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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/daimler-truck-holding-ag" target="_blank" data-smartkarma-citation="entities:35551:1" rel="noopener">Daimler Truck Holding (DTG GR)</a> (DT) are looking to raise up to US$1.7bn via selling around 35% of their stake in <a href="https://www.smartkarma.com/entities/archion-corporation" target="_blank" data-smartkarma-citation="entities:47577:1" rel="noopener">Archion (543A JP)</a>.</li>
<li>The news of the possible deal was already out last week and the deal terms are somewhat along expected lines.</li>
<li>We have looked at most aspects of the deal in our earlier note. In this note, we will talk about the recent updates.</li>
</ul>



Toyota Motor (7203 JP) and Daimler Truck Holding (DTG GR) (DT) are looking to raise up to US$1.7bn via selling around 35% of their stake in Archion (543A JP).
The news of the possible deal was already out last week and the deal terms are somewhat along expected lines.
We have looked at most aspects of the deal in our earlier note. In this note, we will talk about the recent updates.


Aequitas: Archion Placement - As Expected, Some of the past Large Deals Have Been Mixed

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/daimler-truck-holding-ag" target="_blank" data-smartkarma-citation="entities:35551:1" rel="noopener">Daimler Truck Holding (DTG GR)</a> could look to raise JPY200-300bn (US$1.3-1.9bn) via a secondary in <a href="https://www.smartkarma.com/entities/archion-corporation" target="_blank" data-smartkarma-citation="entities:47577:1" rel="noopener">Archion (543A JP)</a>, as per media reports.</li>
<li>Post the news break on Friday, the company clarified that it is exploring various options, including a secondary.</li>
<li>In this note, we will talk about the possible deal dynamics.</li>
</ul>



Toyota Motor (7203 JP) and Daimler Truck Holding (DTG GR) could look to raise JPY200-300bn (US$1.3-1.9bn) via a secondary in Archion (543A JP), as per media reports.
Post the news break on Friday, the company clarified that it is exploring various options, including a secondary.
In this note, we will talk about the possible deal dynamics.


Aequitas: Archion Possible Placement - Large, ~US$1.6bn, but Well Flagged Secondary

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• THE POST-COVID ROTATION •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/288/original/2021-02-28_08-38-14.png?1614469105" class="editor-image img-responsive" data-smartkarma-image-id="191288"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/290/original/2021-02-28_08-57-32.png?1614470265" class="editor-image img-responsive" data-smartkarma-image-id="191290"></figure></section></section><section class="figure"><div style="text-align: center;" class="content-caption"> Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>THE 2021 ROTATION ACCELERATES</strong> - As we noted in <a href="https://www.smartkarma.com/insights/japan-the-post-covid-rotation-from-growth-to-value-begins-02-05-results-revisions-update" target="_blank" data-smartkarma-citation="insights:47877" rel="noopener">The Post-COVID Rotation from Growth to Value Begins</a>, the Japanese equity market has been led by overvalued and overvalued for most of the last year overbought high-quality growth companies in the <strong>Technology Hardware</strong>, <strong>Electrical Equipment</strong>, <strong>Internet</strong>, and <strong>Healthcare</strong> Sectors. These companies were deemed to be 'COVID-resistant' and were consistently well-bid regardless of price. The stocks leading this 'charge' were <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP),</a><a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">MonotaRO (3064 JP)</a>, <a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a>, and <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec (6594 JP)</a>, while the only cyclical Sector that has seen a major recovery was Energy. Meanwhile, shares in domestically-orientated Sectors and companies heavily exposed to COVID-related delines in business activity languished despite valuations reaching ten or twenty-year lows. </p><p><strong>PEAKED?</strong> - Over the last twenty trading days during which TOPIX reached 1,974.99. The <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> breached 30,000, many of these market leaders have seen a significant correction, while the market has rotated into domestic, cyclical, and financial Sectors - as illustrated by our Sector Relative Price Score timelines in the chart above. In the<strong> DETAIL</strong> Section below, we will review the current market technicals after Friday's 4% N225 decline and look at the leading stocks on both 'sides' of this rotation trade.</p>

