Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><p>PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).</p></div><div><p>PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).</p></div><div><p>We have covered the main aspects of the deal in our earlier notes<a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-many-companies-rolled-into-one" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Many companies rolled into one and </a><a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-peer-comparison" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Peer Comparison.</a></p></div><div><p>In this note we will talk about valuation.</p></div>

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).We have covered the main aspects of the deal in our earlier notes PHC Holdings Pre-IPO - Many companies rolled into one and  PHC Holdings Pre-IPO - Peer Comparison.In this note we will talk about valuation.

PHC Holdings Pre-IPO - Thoughts on Valuation

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

Equity Bottom-Up

<p>Japan’s largest apparel retailer, <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> has endured a tough time over the last six months with the share price falling over 30% since peaking in February 2021. Fast Retailing shares have also failed to benefit from the recent stock market rally (resulting from Prime Minister Suga’s planned exit), which saw the benchmark Topix index rise around 10% during the last two weeks.</p><p>We would expect the company’s 4QFY21 financial performance to remain weak, driven by disappointing domestic, China and other overseas market performance. This is mostly priced in the share price, and shares could start to rebound as Japan prepares to relax COVID restrictions in the near future following a successful vaccination campaign.</p><p>Nevertheless, the risks rewards of buying Fast Retailing hangs in the balance as valuation multiples remain expensive even after a 30% decline in the share price.</p><p>We would recommend closing any short positions as there is upside potential alongside the recovery of the domestic business.</p>

Japan’s largest apparel retailer, Fast Retailing (9983 JP) has endured a tough time over the last six months with the share price falling over 30% since peaking in February 2021. Fast Retailing shares have also failed to benefit from the recent stock market rally (resulting from Prime Minister Suga’s planned exit), which saw the benchmark Topix index rise around 10% during the last two weeks.We would expect the company’s 4QFY21 financial performance to remain weak, driven by disappointing domestic, China and other overseas market performance. This is mostly priced in the share price, and shares could start to rebound as Japan prepares to relax COVID restrictions in the near future following a successful vaccination campaign.Nevertheless, the risks rewards of buying Fast Retailing hangs in the balance as valuation multiples remain expensive even after a 30% decline in the share price.We would recommend closing any short positions as there is upside potential alongside the recovery of the domestic business.

Fast Retailing: Slowing China Demand Could Overwhelm the Domestic Market Rebound

<p>PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mistui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).</p><p>PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).</p><p>PHC’s revenue has increased by 64% over FY19-FY21 and it was up another 29% in 1Q22. The growth has mainly been driven by acquisition of a number of firms over the reporting period. </p><p>Although, its main division, Diabetes Management appears to be suffering from a decline in revenue that has been going on for a while. In addition, it's difficult to pinpoint the growth of its other segments owing to the acquisitions having been completed mid-year.</p><p>Furthermore, it's not clear to us how the company acts as one firm, as all of its acquired firms appear to be working independently and there hasn’t been much mention of synergies.</p>

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mistui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).PHC’s revenue has increased by 64% over FY19-FY21 and it was up another 29% in 1Q22. The growth has mainly been driven by acquisition of a number of firms over the reporting period. Although, its main division, Diabetes Management appears to be suffering from a decline in revenue that has been going on for a while. In addition, it's difficult to pinpoint the growth of its other segments owing to the acquisitions having been completed mid-year.Furthermore, it's not clear to us how the company acts as one firm, as all of its acquired firms appear to be working independently and there hasn’t been much mention of synergies.

