue))Our detailed analysis of the deal is below for subscribers.

Yakult was down 6.8% today as it was announced that top shareholder Danon would sell down its 20% stake in the company to approximately 7%, possibly at the behest of activist investor Corvex.  We do not expect the move to have a significant impact on Yakult's operations and if anything may prompt the companies to be more aggressive in their collaborations such as through Danone distributing Yakult's products in Europe where sales have been anemic.TermsDiscount Range: 3.0%, 4.0%, 5.0%Offering size: Up to JPY 195.3 bn (USD 1.8 bn) (based on closing price of JPY 7,940 on February 14th, 2018; 1 USD=JPY 107)Buyback: Yakult will repurchase up to 5m shares up to a maximum JPY36bn from 16-28 Feb 18 via ToSTNeT-3 (Since updated to 4.86m shares at JPY7,400 on 16 Feb). Danone is expected to sell a portion of its Yakult stock through the repurchase transaction. The number of shares to be sold in the global offering will be determined after taking into account the number of shares sold by Danone through such share repurchase transaction.Total shares offered: Up to 24,600,000 secondary shares (Base offering up to 21,391,600 shares and over-allotment (“OA”) of up to 3,208,400 shares)International tranche: Up to 9,840,000 shares (40%; 8,556,700 base shares and 1,283,300 OA)Domestic tranche: Up to 14,760,000 shares (60%; 12,834,900 base and 1,925,100 OA)Shares outstanding (excluding 10,549,711 treasury shares): 165,360,507 sharesJoint Global Coordinators: Mizuho Securities Co., Ltd. and Citigroup Global Markets Japan Inc.-International Tranche: Citigroup, Mizuho, J.P. Morgan-Japanese Tranche: Mizuho, Citigroup, DaiwaLock-up Period: 180 days from and including the delivery date for Yakult and Danone Offering schedule:Launch: February 14, 2018 (Wed)Domestic/International roadshow: February 16, 2018 (Fri) ~ February 27, 2018 (Tue)Bookbuilding (International): February 26, 2018 (Mon) ~ 1 business day before pricing (Earliest Mar 2, 2018 (Fri))Pricing: One business day between March 5, 2018 (Mon) and March 7, 2018 (Wed)&lt;International&gt;Payment &amp; Delivery: 6 business days after pricing (Earliest March 13, 2018 (Tue))&lt;Domestic&gt;Domestic subscription period: 1~2 business days after pricing (Earliest March 6, 2018 (Tue) ~ March 7, 2018 (Wed))Delivery: 6 business days after pricing (Earliest March 13, 2018 (Tue))Our detailed analysis of the deal is below for subscribers.

Yakult Honsha

Yakult: A Digestible Deal Indeed