• THE POST-COVID ROTATION • Source for all charts &amp; tables: Japan AnalyticsTHE 2021 ROTATION ACCELERATES - As we noted in The Post-COVID Rotation from Growth to Value Begins, the Japanese equity market has been led by overvalued and overvalued for most of the last year overbought high-quality growth companies in the Technology Hardware, Electrical Equipment, Internet, and Healthcare Sectors. These companies were deemed to be 'COVID-resistant' and were consistently well-bid regardless of price. The stocks leading this 'charge' were M3 (2413 JP),Lasertec (6920 JP), MonotaRO (3064 JP), Chugai Pharmaceutical (4519 JP), and Nidec (6594 JP), while the only cyclical Sector that has seen a major recovery was Energy. Meanwhile, shares in domestically-orientated Sectors and companies heavily exposed to COVID-related delines in business activity languished despite valuations reaching ten or twenty-year lows. PEAKED? - Over the last twenty trading days during which TOPIX reached 1,974.99. The Nikkei 225 (NKY INDEX) breached 30,000, many of these market leaders have seen a significant correction, while the market has rotated into domestic, cyclical, and financial Sectors - as illustrated by our Sector Relative Price Score timelines in the chart above. In the DETAIL Section below, we will review the current market technicals after Friday's 4% N225 decline and look at the leading stocks on both 'sides' of this rotation trade.

🇯🇵 JAPAN • The Post-COVID Rotation Accelerates

<p style="text-align: center;"><strong>• EARNINGS MOMENTUM TURNS POSITIVE •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/535/original/2021-02-14_09-01-24.png?1613260898" class="editor-image img-responsive" data-smartkarma-image-id="188535"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>POSITIVE EARNINGS MOMENTUM</strong> - For the first time in just over one year and driven by a strong recovery in the index-heavy <strong>Auto</strong> Sector, our Market Composite Results &amp; Revision Score - a measure of earnings momentum - has turned positive. Meanwhile, the Cabinet Office Leading Indicator of Business Conditions which is indexed to August 2015, has yet to rise above 100 and declined by 120 basis points for December.</p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/537/original/2021-02-14_08-23-29.png?1613262285" class="editor-image img-responsive" data-smartkarma-image-id="188537"></figure></section><p><strong>SECTOR BREAKDOWN</strong> - The leading Sectors, as measured by the change in Results &amp; Revision Score, are<strong> Other Commercial Products</strong>, <strong>Autos</strong>, <strong>Metals</strong>, <strong>Building Materials</strong>, and <strong>Other Consumer Products</strong>. The laggards are <strong>Utilities</strong>, <strong>Internet</strong>, <strong>Food</strong>, <strong>Beverages &amp; Tobacco</strong>, <strong>Retail</strong>, and <strong>Commercial Services</strong>. As in other markets, cyclicals leading the recovery, and, as a result, driving Japan's indices to new multi-decade highs.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/538/original/2021-02-14_08-22-44.png?1613262793" class="editor-image img-responsive" data-smartkarma-image-id="188538"></figure></section><p><strong>FORWARD VALUATIONS</strong> - While the trailing Market Composite PER remain above 30 times,  a ¥7.6 trillion increase in forecast Net Income from the low point if 2020, has reduced the forward multiple to 28.2 times. By the end of May, most March year-end companies will have made forecasts for the year to March 2022 - a decline to below 25 times is likely, assuming Total Market Value is at current levels.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/539/original/2021-02-14_08-14-17.png?1613262839" class="editor-image img-responsive" data-smartkarma-image-id="188539"></figure></section><p><strong>ALL-TIME US$ HIGH &lt;10% AWAY</strong> - While much is being written about the new thirty-year high for the TOPIX index, many will have missed the proximity of TOPIX in US dollars terms to a new all-time high, which would occur with a combined 9.5% increase in the equity market and the Yen. A 4.3% rise in TOPIX and a USDJPY rate of 100 is all that is required and would be a welcome feather in the cap of the recently beleaguered PM Suga's cap. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/540/original/2021-02-14_10-05-46.png?1613264814" class="editor-image img-responsive" data-smartkarma-image-id="188540"></figure></section><p><strong>RSI &gt;80</strong> - Tempering the current bullishness are the RSI of over 80 and a Toraku index close to 120. Both suggest near-term caution is warranted.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/541/original/2021-02-14_10-15-17.png?1613265332" class="editor-image img-responsive" data-smartkarma-image-id="188541"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/542/original/2021-02-14_10-20-42.png?1613265721" class="editor-image img-responsive" data-smartkarma-image-id="188542"></figure></section><hr></section><p style="text-align: center;"><br><strong>• RESULTS &amp; REVISIONS SUMMARY - 12th FEBRUARY •</strong></p><div><p>Of Friday's 723 results announcements, 64% scored positively for earnings momentum despite trailing revenues falling by 3% on average and a 3.9 point decline in operating margins. 17% of companies were in the red for the quarter.  63% of the 360 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +10.3 points.</p></div><div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>The 'best' larger-cap announcements came from <a href="https://www.smartkarma.com/entities/yamaha-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:7411:1" rel="noopener">Yamaha Motor (7272 JP)</a>,  <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a>, and <a href="https://www.smartkarma.com/entities/toppan-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:11875:1" rel="noopener">Toppan Printing (7911 JP)</a>; the 'worst' were from <a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka Holdings (4578 JP)</a>, <a href="https://www.smartkarma.com/entities/sumitomo-dainippon-pharma-co" target="_blank" data-smartkarma-citation="entities:1935:1" rel="noopener">Sumitomo Dainippon Pharma (4506 JP)</a>, and <a href="https://www.smartkarma.com/entities/lion-corp" target="_blank" data-smartkarma-citation="entities:16576:1" rel="noopener">Lion (4912 JP)</a>.  <a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis (4927 JP)</a> and <a href="https://www.smartkarma.com/entities/asahi-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10482:1" rel="noopener">Asahi Group (2502 JP)</a> take the prizes for optimism.  For more, see the <strong>DETAIL</strong> section below.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/605/original/2021-02-15_06-00-48.png?1613336460" class="editor-image img-responsive" data-smartkarma-image-id="188605"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/606/original/2021-02-15_06-01-37.png?1613336511" class="editor-image img-responsive" data-smartkarma-image-id="188606"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/608/original/2021-02-15_06-05-12.png?1613336726" class="editor-image img-responsive" data-smartkarma-image-id="188608"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/610/original/2021-02-15_06-05-57.png?1613336771" class="editor-image img-responsive" data-smartkarma-image-id="188610"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/611/original/2021-02-15_06-06-35.png?1613336808" class="editor-image img-responsive" data-smartkarma-image-id="188611"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/612/original/2021-02-15_06-07-12.png?1613336846" class="editor-image img-responsive" data-smartkarma-image-id="188612"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/613/original/2021-02-15_06-10-36.png?1613337047" class="editor-image img-responsive" data-smartkarma-image-id="188613"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/188/615/original/2021-02-15_06-11-21.png?1613337091" class="editor-image img-responsive" data-smartkarma-image-id="188615"></figure></section><p></p>
</div>

