Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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

Recruit Holdings / Equity Capital Markets

<p>Recruit Holdings announced a USD 3.8 bn globlal follow-on offering on August 28th, selling up to 121.5 million shares. In our previous insight (link <a href="https://www.smartkarma.com/insights/recruit-holdings-placement-first-major-sell-down-since-2016" target="_blank" rel="noopener">here</a>), we briefly covered the details of the deal, rationale of the sell down, the selling shareholders, comparison to previous deals. </p>
<p>In this insight, we will cover the company's recent performance, SOTP based valuation, past Japan placement with a deal size of more than USD 1 billion, index event, future sell-down, and score the deal in our ECM framework.</p>
<p>We have previously covered some of the past offerings:</p>
<ul>
<li class="">USD 2.3 billion raising in September 2016 (<a href="https://www.smartkarma.com/insights/recruit-holdings-time-to-hire-more-long-term-shareholders" target="_blank" rel="noopener">link</a>)</li>
<li class="">USD 263 million raising in January 2019 (<a href="https://www.smartkarma.com/insights/recruit-holdings-placement-a-tiny-long-overdue-sell-down" target="_blank" rel="noopener">link</a>)</li>
</ul>

Recruit Holdings announced a USD 3.8 bn globlal follow-on offering on August 28th, selling up to 121.5 million shares. In our previous insight (link here), we briefly covered the details of the deal, rationale of the sell down, the selling shareholders, comparison to previous deals. 
In this insight, we will cover the company's recent performance, SOTP based valuation, past Japan placement with a deal size of more than USD 1 billion, index event, future sell-down, and score the deal in our ECM framework.
We have previously covered some of the past offerings:

USD 2.3 billion raising in September 2016 (link)
USD 263 million raising in January 2019 (link)


Recruit Holding Placement: Thoughts on Valuation, Past Placements, and Index Event

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.

<p><a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options are fully exercised. Recruit has launched the offering to provide an opportunity for thirteen shareholders to reduce their holdings.</p><div class="content-highlight"><p>Recruit shares have increased around 3x in three years, adjusting for the three-for-one stock split effective on July 2017. The strong outperformance is due to the solid performance of its three business segments - HR Technology, Media &amp; Solutions and Staffing. However, from a valuation perspective, Recruit is fully priced, and we would need a 10% discount to participate in the offering.</p></div>

Recruit Holdings (6098 JP) announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options are fully exercised. Recruit has launched the offering to provide an opportunity for thirteen shareholders to reduce their holdings.Recruit shares have increased around 3x in three years, adjusting for the three-for-one stock split effective on July 2017. The strong outperformance is due to the solid performance of its three business segments - HR Technology, Media &amp; Solutions and Staffing. However, from a valuation perspective, Recruit is fully priced, and we would need a 10% discount to participate in the offering.

Recruit Holdings Secondary Offering: Coming at a Full Valuation

Equity Analyst, LightStream Research

Supun Walpola

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><a href="https://www.smartkarma.com/entities/yahoo-japan-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Yahoo Japan (4689 JP)</a> reported its 1Q FY03/20 financial results last Friday (1st August 2019). YJ reported revenue and OP of ¥239bn (+2.9%) and ¥36bn (-24.0%) respectively for 1Q FY03/20. Both revenue (¥246bn) and OP (¥38bn) were below consensus. YJ’s share price fell by 12.5% following the release, closing at ¥280 on Monday (5th August 2019).</p>

Yahoo Japan (4689 JP) reported its 1Q FY03/20 financial results last Friday (1st August 2019). YJ reported revenue and OP of ¥239bn (+2.9%) and ¥36bn (-24.0%) respectively for 1Q FY03/20. Both revenue (¥246bn) and OP (¥38bn) were below consensus. YJ’s share price fell by 12.5% following the release, closing at ¥280 on Monday (5th August 2019).

Yahoo Japan: Slowdown in Traditional Business Silos Deter Mid-Term Prospects

<p><a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">Cyberagent Inc (4751 JP)</a> reported 3Q FY09/19 financial results last week (on Wednesday, 24th July 2019). CyberAgent reported revenue of ¥113.6bn (+8.8% YoY) and OP of ¥9.4bn (+38.3% YoY) for 3Q FY09/19. Both revenue and OP beat consensus by 1.3% and 53.9% respectively. CyberAgent revised its full-year OP guidance upwards by ¥9bn (+4.5%) from ¥20bn to ¥29bn. CyberAgent's share price reacted positively for this, closing at ¥4,565 on Monday (29th July), up by 14% from last Tuesday's (23rd July) close.</p>

Cyberagent Inc (4751 JP) reported 3Q FY09/19 financial results last week (on Wednesday, 24th July 2019). CyberAgent reported revenue of ¥113.6bn (+8.8% YoY) and OP of ¥9.4bn (+38.3% YoY) for 3Q FY09/19. Both revenue and OP beat consensus by 1.3% and 53.9% respectively. CyberAgent revised its full-year OP guidance upwards by ¥9bn (+4.5%) from ¥20bn to ¥29bn. CyberAgent's share price reacted positively for this, closing at ¥4,565 on Monday (29th July), up by 14% from last Tuesday's (23rd July) close.

