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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a> announced a pre-conditional privatisation offer from Mr Tan, Mr Lim and CVC at HK$2.82 per share, a 55.8% premium to the unaffected price. </li>
<li>The pre-condition is anti-trust approval in several countries. Key conditions are the headcount test and approval by at least 75% disinterested shareholders (&lt;10% of all disinterested shareholders rejection).  </li>
<li>While the offer will leave many disappointed (such as IPO investors), it is reasonable compared to historical share prices and multiples. The gross spread at the last close is 14.6%. </li>
</ul>



Razer Inc (1337 HK) announced a pre-conditional privatisation offer from Mr Tan, Mr Lim and CVC at HK$2.82 per share, a 55.8% premium to the unaffected price. 
The pre-condition is anti-trust approval in several countries. Key conditions are the headcount test and approval by at least 75% disinterested shareholders (&lt;10% of all disinterested shareholders rejection).  
While the offer will leave many disappointed (such as IPO investors), it is reasonable compared to historical share prices and multiples. The gross spread at the last close is 14.6%. 


Razer’s Privatisation Bid by Founders and CVC

<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a> designs and builds gamer-focused ecosystem of hardware, software, and services. It offers gaming peripherals and hardware, as well as virtual credit services and offline-to-online digital payment networks. Razer was listed on the HKEx in November 2017 to raise net proceeds of HK$3,930.7 million ($505 million) at HK$3.88 per share. On Friday after market close, Razer announced that Mr Min-Liang Tan (co-founder, CEO and Chairman) and Mr Lim Kaling (a founding investor and non-executive director) are in preliminary discussions with financial investors to explore the possibility of a transaction involving Razer. The transaction may or may not lead to a general offer for the shares. The Board cautions that no decision has been made by Mr Tan and Mr Lim on whether to proceed with any transaction. Mr Tan represents 3,009.3 million shares or 34.35% of outstanding shares and Mr Lim represents 2,054.8 million shares or 23.46% of outstanding shares. Consequently, Mr Tan and Mr Lim together represent 57.81% of outstanding shares.Despite improving financial performance and strong 1H21, the shares are trading -14% and -49% below its 1-year VWAP and IPO price, respectively. Razer is cash rich with the net cash (including leases) accounting for around 23% of the market cap. Also, on 3 June 2021, Mr Tan and Mr Lim sold a combined 275 million shares (3.09% of the total issued share capital at that time) at HK$2.405 per share for financial management purposes. In this context, it is unsurprisingly that Mr Tan and Mr Lim are in discussions with financial investors. <div class="content-highlight">While we think there is a good chance that a transaction materialises, the shares continue to be attractive on an underlying basis. Our base-case SoTP valuation of HK$2.47 per share implies a 26% upside to the last close price of HK$1.96 per share.</div>

Razer Inc (1337 HK) designs and builds gamer-focused ecosystem of hardware, software, and services. It offers gaming peripherals and hardware, as well as virtual credit services and offline-to-online digital payment networks. Razer was listed on the HKEx in November 2017 to raise net proceeds of HK$3,930.7 million ($505 million) at HK$3.88 per share. On Friday after market close, Razer announced that Mr Min-Liang Tan (co-founder, CEO and Chairman) and Mr Lim Kaling (a founding investor and non-executive director) are in preliminary discussions with financial investors to explore the possibility of a transaction involving Razer. The transaction may or may not lead to a general offer for the shares. The Board cautions that no decision has been made by Mr Tan and Mr Lim on whether to proceed with any transaction. Mr Tan represents 3,009.3 million shares or 34.35% of outstanding shares and Mr Lim represents 2,054.8 million shares or 23.46% of outstanding shares. Consequently, Mr Tan and Mr Lim together represent 57.81% of outstanding shares.Despite improving financial performance and strong 1H21, the shares are trading -14% and -49% below its 1-year VWAP and IPO price, respectively. Razer is cash rich with the net cash (including leases) accounting for around 23% of the market cap. Also, on 3 June 2021, Mr Tan and Mr Lim sold a combined 275 million shares (3.09% of the total issued share capital at that time) at HK$2.405 per share for financial management purposes. In this context, it is unsurprisingly that Mr Tan and Mr Lim are in discussions with financial investors. While we think there is a good chance that a transaction materialises, the shares continue to be attractive on an underlying basis. Our base-case SoTP valuation of HK$2.47 per share implies a 26% upside to the last close price of HK$1.96 per share.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a> designs and builds a gamer-focused ecosystem of hardware, software, and services. It offers gaming peripherals and hardware, as well as virtual game payments (Razer Gold) and offline-to-online digital payment networks (Razer Fintech). <div class="content-highlight">Overall, we think the 2020 results underscored Razer’s transformation into a company that under-promises and over-delivers. The 2020 results delivered a consensus revenue and profit beat along with strong cash generation and a chunky net cash position. Looking ahead, we think that consensus remains cautious. An attractive valuation and ongoing share buyback programme lend support to the share price. Overall, we think that the shares are worth a closer look. </div>