• EARNINGS MOMENTUM TURNS POSITIVE •Source for all charts &amp; tables: Japan AnalyticsPOSITIVE EARNINGS MOMENTUM - For the first time in just over one year and driven by a strong recovery in the index-heavy Auto Sector, our Market Composite Results &amp; Revision Score - a measure of earnings momentum - has turned positive. Meanwhile, the Cabinet Office Leading Indicator of Business Conditions which is indexed to August 2015, has yet to rise above 100 and declined by 120 basis points for December.SECTOR BREAKDOWN - The leading Sectors, as measured by the change in Results &amp; Revision Score, are Other Commercial Products, Autos, Metals, Building Materials, and Other Consumer Products. The laggards are Utilities, Internet, Food, Beverages &amp; Tobacco, Retail, and Commercial Services. As in other markets, cyclicals leading the recovery, and, as a result, driving Japan's indices to new multi-decade highs.
FORWARD VALUATIONS - While the trailing Market Composite PER remain above 30 times,  a ¥7.6 trillion increase in forecast Net Income from the low point if 2020, has reduced the forward multiple to 28.2 times. By the end of May, most March year-end companies will have made forecasts for the year to March 2022 - a decline to below 25 times is likely, assuming Total Market Value is at current levels.
ALL-TIME US$ HIGH &lt;10% AWAY - While much is being written about the new thirty-year high for the TOPIX index, many will have missed the proximity of TOPIX in US dollars terms to a new all-time high, which would occur with a combined 9.5% increase in the equity market and the Yen. A 4.3% rise in TOPIX and a USDJPY rate of 100 is all that is required and would be a welcome feather in the cap of the recently beleaguered PM Suga's cap. 
RSI &gt;80 - Tempering the current bullishness are the RSI of over 80 and a Toraku index close to 120. Both suggest near-term caution is warranted.
 • RESULTS &amp; REVISIONS SUMMARY - 12th FEBRUARY •Of Friday's 723 results announcements, 64% scored positively for earnings momentum despite trailing revenues falling by 3% on average and a 3.9 point decline in operating margins. 17% of companies were in the red for the quarter.  63% of the 360 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +10.3 points.• BEST &amp; WORST •
The 'best' larger-cap announcements came from Yamaha Motor (7272 JP),  Japan Post Bank (7182 JP), and Toppan Printing (7911 JP); the 'worst' were from Otsuka Holdings (4578 JP), Sumitomo Dainippon Pharma (4506 JP), and Lion (4912 JP).  Pola Orbis (4927 JP) and Asahi Group (2502 JP) take the prizes for optimism.  For more, see the DETAIL section below.



