Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Since late June when I recommended to not be long Toshiba vs Peers, Toshiba has fallen 9.5% vs Peers (-6% on its own and an equal-weighted Peer Basket is +3.9%).</li>
<li>If one assumes the likelihood of a privatisation has not gone down, and the likely takeout price is the same, back-end adjusted, probability-adjusted IRRs are up 6-8%, to decent levels.</li>
<li>This changes my recommendation from Bearish to Probability-Adjusted Bullish, but it is nuanced, and it is still a range trade.</li>
</ul>


Since late June when I recommended to not be long Toshiba vs Peers, Toshiba has fallen 9.5% vs Peers (-6% on its own and an equal-weighted Peer Basket is +3.9%).
If one assumes the likelihood of a privatisation has not gone down, and the likely takeout price is the same, back-end adjusted, probability-adjusted IRRs are up 6-8%, to decent levels.
This changes my recommendation from Bearish to Probability-Adjusted Bullish, but it is nuanced, and it is still a range trade.


Toshiba (6502) Update - No Longer Worthwhile to Be Short Toshiba Vs Peers

<ul>
<li>Overnight, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> has released an <a href="https://www.global.toshiba/content/dam/toshiba/ww/ir/corporate/news/20220719_2.pdf" target="_blank" rel="noopener">update</a> "Progress Report on Discussions with Potential Investors and Sponsors. Four advance to the second round, including both PE and strategic investors.  </li>
<li>Nikkei <a href="https://asia.nikkei.com/Spotlight/Toshiba-in-turmoil/Japan-Industrial-Partners-Bain-advance-in-bidding-for-Toshiba" target="_blank" rel="noopener">reported</a> those advancing were Bain, CVC, Brookfield, and JIP-JIC. Blackstone did not advance. Yesterday, Reuters reported that KKR had declined to bid, but might join another bid.</li>
<li>Now parties will start due diligence, and Toshiba will examine bids for "measures to enhance corporate value" and certainty of execution (given national security-sensitive issues, and funding). </li>
</ul>


Overnight, Toshiba Corp (6502 JP) has released an update "Progress Report on Discussions with Potential Investors and Sponsors. Four advance to the second round, including both PE and strategic investors.  
Nikkei reported those advancing were Bain, CVC, Brookfield, and JIP-JIC. Blackstone did not advance. Yesterday, Reuters reported that KKR had declined to bid, but might join another bid.
Now parties will start due diligence, and Toshiba will examine bids for "measures to enhance corporate value" and certainty of execution (given national security-sensitive issues, and funding). 


Toshiba (6502) Update - Shares Down Since Last Look, "News" Isn't Really. IRR Grid.

APAC IPOs & Placements

Zhen Zhou, Toh

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<a href="https://www.smartkarma.com/entities/16968" target="_blank" data-smartkarma-citation="entities:16968:1">Fujitsu Ltd (6702 JP)</a> is selling 54m shares of <a href="https://www.smartkarma.com/entities/12213" target="_blank" data-smartkarma-citation="entities:12213:1">Fuji Electric Co Ltd (6504 JP)</a> in a secondary placement. Post-deal, Fujitsu will be left with only 2.7% of Fuji Electric's total outstanding shares, down from 9.9% The deal scores marginally negative on our framework owing to the company's poor track record but offset by its inexpensive valuation. The sell-down by Fujitsu should not come as a surprise ever since it was flagged out from Fuji Electric's sell down in Fujitsu. We covered the deal…

Fujitsu Ltd (6702 JP) is selling 54m shares of Fuji Electric Co Ltd (6504 JP) in a secondary placement. Post-deal, Fujitsu will be left with only 2.7% of Fuji Electric's total outstanding shares, down from 9.9% The deal scores marginally negative on our framework owing to the company's poor track record but offset by its inexpensive valuation. The sell-down by Fujitsu should not come as a surprise ever since it was flagged out from Fuji Electric's sell down in Fujitsu. We covered the deal…

Fuji Electric Placement - Large Deal Size, Small Overhang

<a href="https://www.smartkarma.com/entities/12213" target="_blank" data-smartkarma-citation="entities:12213:1">Fuji Electric Co Ltd (6504 JP)</a> is selling 8.16% of <a href="https://www.smartkarma.com/entities/16968" target="_blank" data-smartkarma-citation="entities:16968:1">Fujitsu Ltd (6702 JP)</a>'s total outstanding shares for approximately JPY110,959m (US$991m). Post sale, Fuji Electric's stake in Fujitsu will be reduced to 2.8%.Along with the placement, Fujitsu announced that it will buy back up to 1.9% of shares for JPY25bn. The deal scores positively on our ECM framework owing to its strong share price performance and extended trading period. The company has recently reported a decent set of Q3 results…

Fuji Electric Co Ltd (6504 JP) is selling 8.16% of Fujitsu Ltd (6702 JP)'s total outstanding shares for approximately JPY110,959m (US$991m). Post sale, Fuji Electric's stake in Fujitsu will be reduced to 2.8%.Along with the placement, Fujitsu announced that it will buy back up to 1.9% of shares for JPY25bn. The deal scores positively on our ECM framework owing to its strong share price performance and extended trading period. The company has recently reported a decent set of Q3 results…

Fujitsu Placement - Large Size, Tight Discount, But Extended Trading Allows Deal to Be Priced In

Japan

FUJI ELECTRIC CO.,LTD manufactures electric machinery and electronic devices. The Company's products include automatic vending machines, factory automation equipment, and power supplies, as well as information and electronic components such as power semiconductors and integrated circuits (ICs).

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Fuji Electric (6504 JP)

Toshiba (6502) Update - No Longer Worthwhile to Be Short Toshiba Vs Peers

The IRR to be obtained by buying Toshiba and expecting Probability X% of a Privatisation and (1-X%) of no deal has gone up sharply since end-June....

Travis Lundy

Toshiba (6502) Update - Shares Down Since Last Look, "News" Isn't Really. IRR Grid.

Toshiba (6502) is -8% vs Peer Basket after the late June pop on a "¥7,000 deal." Semi/memory peers weaker while industrials better. That lifts IRR...

Travis Lundy

Fuji Electric Placement - Large Deal Size, Small Overhang

Fujitsu Ltd (6702 JP) is selling 54m shares of Fuji Electric Co Ltd (6504 JP) in a secondary placement. Post-deal, Fujitsu will be left with only...

Zhen Zhou, Toh

Fujitsu Placement - Large Size, Tight Discount, But Extended Trading Allows Deal to Be Priced In

Fuji Electric Co Ltd (6504 JP) is selling 8.16% of Fujitsu Ltd (6702 JP)'s total outstanding shares for approximately JPY110,959m (US$991m). Post...

Zhen Zhou, Toh

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