Razer Inc (1337 HK) designs and builds a gamer-focused ecosystem of hardware, software, and services. It offers gaming peripherals and hardware, as well as virtual game payments (Razer Gold) and offline-to-online digital payment networks (Razer Fintech). Overall, we think the 2020 results underscored Razer’s transformation into a company that under-promises and over-delivers. The 2020 results delivered a consensus revenue and profit beat along with strong cash generation and a chunky net cash position. Looking ahead, we think that consensus remains cautious. An attractive valuation and ongoing share buyback programme lend support to the share price. Overall, we think that the shares are worth a closer look. 

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.

Thematic (Sector/Industry)

eSports offer intriguing investment possibilities to investors given very large projected TAMs, high growth rates and links to a variety of other fast growing industries including games, streaming, animation, tech hardware and social media. This makes eSports important to understand and below we examine key themes that investors should be aware of, before delving into a full primer on the space, companies with exposure to eSports, Asian eSports franchises and key eSports games to be aware of.

eSports offer intriguing investment possibilities to investors given very large projected TAMs, high growth rates and links to a variety of other fast growing industries including games, streaming, animation, tech hardware and social media. This makes eSports important to understand and below we examine key themes that investors should be aware of, before delving into a full primer on the space, companies with exposure to eSports, Asian eSports franchises and key eSports games to be aware of.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Abko is getting ready to complete its IPO in November in the Korean stock market. Apko is the number one player in the Korean gaming gear market. The company makes gaming gear products such as keyboards, headsets, and mouse for the PC gaming market.The company has been able to expand its consumer electronics (small home appliances) market capitalizing on its strength on the global gaming gear brand recognition. This small home appliance market is a newly growing market both at home and abroad to keep pace with the changes in the social environment such as an increase in single-person households and non-face-to-face activities.The IPO price range is from 21,400 won to 24,300 won. The IPO base deal size ranges from $48 million to $54 million. The expected market cap range after the IPO is from 217 billion won to 247 billion won, according to the bankers' valuation. The book-building for the institutional investors starts on 17 November.

Abko is getting ready to complete its IPO in November in the Korean stock market. Apko is the number one player in the Korean gaming gear market. The company makes gaming gear products such as keyboards, headsets, and mouse for the PC gaming market.The company has been able to expand its consumer electronics (small home appliances) market capitalizing on its strength on the global gaming gear brand recognition. This small home appliance market is a newly growing market both at home and abroad to keep pace with the changes in the social environment such as an increase in single-person households and non-face-to-face activities.The IPO price range is from 21,400 won to 24,300 won. The IPO base deal size ranges from $48 million to $54 million. The expected market cap range after the IPO is from 217 billion won to 247 billion won, according to the bankers' valuation. The book-building for the institutional investors starts on 17 November. 

Abko IPO Preview (#1 Gaming Gear Maker in Korea)

Switzerland

Logitech International S.A. manufactures personal computer input devices.  The Company produces computer mice which help the user move the cursor around the computer screen quickly, trackballs, game controllers, keyboards, PC video cameras, and multimedia speakers.  The Company sells its products worldwide.

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Logitech International SA (LOGN SW)

Razer’s Privatisation Bid by Founders and CVC

While the HK$2.82 per share offer will leave many disappointed (such as IPO investors), it is reasonable compared to historical share prices and...

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Razer Potentially in Play?

Razer announced that Mr Tan and Mr Lim are in discussions with investors on a possible transaction that may lead to a general offer. The shares...

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Razer: Play On

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Arun George

ESports – Entering the Third Innings

In this Smartkarma Original we examine the state of eSports in Asia, examining differences with traditional sports and the games, teams and...

Mio Kato

Abko IPO Preview (#1 Gaming Gear Maker in Korea)

Apko is the number one player in the Korean gaming gear market. The company makes gaming gear products such as keyboards, headsets, and mouse for...

Douglas Kim

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