🇯🇵 JAPAN • Market & Results & Revisions Update 02/12 • Yamaha Motor, J Post Bank, Otsuka & Lion

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

<p>The COVID-19 pandemic has created unprecedented demand from corporate borrowers for loans, but it is suspected that the vast majority of these emergency loans have been made at virtually no profit margin for the banks.  Moreover, most of this money appears to have been redeposited with the banks for safe-keeping until really needed.  Meanwhile, the rise in workers working from home and restrictions on international travel has resulted in substantially lower discretionary spending (such as on holiday travel) and higher levels of saving.</p>
<p>The cash piles are turning into cash mountains at the banks, prompting some banks to withdraw some deposit products and suspend branch counter operations for cash deposits, cash withdrawals and currency exchange.</p>
<p style="text-align: justify;">It’s a whole new world of pain for Japan’s embattled banks.</p>

The COVID-19 pandemic has created unprecedented demand from corporate borrowers for loans, but it is suspected that the vast majority of these emergency loans have been made at virtually no profit margin for the banks.  Moreover, most of this money appears to have been redeposited with the banks for safe-keeping until really needed.  Meanwhile, the rise in workers working from home and restrictions on international travel has resulted in substantially lower discretionary spending (such as on holiday travel) and higher levels of saving.
The cash piles are turning into cash mountains at the banks, prompting some banks to withdraw some deposit products and suspend branch counter operations for cash deposits, cash withdrawals and currency exchange.
It’s a whole new world of pain for Japan’s embattled banks.

Japan

Japan Post Bank Co. Ltd. provides general banking services. The Company offers deposits, savings, loans, currency exchange transactions, investment trusts, national bonds, and other related banking services to individuals and businesses. Japan Post Bank also provides other financial services such as insurance agency and financing service.

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Japan Post Bank (7182 JP)

Aequitas: Archion Placement - As Expected, Some of the past Large Deals Have Been Mixed

Toyota Motor (7203 JP) and Daimler Truck Holding (DTG GR) (DT) are looking to raise up to US$1.7bn via selling around 35% of their stake in Archion...

Sumeet Singh

Aequitas: Archion Possible Placement - Large, ~US$1.6bn, but Well Flagged Secondary

Toyota Motor (7203 JP) and Daimler Truck Holding (DTG GR) could look to raise JPY200-300bn (US$1.3-1.9bn) via a secondary in Archion (543A JP), as...

Sumeet Singh

🇯🇵 JAPAN • The Post-COVID Rotation Accelerates

Over the last 20 trading days during which TOPIX reached 1,974.99, many market leaders have seen a significant correction, and there has been a...

Campbell Gunn

🇯🇵 JAPAN • Market & Results & Revisions Update 02/12 • Yamaha Motor, J Post Bank, Otsuka & Lion

For the first time in just over one year and driven by a strong recovery in the index-heavy Auto Sector, our Market Composite Results & Revision...

Campbell Gunn

Japanese Banks: Mountains of Money

The cash piles at the banks are turning into cash mountains, prompting some to withdraw some deposit products and suspend counter operations for...

J. Brian Waterhouse

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