Research from Asian Century Stocks, Asian Century Stocks

Michael Fritzell

Research from Asian Century Stocks

Providing financial journalism in the Asia-Pacific

Asian Century Stocks

Asian Century Stocks is a newsletter providing financial journalism for companies and stocks in the Asia-Pacific. 
The Asian Century Stocks logotype “百” stands for “one hundred” or a “century”. The economic centre of gravity is moving towards Asia. Yet most global investors are missing out.

Equity Bottom-Up

<ul>
<li>Japan's leading developer of talent management software, used by companies to manage their staff. Key selling points include staff deployment, periodic evaluations, surveys, training, internal recruitment</li>
<li>Low valuation at 2.1x EV/Sales, long-term operating margin guidance of 20%+ on top of predictable 20-30% sustainable growth</li>
<li>Near-Term catalysts include the recent releases of labor management service “Roum Mate”, budget control system called “Yojitsutic”</li>
</ul>


Japan's leading developer of talent management software, used by companies to manage their staff. Key selling points include staff deployment, periodic evaluations, surveys, training, internal recruitment
Low valuation at 2.1x EV/Sales, long-term operating margin guidance of 20%+ on top of predictable 20-30% sustainable growth
Near-Term catalysts include the recent releases of labor management service “Roum Mate”, budget control system called “Yojitsutic”


Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Another Japanese smallcap takeover at a huge premium. Must be a day ending in "y." It is a thing recently. </li>
<li>Interestingly, this is NOT an MBO. It is an LBO. Carlyle is buying out <a href="https://www.smartkarma.com/entities/kaonavi-inc" target="_blank" data-smartkarma-citation="entities:29703:1" rel="noopener">Kaonavi Inc (4435 JP)</a> at ¥4,380/share which is 19x book and 89x EBIT. Nice price.</li>
<li>I expect this gets done easily because the co-CEO with 28.7% and Recruit with 20.6% are putting in. There's another easy 9.7%. One more holder and this is done.</li>
</ul>


Another Japanese smallcap takeover at a huge premium. Must be a day ending in "y." It is a thing recently. 
Interestingly, this is NOT an MBO. It is an LBO. Carlyle is buying out Kaonavi Inc (4435 JP) at ¥4,380/share which is 19x book and 89x EBIT. Nice price.
I expect this gets done easily because the co-CEO with 28.7% and Recruit with 20.6% are putting in. There's another easy 9.7%. One more holder and this is done.


Kaonavi (4435 JP) - Small HR Software Co Gets 121% Premium LBO from Carlyle

Research Coverage of Japanese Listed Companies, Shared Research Inc

Shared Research

Research Coverage of Japanese Listed Companies

Shared Research Inc

Pioneering research coverage of Japanese listed companies. Now customizable and interactive for global institutional investors. Corporate access reimagined.

<ul><li>In cumulative Q3 FY03/25, the company reported revenue of JPY7.0bn, with net income reaching JPY412mn.</li><li>As of end-Q3 FY03/25, consolidated ARR was JPY9.5bn, with TMS ARR increasing 22.2% YoY to JPY9.3bn.</li><li>The revised full-year forecast for FY03/25 projects revenue of JPY9.5bn, with net income expected at JPY250mn.</li></ul>

In cumulative Q3 FY03/25, the company reported revenue of JPY7.0bn, with net income reaching JPY412mn.As of end-Q3 FY03/25, consolidated ARR was JPY9.5bn, with TMS ARR increasing 22.2% YoY to JPY9.3bn.The revised full-year forecast for FY03/25 projects revenue of JPY9.5bn, with net income expected at JPY250mn.

Kaonavi Inc (4435 JP): Q3 FY03/25 flash update

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>
<a href="https://www.smartkarma.com/entities/kaonavi-inc" target="_blank" data-smartkarma-citation="entities:29703:1" rel="noopener">Kaonavi Inc (4435 JP)</a> has recommended a tender offer from <a href="https://www.smartkarma.com/entities/carlyle-group-inc-the" target="_blank" data-smartkarma-citation="entities:33402:1" rel="noopener">Carlyle Group / (CG US)</a> at JPY4,380, a 121.2% premium to the last close.</li>
<li>The offer is attractive due to the high takeover premium, being materially above the midpoint of the target IFA’s DCF valuation range and representing a four-year high.</li>
<li>This is a done deal, as the required minority acceptance rate is not onerous. The tender offer is from 14 February to 31 March (30 business days).</li>
</ul>



Kaonavi Inc (4435 JP) has recommended a tender offer from Carlyle Group / (CG US) at JPY4,380, a 121.2% premium to the last close.
The offer is attractive due to the high takeover premium, being materially above the midpoint of the target IFA’s DCF valuation range and representing a four-year high.
This is a done deal, as the required minority acceptance rate is not onerous. The tender offer is from 14 February to 31 March (30 business days).


Kaonavi (4435 JP): Carlyle’s JPY4,380 Tender Offer (121% Premium)

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Japan's tech market sees major movement with Carlyle's 120% premium bid for Kaonavi, highlighting the stark valuation gap between Japanese and US SaaS companies.</li>
<li>Many Japanese software firms trade at significantly lower multiples (4x) versus US peers (8x), attracting private equity attention.</li>
<li>Japanese stocks ended the week up around 1%. Global macro concerns and inflation lifting bond yields and raising concern over a stronger yen. </li>
</ul>


Japan's tech market sees major movement with Carlyle's 120% premium bid for Kaonavi, highlighting the stark valuation gap between Japanese and US SaaS companies.
Many Japanese software firms trade at significantly lower multiples (4x) versus US peers (8x), attracting private equity attention.
Japanese stocks ended the week up around 1%. Global macro concerns and inflation lifting bond yields and raising concern over a stronger yen. 


Japan Strategy Weekly | Carlyle's Kaonavi Deal Signals a Shift in Japanese Valuations

Japan

kaonavi,inc. provides human resources management cloud services. The Company offers talent database, organization tree diagram, employee list and questionnaire, and evaluation workflow, as well as employee data graph and information sort, application programming interface cooperation, and other services. kaonavi serves clients across Japan.

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Kaonavi Inc (4435 JP)

Kaonavi (4435 JP)

Recruit’s talent management SaaS platform at 2.1x EV/Sales with business model margins of 20%+ and sustainable growth well above 20%

Asian Century Stocks

Kaonavi (4435 JP) - Small HR Software Co Gets 121% Premium LBO from Carlyle

Carlyle launches a 121% premium tender offer on a smallcap growth co. The co-CEO is selling out. Recruit too. This is a future bolt-on for Carlyle.

Travis Lundy