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>Leading proxies recommend that <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> shareholders vote against the Tsuruha/<a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> merger on 26 May.</li>
<li>The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha vote will be close but likely to be approved. Long Tsuruha is the trade, irrespective of the vote.  </li>
<li>For a vote pass, you are long synergies and a likely partial offer bump. For a fail, you are long an undemanding multiple and the optionality of a new bid.      </li>
</ul>


Leading proxies recommend that Tsuruha Holdings (3391 JP) shareholders vote against the Tsuruha/Welcia Holdings (3141 JP) merger on 26 May.
The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha vote will be close but likely to be approved. Long Tsuruha is the trade, irrespective of the vote.  
For a vote pass, you are long synergies and a likely partial offer bump. For a fail, you are long an undemanding multiple and the optionality of a new bid.      


Tsuruha (3391 JP)/Welcia (3141 JP): Vote Musings

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> and <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> announced a merger through a share exchange followed by a partial tender offer by Aeon for a 50.90% stake of the merged entity.</li>
<li>The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha shareholder vote is high risk as Orbis, the second-largest shareholder, <a href="https://www.businesswire.com/news/home/20250411005584/en/Orbis-Statement-on-Proposed-Merger-Between-Tsuruha-and-Welcia-and-Proposed-Tender-Offer-by-Aeon" target="_blank" rel="noopener">intends to vote NO</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a>’s follow-up partial offer for Tsuruha is unattractive compared to its previous offer for the Oasis stake, peer multiples and premium to the undisturbed price.   </li>
</ul>



Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) announced a merger through a share exchange followed by a partial tender offer by Aeon for a 50.90% stake of the merged entity.
The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha shareholder vote is high risk as Orbis, the second-largest shareholder, intends to vote NO. 

Aeon Co Ltd (8267 JP)’s follow-up partial offer for Tsuruha is unattractive compared to its previous offer for the Oasis stake, peer multiples and premium to the undisturbed price.   


Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Since late-February (2/25/25 Compass and 2/27/25 Int'l Compass) we expected an 8-10% pullback to provide a buying opportunity.</li>
<li>But that all changed last week (4/1/25 Compass and 4/3/25 Int'l Compass), when we downgraded our outlook to bearish/cautious, citing several concerning developments.</li>
<li>Despite the 90-day pause, we remain cautious and we continue to favor defensives as long as the S&amp;P 500 and ACWI-US are below their 200-day MAs.</li>
</ul>


Since late-February (2/25/25 Compass and 2/27/25 Int'l Compass) we expected an 8-10% pullback to provide a buying opportunity.
But that all changed last week (4/1/25 Compass and 4/3/25 Int'l Compass), when we downgraded our outlook to bearish/cautious, citing several concerning developments.
Despite the 90-day pause, we remain cautious and we continue to favor defensives as long as the S&amp;P 500 and ACWI-US are below their 200-day MAs.


Still Favor Defensives Until Market Dynamics Improve; EURO STOXX 50 Testing Crucial 5000 Level

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Tsuruha and Welcia are on the road to a merger, where Tsuruha takes over Welcia but Aeon ends up owning "more than 50% but less than 51%" of Tsuruha.</li>
<li>The Price Ratio is now 4.24x. Trailing EPS ratios is &gt;5. Forward EPS ratios are further above 5. BVPS ratio? Near 5. Welcia grows storecount. Tsuruha makes more money/store.</li>
<li>Tsuruha changed its FY-end to match that of Welcia/Aeon so both will report earnings/guidance in just over 3 weeks. That will likely influence the ratio.</li>
</ul>


Tsuruha and Welcia are on the road to a merger, where Tsuruha takes over Welcia but Aeon ends up owning "more than 50% but less than 51%" of Tsuruha.
The Price Ratio is now 4.24x. Trailing EPS ratios is &gt;5. Forward EPS ratios are further above 5. BVPS ratio? Near 5. Welcia grows storecount. Tsuruha makes more money/store.
Tsuruha changed its FY-end to match that of Welcia/Aeon so both will report earnings/guidance in just over 3 weeks. That will likely influence the ratio.


Tsuruha (3391) - Welcia (3141) - Tsuruha Earnings In a Week - Still Good To Be Long The Ratio

<ul>
<li>The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.</li>
<li>In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in <a href="https://www.smartkarma.com/entities/kusuri-no-aoki-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:27329:1" rel="noopener">Kusuri no Aoki Holdings (3549 JP)</a>. </li>
<li>The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.</li>
</ul>


The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.
In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in Kusuri no Aoki Holdings (3549 JP). 
The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.


Kusuri No Aoki (3549) Big Buyback - Accretive, And May Involve Musical Shares

Japan

MatsukiyoCocokara & Co. operates drug store chains. The Company retails medicines, cosmetics, health foods, beauty care products, and other products. MatsukiyoCocokara & also operates supermarkets and home centers.

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MatsukiyoCocokara (3088 JP)

Tsuruha (3391 JP)/Welcia (3141 JP): Vote Musings

The Tsuruha vote on 26 May will be close but likely to be approved. Long Tsuruha is the trade, irrespective of the vote.

Arun George

Still Favor Defensives Until Market Dynamics Improve; EURO STOXX 50 Testing Crucial 5000 Level

Still Favor Defensives Until Market Dynamics Improve; EURO $STOXX 50 Testing Crucial 5000 Level; Watch for Resistance at $105-$117.69 on $ACWI. Buy...

Vermilion Research

Tsuruha (3391) - Welcia (3141) - Tsuruha Earnings In a Week - Still Good To Be Long The Ratio

The Tsuruha/Welcia trade is a good-looking "guess the ratio" trade because Tsuruha wins on PBR, PER, forward PER, etc. The price ratio should be...

Travis Lundy

Kusuri No Aoki (3549) Big Buyback - Accretive, And May Involve Musical Shares

Activist-pressured Kusuri no Aoki reports Q1 earnings and a 5+% buyback. The seller could be a cross-holder after the Aoki brothers upped their...

Travis Lundy

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Tsuruha (3391 JP)/Welcia (3141 JP): Vote Musings

The Tsuruha vote on 26 May will be close but likely to be approved. Long Tsuruha is the trade, irrespective of the vote.

Arun George

Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive

Unsurprisingly, Orbis has opposed the transactions, as the terms of the share exchange and partial offer are unfavourable for Tsuruha shareholders....

Arun George

Still Favor Defensives Until Market Dynamics Improve; EURO STOXX 50 Testing Crucial 5000 Level

Still Favor Defensives Until Market Dynamics Improve; EURO $STOXX 50 Testing Crucial 5000 Level; Watch for Resistance at $105-$117.69 on $ACWI. Buy...

Vermilion Research

Tsuruha (3391) - Welcia (3141) - Tsuruha Earnings In a Week - Still Good To Be Long The Ratio

The Tsuruha/Welcia trade is a good-looking "guess the ratio" trade because Tsuruha wins on PBR, PER, forward PER, etc. The price ratio should be...

Travis Lundy

Kusuri No Aoki (3549) Big Buyback - Accretive, And May Involve Musical Shares

Activist-pressured Kusuri no Aoki reports Q1 earnings and a 5+% buyback. The seller could be a cross-holder after the Aoki brothers upped their...

Travis Lundy