Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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

<ul>
<li>ANA announced and priced a ¥150bn CB issuance last night. </li>
<li>This was of course after all the usual denials about needing more capital. </li>
<li>We suspect dilution will not be an issue here and that is a problem.</li>
</ul>


ANA announced and priced a ¥150bn CB issuance last night. 
This was of course after all the usual denials about needing more capital. 
We suspect dilution will not be an issue here and that is a problem.


ANA – CB Issuance Is Positive… Sort Of

<ul>
<li>ANA recently commented that it was more likely to sell assets than raise capital if it were unable to return to the black next year. </li>
<li>We believe that is highly likely and that recovery expectations are highly overoptimistic. </li>
<li>Furthermore we believe ANA will continue to be challenged by a more aggressive JAL in possession of a stronger balance sheet.</li>
</ul>


ANA recently commented that it was more likely to sell assets than raise capital if it were unable to return to the black next year. 
We believe that is highly likely and that recovery expectations are highly overoptimistic. 
Furthermore we believe ANA will continue to be challenged by a more aggressive JAL in possession of a stronger balance sheet.


ANA – Will Be Under Pressure for Some Time

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.</p>
</div>
<div>
<p>I number 49, mostly firm, deals around the region.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 49, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: Afterpay, Link Admin, Razer, AusNet, First Service

Travis Lundy

<p>Today after the close, <a href="https://www.smartkarma.com/entities/sojitz-corp" target="_blank" data-smartkarma-citation="entities:14437:1" rel="noopener">Sojitz Corp (2768 JP)</a> and <a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a> together announced they had created an entity to buy out minorities in <a href="https://www.smartkarma.com/entities/jalux-inc" target="_blank" data-smartkarma-citation="entities:4339:1" rel="noopener">Jalux Inc (2729 JP)</a>, which operates in the aircraft and airport ground equipment servicing businesses, and airline servicing businesses such as onboard mail order sales and merchandising, and the F&amp;B business related to servicing airlines. Sojitz already owns 22.22% and JAL owns 21.56%, and <strong>Japan Airport Terminal</strong> owns 8.08%. Minorities own 48.14%. </p><p>The goal is to take the company private, buying at least 1.8741mm shares from the minorities to get to two-thirds plus a share.</p><p>Given that everyone has basically always known this was going to happen, the minimum for success is less than one-third of the minority, the airline industry is doing badly, and the price is a 50% premium to last (and given the impact of covid-19 it does not seem patently offensive), I expect this gets done easily. A 50% premium is pretty juicy.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/239/249/original/Screenshot+2021-11-02+at+6.11.40+PM.png?1635847923" class="editor-image img-responsive" data-smartkarma-image-id="239249"></figure><p></p></section><p>But a deal is a deal and there are deal details to scrutinise so we do so below. </p>

Today after the close, Sojitz Corp (2768 JP) and Japan Airlines (9201 JP) together announced they had created an entity to buy out minorities in Jalux Inc (2729 JP), which operates in the aircraft and airport ground equipment servicing businesses, and airline servicing businesses such as onboard mail order sales and merchandising, and the F&amp;B business related to servicing airlines. Sojitz already owns 22.22% and JAL owns 21.56%, and Japan Airport Terminal owns 8.08%. Minorities own 48.14%. The goal is to take the company private, buying at least 1.8741mm shares from the minorities to get to two-thirds plus a share.Given that everyone has basically always known this was going to happen, the minimum for success is less than one-third of the minority, the airline industry is doing badly, and the price is a 50% premium to last (and given the impact of covid-19 it does not seem patently offensive), I expect this gets done easily. A 50% premium is pretty juicy.But a deal is a deal and there are deal details to scrutinise so we do so below. 

Sojitz and JAL to Buy Out JALUX Minorities in Tender Offer

<p>We believe that there is a material possibility of ANA requiring more capital to maintain its competitiveness. In addition, valuations appear to be pricing in a blue-sky scenario and there are some signs that ANA’s spending could be unsustainably low. With markets looking for reopening plays and bidding up its price this looks like a perfect storm coming together.</p>

We believe that there is a material possibility of ANA requiring more capital to maintain its competitiveness. In addition, valuations appear to be pricing in a blue-sky scenario and there are some signs that ANA’s spending could be unsustainably low. With markets looking for reopening plays and bidding up its price this looks like a perfect storm coming together.

Japan

Japan Airlines Co. Ltd. provides air transportation services. The Company offers a variety of scheduled  flights and unscheduled flights throughout the world as well as offers air courier services. Japan Airlines also provides tickets, resort hotels, and travel agencies services.

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Japan Airlines (9201 JP)

ANA – CB Issuance Is Positive… Sort Of

As we predicted ANA did indeed need more capital and issued ¥150bn in CBs. While this removes a negative catalyst it also flags a beak operating...

Mio Kato

ANA – Will Be Under Pressure for Some Time

Recovery expectations remain highly overoptimistic and we believe ANA will continue to be challenged by a more aggressive JAL in possession of a...

Mio Kato

Asia-Pac Weekly Risk Arb Summary: Afterpay, Link Admin, Razer, AusNet, First Service

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Sojitz and JAL to Buy Out JALUX Minorities in Tender Offer

Trading house Sojitz and Japanese airline JAL have decided, finally, to take out minorities in JALUX - of which they and JAT now own 52%. This is a...

Travis Lundy

ANA – Needs More Capital

There is a material possibility of ANA requiring more capital while valuations are rich and costs could be unsustainably low. This could seriously...

Mio Kato

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