Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>I was bearish <a href="https://www.smartkarma.com/entities/hino-motors-ltd" target="_blank" data-smartkarma-citation="entities:2144:1" rel="noopener">Hino Motors Ltd (7205 JP)</a> / <a href="https://www.smartkarma.com/entities/archion-corporation" target="_blank" data-smartkarma-citation="entities:47577:1" rel="noopener">Archion (543A JP)</a> against <a href="https://www.smartkarma.com/entities/isuzu-motors-ltd" target="_blank" data-smartkarma-citation="entities:14726:1" rel="noopener">Isuzu Motors (7202 JP)</a> last year at this time. That trade did well. I am bullish now. </li>
<li>Isuzu released Q1 results a bit more than a week ago. They were salutary. Archion released Q1 yesterday. Also salutary. Historical comparisons are a bit tough, but outlook is good.</li>
<li>When looking at Q1 seasonality vs Hino history, and Q1 revenue results vs last year, either Q1 was a very special outlier or the guidance is quite conservative.</li>
</ul>


I was bearish Hino Motors Ltd (7205 JP) / Archion (543A JP) against Isuzu Motors (7202 JP) last year at this time. That trade did well. I am bullish now. 
Isuzu released Q1 results a bit more than a week ago. They were salutary. Archion released Q1 yesterday. Also salutary. Historical comparisons are a bit tough, but outlook is good.
When looking at Q1 seasonality vs Hino history, and Q1 revenue results vs last year, either Q1 was a very special outlier or the guidance is quite conservative.


ARCHION (543A) - Q1 Results Positive, Seasonality VERY Positive

Equity Long-Short

Mo Aziz

<ul>
<li>Q1 underlying OP rose 32% YoY to ¥29.0bn, annualising ahead of ¥110bn guidance; the ¥233bn bargain purchase gain we flagged at initiation landed almost to the number.</li>
<li>We were right on the company, wrong on the entry: the July secondary cleared ¥260 — well below our ¥360 line — leaving the stock at ¥272, 0.80x book.</li>
<li>Reaffirm BULISH stance, TP reset to ¥370 (was ¥450), +36% upside; basis is a tight blend of 14.5x ex-gain earnings, 1.08x book and ~5.2x EV/EBITDA at Isuzu-parity.</li>
</ul>


Q1 underlying OP rose 32% YoY to ¥29.0bn, annualising ahead of ¥110bn guidance; the ¥233bn bargain purchase gain we flagged at initiation landed almost to the number.
We were right on the company, wrong on the entry: the July secondary cleared ¥260 — well below our ¥360 line — leaving the stock at ¥272, 0.80x book.
Reaffirm BULISH stance, TP reset to ¥370 (was ¥450), +36% upside; basis is a tight blend of 14.5x ex-gain earnings, 1.08x book and ~5.2x EV/EBITDA at Isuzu-parity.


ARCHION (543A JP): Right Thesis, Wrong Entry — Bargain Gain Lands, Reset TP to ¥370, Stay BULLISH

Equity Capital Markets

<ul>
<li>The mega-offering-slash-re-IPO of <a href="https://www.smartkarma.com/entities/archion-corporation" target="_blank" data-smartkarma-citation="entities:47577:1" rel="noopener">Archion (543A JP)</a> likely prices today. This is 900mm new shares for ~US$1.6bn of which 40% (US$630mm) goes to internationals, 60% to domestics.</li>
<li>There's a bunch of index buying to do between now and end-October. More than I originally thought due to one recent data point.</li>
<li>The stock has NOT gotten crushed in the last two weeks despite indications the sellers wouldn't mind. That tells me this is priced except for print risk. </li>
</ul>


The mega-offering-slash-re-IPO of Archion (543A JP) likely prices today. This is 900mm new shares for ~US$1.6bn of which 40% (US$630mm) goes to internationals, 60% to domestics.
There's a bunch of index buying to do between now and end-October. More than I originally thought due to one recent data point.
The stock has NOT gotten crushed in the last two weeks despite indications the sellers wouldn't mind. That tells me this is priced except for print risk. 


[Japan Offering] ARCHION (543A) Prices Today (?) - Big Picture Growth Priced Cheaply

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>Since the announcement of the US$1.7 billion secondary offering, <a href="https://www.smartkarma.com/entities/archion-corporation" target="_blank" data-smartkarma-citation="entities:47577:1" rel="noopener">Archion (543A JP)</a>’s shares have declined 5.8% to the undisturbed price of JPY313 (3 July).</li>
<li>It is instructive to look at recent large Japanese placements to understand the potential trading pattern. Archion's share decline is lower than the median of recent large placements.</li>
<li>The preliminary pricing range is JPY250 to JPY300 per share. The offering will likely be priced on 22 July. The average large Japanese placement tends to generate positive returns.</li>
</ul>


Since the announcement of the US$1.7 billion secondary offering, Archion (543A JP)’s shares have declined 5.8% to the undisturbed price of JPY313 (3 July).
It is instructive to look at recent large Japanese placements to understand the potential trading pattern. Archion's share decline is lower than the median of recent large placements.
The preliminary pricing range is JPY250 to JPY300 per share. The offering will likely be priced on 22 July. The average large Japanese placement tends to generate positive returns.


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.

<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 had been leaked ahead of the actual launch, although the overall selldown was very well flagged.</li>
<li>We have looked at most aspects of the deal in our earlier notes. In this note, we talk about the recent share price performance and provide our thoughts on valuations.</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 had been leaked ahead of the actual launch, although the overall selldown was very well flagged.
We have looked at most aspects of the deal in our earlier notes. In this note, we talk about the recent share price performance and provide our thoughts on valuations.


Aequitas: Archion Placement - Past Large Deals Performance and Thoughts on Valuations

Japan

ARCHION Corporation offers professional services. The Company provides subsidiary company management and other related services. ARCHION conducts businesses in Japan.

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Archion (543A JP)

ARCHION (543A) - Q1 Results Positive, Seasonality VERY Positive

Archion reported Q1 results. They were quite salutary (even without the one-off non-cash gains). Sales were particularly good, but it is early days...

Travis Lundy

ARCHION (543A JP): Right Thesis, Wrong Entry — Bargain Gain Lands, Reset TP to ¥370, Stay BULLISH

A net-cash Japanese truck champion at 0.80x book, overhang cleared and guidance reaffirmed; validated numbers now 28% cheaper post-offering....

Mo Aziz

[Japan Offering] ARCHION (543A) Prices Today (?) - Big Picture Growth Priced Cheaply

Archion priced its offering WAY too low. The stock has underperformed Isuzu by 15% since the post-merger business plan was announced and nearly 10%...

Travis Lundy

Archion (543A JP): The Current Playbook

The preliminary pricing range is JPY250 to JPY300 per share. The offering will likely be priced on 22 July. The average large Japanese placement...

Arun George

Aequitas: Archion Placement - Past Large Deals Performance and Thoughts on Valuations

Toyota Motor (7203 JP) and Daimler Truck Holding (DTG GR) are looking to raise up to US$1.7bn via selling some of their stake in Archion (543A JP)....

Sumeet Singh

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