Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>In March 2023, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> sold ¥1.1trln of shares in <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>, lowering its stake considerably, raising float. <a href="https://www.smartkarma.com/insights/japan-post-bank-7182-the-october-topix-ffw-adjustment" target="_blank" rel="noopener">There will be a TOPIX upweight</a>. </li>
<li>In May, with earnings, they announced their <a href="https://www.japanpost.jp/en/ir/news/jpn/pdf/20230515_en04.pdf" target="_blank" rel="noopener">intention to buy back ¥300bn of shares</a> or up to 10% of shares out. Today, they <a href="https://www.japanpost.jp/en/ir/news/jpn/pdf/20230814_en01.pdf" target="_blank" rel="noopener">announced the details</a>. ¥300bn through March end.</li>
<li>In a ¥300bn ToSTNeT-3 tomorrow, the govt will sell back ¥105.7bn. That leaves a residual worth examining. So we examine.</li>
</ul>


In March 2023, Japan Post Holdings (6178 JP) sold ¥1.1trln of shares in Japan Post Bank (7182 JP), lowering its stake considerably, raising float. There will be a TOPIX upweight. 
In May, with earnings, they announced their intention to buy back ¥300bn of shares or up to 10% of shares out. Today, they announced the details. ¥300bn through March end.
In a ¥300bn ToSTNeT-3 tomorrow, the govt will sell back ¥105.7bn. That leaves a residual worth examining. So we examine.


Japan Post Holdings (6178) Starts Its Bigly Buyback With a Sale from the MOF-Boffins

<ul>
<li>The TSE went through a multi-year period of planning a "<a href="https://www.jpx.co.jp/english/equities/market-restructure/index.html" target="_blank" rel="noopener">Market Restructuring</a>" which ended on 4 April 2022 as the TSE split into three Sections, TSE Prime, Standard, and Growth.</li>
<li>After that, the TSE formed a "Council of Experts" (<a href="https://www.jpx.co.jp/english/equities/improvements/follow-up/b5b4pj000004yqcc-att/follow-up_member_en.pdf" target="_blank" rel="noopener">some very senior people</a>) that would <a href="https://www.jpx.co.jp/english/equities/improvements/follow-up/b5b4pj000004yqcc-att/follow-up_market_e.pdf" target="_blank" rel="noopener">follow up</a> on the changes, and recommend new measures.  In January, new rule proposals dropped.</li>
<li>There was <a href="https://www.jpx.co.jp/english/equities/improvements/follow-up/b5b4pj000004yqcc-att/dreu250000000uqc.pdf" target="_blank" rel="noopener">talk</a> of a hard end to the transition period. Also, the Council harped on Awareness of Capital Cost and Efficiency. Most notably, for companies with PBR &lt; 1.</li>
</ul>


The TSE went through a multi-year period of planning a "Market Restructuring" which ended on 4 April 2022 as the TSE split into three Sections, TSE Prime, Standard, and Growth.
After that, the TSE formed a "Council of Experts" (some very senior people) that would follow up on the changes, and recommend new measures.  In January, new rule proposals dropped.
There was talk of a hard end to the transition period. Also, the Council harped on Awareness of Capital Cost and Efficiency. Most notably, for companies with PBR &lt; 1.


Japan's Governance Changes I - The PBR 1.0 Target

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

Kokusai Electric  / Equity Capital Markets

<ul>
<li>KKR is looking to raise around US$750m via selling a stake in <a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> (KE) in its Japan IPO.</li>
<li>KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.</li>
<li>In our previous notes we have looked at the company’s past performance. In this note, we will undertake a peer comparison.</li>
</ul>


KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In our previous notes we have looked at the company’s past performance. In this note, we will undertake a peer comparison.


Kokusai Electric Pre-IPO - Peer Comparison

David Blennerhassett

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a>'s TOPIX inclusion is this week. And the Real World Float has gotten smaller since the offering. And some of those people aren't going to sell near-term.</li>
<li>
<a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>'s P/B is back down to 0.31x as <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> tackles alleged language bias by flight attendants. </li>
<li>Understanding real money demand on the <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a> story is key. If there is any, that makes deal overhang smaller than it looks. </li>
</ul>



Rakuten Bank (5838 JP)'s TOPIX inclusion is this week. And the Real World Float has gotten smaller since the offering. And some of those people aren't going to sell near-term.

Swire Pacific (A) (19 HK)'s P/B is back down to 0.31x as Cathay Pacific Airways (293 HK) tackles alleged language bias by flight attendants. 
Understanding real money demand on the Rakuten (4755 JP) story is key. If there is any, that makes deal overhang smaller than it looks. 


Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post

<ul>
<li>At 0.3x, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> is top of the heap in terms of dollar "UpValue" to move to PBR 1.0x under Japan's governance changes. </li>
<li>Preceding my comments on Japan Post are the current setup/unwind tables for Asia-Pacific Holdcos. </li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


At 0.3x, Japan Post Holdings (6178 JP) is top of the heap in terms of dollar "UpValue" to move to PBR 1.0x under Japan's governance changes. 
Preceding my comments on Japan Post are the current setup/unwind tables for Asia-Pacific Holdcos. 
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Japan Post Holdings Coming Up "Cheap"

Japan

Japan Post Holdings Co. Ltd. operates post stations, banks, and insurance business. The Company offers letters and goods transportation services, stamp sales, deposits, loans, and insurance products.

52-week Range	0.00 - 0.00
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Japan Post Holdings (6178 JP)

Japan Post Holdings (6178) Starts Its Bigly Buyback With a Sale from the MOF-Boffins

JPH (6178 JP) today announced they had bought back 126.428mm shares for ¥132.118bn in from 15-31 August. 103.1mm shs in the ToSTNeT-3, and 23.35mm...

Travis Lundy

Japan's Governance Changes I - The PBR 1.0 Target

Japan's powers that be - the TSE and now the Finance Ministry - are targeting listcos with PBRs of less than 1.0x. That will mean they will be...

Travis Lundy

Kokusai Electric Pre-IPO - Peer Comparison

KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO. In this note we undertake a peer...

Sumeet Singh

Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: Japan Post Holdings Coming Up "Cheap"

Own cheap large caps which own stocks of companies which are themselves liquid. JPH has the highest dollar value of gain in value of RW Float to...

David Blennerhassett

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)