CyberAgent Revises the OP Guidance Upwards by 5%; Share Price Up 14%

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/089/325/original/2019-06-01_09-16-25.png?1559348196" class="editor-image img-responsive" data-smartkarma-image-id="89325"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/089/326/original/2019-06-01_09-19-21.png?1559348371" class="editor-image img-responsive" data-smartkarma-image-id="89326"></figure><p>Source: Japan Analytics</p>
</div><p><strong>INAUSPICIOUS</strong> - Since the beginning of the Reiwa era (令和時代), Japanese equities have fallen by 6.1% and have seen only six 'up' days out of the nineteen trading days so far. The strength of the Yen has cut that decline to -3.2% for the minority of foreign investors that are unhedged. The Bank of Japan has purchased ETFs on ten days in the new era including on each of the last three trading sessions - the largest such intervention this calendar year.  Having reached a new five-month low, a decisive low above that of December 25th is required. The market took only two trading days to descend from the current level to that 2018 low, and a fall of 6.7% from Friday's close would breach that level. For the time being, it pays to be net short.  </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/089/329/original/2019-06-01_10-10-41.png?1559351453" class="editor-image img-responsive" data-smartkarma-image-id="89329"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>CURRENCY RISK?</strong> - Much has been made of recent ¥3 move in the US$/JP¥ cross rate in May. The one-year rate of change has been the key driver of the Japanese earnings cycle and, in turn, the market. A rate of ¥108 held through the summer would equate with a breach of the December low and a rate of ¥90 by year-end would be consistent with the low of February 2016 - a 14% decline from the current index level.  </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/089/330/original/2019-06-01_10-14-50.png?1559351702" class="editor-image img-responsive" data-smartkarma-image-id="89330"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>RSI</strong> - The five-day Relative Strength Index could well be in single digits on Monday, which would be the second-most oversold level this year. A short-term recovery can be expected later in the week. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/089/331/original/2019-06-01_10-28-00.png?1559352497" class="editor-image img-responsive" data-smartkarma-image-id="89331"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>TORAKU</strong> - The<em> Toraku</em> advance-decline is also back in Oversold territory, but well above the December 2018 low, suggesting further downside to a new cycle low.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/089/333/original/2019-06-01_10-38-19.png?1559353116" class="editor-image img-responsive" data-smartkarma-image-id="89333"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>HIGHS - LOWS</strong> - The 'spread' between New Highs and New Lows is negative, but has yet to reach the most recent peak of 14th May of -549 and is well above the December 2018 low of -2,741. A spread of at least -1,000 is needed to confirm a new cycle low.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/089/332/original/2019-06-01_10-32-11.png?1559352742" class="editor-image img-responsive" data-smartkarma-image-id="89332"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>VOLUME SCORE TIMELINE</strong> - Volumes remains concentrated in the <strong>Internet</strong>, <strong>Information Technology</strong>, <strong>REITs</strong>, <strong>Electrical Equipment</strong>, and <strong>Energy</strong> Sectors, the <strong>Materials</strong>,  <strong>Restaurants</strong>, and <strong>Multi-Industry</strong> Sectors are the volume laggards.</p><div class="content-highlight"><p>In the <strong>DETAIL</strong> section below, we will review Sector performance, scores and valuation, Company Results &amp; Revisions and stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/kikkoman-corp" target="_blank" data-smartkarma-citation="entities:11720:1">Kikkoman (2801 JP)</a>, <a href="https://www.smartkarma.com/entities/inpex-corp" target="_blank" data-smartkarma-citation="entities:20665:1">Inpex (1605 JP)</a>, <a href="https://www.smartkarma.com/entities/keyence-corp" target="_blank" data-smartkarma-citation="entities:3077:1">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/leopalace21-corp" target="_blank" data-smartkarma-citation="entities:8244:1">Leopalace21 (8848 JP)</a>, and <a href="https://www.smartkarma.com/entities/dentsu-inc" target="_blank" data-smartkarma-citation="entities:12434:1">Dentsu (4324 JP)</a>.     </p></div>