PHC Holdings Pre-IPO - Many Companies Rolled into One

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> and <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>, <a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl Group Holdings (2313 HK)</a> and <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a>. Shorts increased in the Information Technology, Consumer Discretionary, Health Care and Real Estate sectors while decreasing in the Communication Services and Materials sectors.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a>, <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>, <a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" data-smartkarma-citation="entities:2458:1" rel="noopener">Yaskawa Electric (6506 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a> and <a href="https://www.smartkarma.com/entities/mitsui-osk-lines-ltd" target="_blank" data-smartkarma-citation="entities:20717:1" rel="noopener">Mitsui Osk Lines (9104 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a>, <a href="https://www.smartkarma.com/entities/odakyu-electric-railway-co-ltd" target="_blank" data-smartkarma-citation="entities:5405:1" rel="noopener">Odakyu Electric Railway (9007 JP)</a>, <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a>, <a href="https://www.smartkarma.com/entities/keio-corp" target="_blank" data-smartkarma-citation="entities:1223:1" rel="noopener">Keio Corp (9008 JP)</a>. Shorts increased in most sectors led by the Industrials, Consumer Discretionary, Information Technology, Consumer Staples and Materials stocks.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a>, <a href="https://www.smartkarma.com/entities/kumho-petro-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:2014:1" rel="noopener">Kumho Petro Chemical (011780 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:393:1" rel="noopener">SK Inc (034730 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/oci-co-ltd" target="_blank" data-smartkarma-citation="entities:1904:1" rel="noopener">Oci Co Ltd (010060 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" data-smartkarma-citation="entities:22932:1" rel="noopener">Samsung Biologics Co., (207940 KS)</a> and <a href="https://www.smartkarma.com/entities/korea-shipbuilding-offshore-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Korea Shipbuilding &amp; Offshore Engineering (009540 KS)</a>. </p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a>, <a href="https://www.smartkarma.com/entities/ase-technology-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:27270:1" rel="noopener">ASE Technology Holding Co Ltd (3711 TT)</a>, <a href="https://www.smartkarma.com/entities/taishin-financial-holding" target="_blank" data-smartkarma-citation="entities:715:1" rel="noopener">Taishin Financial Holding (2887 TT)</a> and <a href="https://www.smartkarma.com/entities/momo-com-inc" target="_blank" data-smartkarma-citation="entities:8403:1" rel="noopener">Momo.Com Inc (8454 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/china-steel-corp" target="_blank" data-smartkarma-citation="entities:962:1" rel="noopener">China Steel (2002 TT)</a>, <a href="https://www.smartkarma.com/entities/wan-hai-lines-ltd" target="_blank" data-smartkarma-citation="entities:14262:1" rel="noopener">Wan Hai Lines (2615 TT)</a>, <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> and <a href="https://www.smartkarma.com/entities/taiwan-business-bank" target="_blank" data-smartkarma-citation="entities:18958:1" rel="noopener">Taiwan Business Bank (2834 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Alibaba Group (9988 HK), China Merchants Bank H (3968 HK), JD.com Inc. (9618 HK), Xiaomi Corp (1810 HK) and Kuaishou Technology (1024 HK) while there was short covering on Tencent (700 HK), Ping An Insurance (H) (2318 HK), Anta Sports Products (2020 HK), Shenzhou Intl Group Holdings (2313 HK) and HKEX (388 HK). Shorts increased in the Information Technology, Consumer Discretionary, Health Care and Real Estate sectors while decreasing in the Communication Services and Materials sectors.In Japan, stocks increased on Shiseido Company (4911 JP), Fast Retailing (9983 JP), Yaskawa Electric (6506 JP), Canon Inc (7751 JP) and Mitsui Osk Lines (9104 JP) while there was short covering on Invesco Office J Reit (3298 JP), Odakyu Electric Railway (9007 JP), Lasertec Corp (6920 JP), JSR Corp (4185 JP), Keio Corp (9008 JP). Shorts increased in most sectors led by the Industrials, Consumer Discretionary, Information Technology, Consumer Staples and Materials stocks.In Korea, shorts increased on NCSOFT Corp (036570 KS), LG Display (034220 KS), Kumho Petro Chemical (011780 KS), SK Inc (034730 KS) and Samsung Electronics (005930 KS) while shorts were covered on SK Telecom (017670 KS), Celltrion Inc (068270 KS), Oci Co Ltd (010060 KS), Samsung Biologics Co., (207940 KS) and Korea Shipbuilding &amp; Offshore Engineering (009540 KS). In Taiwan, shorts increased on Evergreen Marine Corp (2603 TT), Mediatek Inc (2454 TT), ASE Technology Holding Co Ltd (3711 TT), Taishin Financial Holding (2887 TT) and Momo.Com Inc (8454 TT) while shorts covered on TSMC (2330 TT), China Steel (2002 TT), Wan Hai Lines (2615 TT), United Microelectronics Corp (2303 TT) and Taiwan Business Bank (2834 TT). 

Asia Shorts: Alibaba, CMB, Tencent, Anta, Shiseido, Odakyu, Keio, NC Soft, LGD, SK Tel, Evergreen

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<p><em><strong>The following is an in-depth review of Japanese retail in the last 18 months covering all the main formats and categories, providing a quick way to see an overview of all the key trends and winners and losers in Japanese retailing now and going forward.</strong></em></p><p>FY2020 was an anomaly and one that businesses everywhere will want to forget and never repeat. There was more than enough pain among Japan’s top retailers last year, but equally some formats did surprisingly well given the circumstances.</p><p>For most, work-from-home was the single most important factor in determining a chain’s fortunes. City-centre stores and shopping centres offering mostly discretionary shopping have been hit hard, as have convenience stores.</p><p>But those chains selling essentials, healthcare, electronics and, most importantly, food, all saw their fortunes improve. The pandemic has also revealed the strong, dynamic players and exposed the weaker ones. Oh, and everyone needs to be online.</p>

The following is an in-depth review of Japanese retail in the last 18 months covering all the main formats and categories, providing a quick way to see an overview of all the key trends and winners and losers in Japanese retailing now and going forward.FY2020 was an anomaly and one that businesses everywhere will want to forget and never repeat. There was more than enough pain among Japan’s top retailers last year, but equally some formats did surprisingly well given the circumstances.For most, work-from-home was the single most important factor in determining a chain’s fortunes. City-centre stores and shopping centres offering mostly discretionary shopping have been hit hard, as have convenience stores.But those chains selling essentials, healthcare, electronics and, most importantly, food, all saw their fortunes improve. The pandemic has also revealed the strong, dynamic players and exposed the weaker ones. Oh, and everyone needs to be online.

The Polarising Pandemic in Japanese Retail

Japan

FAST RETAILING CO., LTD. operates a chain of clothing stores, UNIQLO, throughout Japan and in other markets overseas including UK, China, Hong Kong, South Korea, US, France, Singapore and Russia.  The Company designs, manufactures, and retails its own line of casual clothing.

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Fast Retailing (9983 JP)

PHC Holdings Pre-IPO - Thoughts on Valuation

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is...

Sumeet Singh

Fast Retailing: Slowing China Demand Could Overwhelm the Domestic Market Rebound

We wouldn’t rush to buy this dip, but we would consider recommending investors to close their short positions as there could be an upside alongside...

Oshadhi Kumarasiri

PHC Holdings Pre-IPO - Many Companies Rolled into One

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO.

Sumeet Singh

Asia Shorts: Alibaba, CMB, Tencent, Anta, Shiseido, Odakyu, Keio, NC Soft, LGD, SK Tel, Evergreen

The Insight looks at movements in short interest across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

The Polarising Pandemic in Japanese Retail

A complete review of the Japanese retail sector in the last 18 months, format by format, category by category, providing key trends and winners &...

Michael Causton

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