Source: Japan Analytics
INAUSPICIOUS - Since the beginning of the Reiwa era (令和時代), Japanese equities have fallen by 6.1% and have seen only six 'up' days out of the nineteen trading days so far. The strength of the Yen has cut that decline to -3.2% for the minority of foreign investors that are unhedged. The Bank of Japan has purchased ETFs on ten days in the new era including on each of the last three trading sessions - the largest such intervention this calendar year.  Having reached a new five-month low, a decisive low above that of December 25th is required. The market took only two trading days to descend from the current level to that 2018 low, and a fall of 6.7% from Friday's close would breach that level. For the time being, it pays to be net short.  Source: Japan AnalyticsCURRENCY RISK? - Much has been made of recent ¥3 move in the US$/JP¥ cross rate in May. The one-year rate of change has been the key driver of the Japanese earnings cycle and, in turn, the market. A rate of ¥108 held through the summer would equate with a breach of the December low and a rate of ¥90 by year-end would be consistent with the low of February 2016 - a 14% decline from the current index level.  Source: Japan AnalyticsRSI - The five-day Relative Strength Index could well be in single digits on Monday, which would be the second-most oversold level this year. A short-term recovery can be expected later in the week. Source: Japan AnalyticsTORAKU - The Toraku advance-decline is also back in Oversold territory, but well above the December 2018 low, suggesting further downside to a new cycle low.Source: Japan AnalyticsHIGHS - LOWS - The 'spread' between New Highs and New Lows is negative, but has yet to reach the most recent peak of 14th May of -549 and is well above the December 2018 low of -2,741. A spread of at least -1,000 is needed to confirm a new cycle low.Source: Japan AnalyticsVOLUME SCORE TIMELINE - Volumes remains concentrated in the Internet, Information Technology, REITs, Electrical Equipment, and Energy Sectors, the Materials,  Restaurants, and Multi-Industry Sectors are the volume laggards.In the DETAIL section below, we will review Sector performance, scores and valuation, Company Results &amp; Revisions and stock performance over the previous two weeks, as well as adding some brief comments on Kikkoman (2801 JP), Inpex (1605 JP), Keyence (6861 JP), Leopalace21 (8848 JP), and Dentsu (4324 JP).     

🇯🇵 JAPAN • Market Update - Retesting the Low

Japan

DENTSU INC. mainly provides comprehensive advertising services.  The Company also provides marketing and event planning & promotion services.  Dentsu has associated companies in the US, Europe, and Asia.

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Dentsu Inc (4324 JP)

Recruit Holding Placement: Thoughts on Valuation, Past Placements, and Index Event

Recruit Holdings announced a USD 3.8 bn globlal follow-on offering on August 28th, selling up to 121.5 million shares. In our previous insight...

Ke Yan, CFA, FRM

Recruit Holdings Secondary Offering: Coming at a Full Valuation

Recruit Holdings (6098 JP) announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options...

Arun George

Yahoo Japan: Slowdown in Traditional Business Silos Deter Mid-Term Prospects

Yahoo Japan (4689 JP) reported its 1Q FY03/20 financial results last Friday (1st August 2019). YJ reported revenue and OP of ¥239bn (+2.9%) and...

Supun Walpola

🇯🇵 JAPAN • Market Update - Retesting the Low

INAUSPICIOUS - Since the beginning of the Reiwa era (令和時代), Japanese equities have fallen by 6.1% and have seen only six 'up' days out of the...

Campbell Gunn

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52-week Range

Market Cap (USDm)

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Recruit Holding Placement: Thoughts on Valuation, Past Placements, and Index Event

Recruit Holdings announced a USD 3.8 bn globlal follow-on offering on August 28th, selling up to 121.5 million shares. In our previous insight...

Ke Yan, CFA, FRM

Recruit Holdings Secondary Offering: Coming at a Full Valuation

Recruit Holdings (6098 JP) announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options...

Arun George

Yahoo Japan: Slowdown in Traditional Business Silos Deter Mid-Term Prospects

Yahoo Japan (4689 JP) reported its 1Q FY03/20 financial results last Friday (1st August 2019). YJ reported revenue and OP of ¥239bn (+2.9%) and...

Supun Walpola

CyberAgent Revises the OP Guidance Upwards by 5%; Share Price Up 14%

Cyberagent Inc (4751 JP) reported 3Q FY09/19 financial results last week (on Wednesday, 24th July 2019). CyberAgent reported revenue of ¥113.6bn...

Supun Walpola

🇯🇵 JAPAN • Market Update - Retesting the Low

INAUSPICIOUS - Since the beginning of the Reiwa era (令和時代), Japanese equities have fallen by 6.1% and have seen only six 'up' days out of the...

Campbell Gunn