APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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

Mitsubishi Estate Logistics / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mitsubishi-estate-logistics" target="_blank" data-smartkarma-citation="entities:25867:1" rel="noopener">Mitsubishi Estate Logistics (3481 JP)</a> (MEL) is looking to raise US$203m to acquire two new properties. </li>
<li>The properties are expected to be more accretive to DPU than its last year's placement, the deal has also been well-flagged and MEL has made capital raise an annual routine.</li>
<li>In this note, we will look at the assets to be acquired, impact on forecast and portfolio, and run the deal through our framework.</li>
</ul>



Mitsubishi Estate Logistics (3481 JP) (MEL) is looking to raise US$203m to acquire two new properties. 
The properties are expected to be more accretive to DPU than its last year's placement, the deal has also been well-flagged and MEL has made capital raise an annual routine.
In this note, we will look at the assets to be acquired, impact on forecast and portfolio, and run the deal through our framework.


Mitsubishi Estate Logistics Placement - Annual Routine

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On Thursday, the Nikkei came out with an <a href="https://asia.nikkei.com/Economy/BOJ-to-widen-interest-rate-target-range-to-support-bank-profits" target="_blank" rel="noopener">article</a> during the lunch break of equities trading. The headline said "BOJ to widen interest rate target range to support bank profits" and indeed in the article it noted that the BOJ would allow the long end of the curve to fluctuate more widely, creating a slightly steeper curve. This could lead to slightly better bank profits less because of the extra 5bp on the curve but more because of the expectation of forcing borrowers to pay more on an absolute basis. What was MORE important for equity markets was the idea that the BOJ "would also abolish its target for purchasing exchange-traded funds, now 6 trillion yen ($55 billion) per year, and instead vow to make such purchases only in times of market turmoil."The article also suggested that the "Target" would be removed for the ¥90bn of J-REITs they buy as a base case (doubled now to ¥180bn as the ¥6trln was doubled to ¥12trln in the depths of the covid crash of March 2020). This move caused Nikkei to underperform TOPIX on the day. TOPIX actually ended up on the day, and ended above where the market closed the AM session before the article came out. Nikkei fell, and started underperforming TOPIX from that point on. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/195/872/original/Screenshot+2021-03-21+at+3.26.17+PM.png?1616311594" class="editor-image img-responsive" data-smartkarma-image-id="195872"></figure></section>Nikkei underperformed TOPIX in the AM session on Friday, and when the BOJ announcements came mid-day on Friday, there were additional subtleties involved. The details are <a href="https://www.boj.or.jp/en/announcements/release_2021/rel210319c.pdf" target="_blank" rel="noopener">here</a>. The presentation with the basic details is <a href="https://www.boj.or.jp/en/announcements/release_2021/k210319b.pdf" target="_blank" rel="noopener">here</a>.<ul>
<li>The target rates for ETF and REIT buying will be abolished, but the current "Target Rate" of annual buying will become annual maxima (¥12 trillion for ETFs, ¥180bn for J-REITs, with ongoing maximum ownership limits on ETFs in place).</li>
<li>Buying of ETFs and J-REITs will be conducted "as necessary" "in times of market turbulence" and such buying will be done only on TOPIX ETFs.</li>
<li>The "Special Rules for Purchases of ETFs to Support Firms Proactively Investing in Physical and Human Capital" will continue as before with only specific ETFs permitted in this group. The amount of ~¥300bn/year and ¥1.2bn per business day will continue.</li>
</ul>It based the new policy on the Reference <a href="https://www.boj.or.jp/en/announcements/release_2021/k210319c.pdf" target="_blank" rel="noopener">document</a> which backs up the changes in policy is much more interesting reading.  Appendix 5 and Chart 12 are the parts you want to read.The hypotheses and results are described here.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/195/869/original/Screenshot+2021-03-21+at+3.02.28+PM.png?1616310186" class="editor-image img-responsive" data-smartkarma-image-id="195869"></figure></section>There are a couple of other side conclusions but the base understanding is...<div class="content-highlight">When the BOJ steps into the market in size, in times of market turbulence, and when stocks are trading below their medium-term average, it has a greater effect per dollar spent on market-wide risk premia as measured in option premia than buying in normal times, and size matters when looking at the risk premia change on single stocks.  </div><h3>What This Means</h3><ul>
<li>When the BOJ steps into the market in size, in times of market turbulence, and when stocks are trading below their medium-term average, it has a greater effect per dollar spent on market-wide risk premia as measured in option premia than buying in normal times, and size matters when looking at the risk premia change on single stocks.  </li>
<li>Expect the BOJ to follow the concept of its study (Appendix 5 again).</li>
<li>Expect the BOJ to pay greater attention to futures activity. </li>
</ul><h3>What This Does NOT Mean</h3><ul><li>It does NOT mean the BOJ will be selling any ETFs.</li></ul><hr>It is worthwhile taking a look at WHY the market reacted the way it did on Thursday and Friday afternoon, and it is worthwhile looking at what the BOJ ETF buying might look like going forward. So we do so below the fold.Note: This is part 1 of the analysis of potential future BOJ ETF Buying. Part II looks at the difference in single stock makeup.

On Thursday, the Nikkei came out with an article during the lunch break of equities trading. The headline said "BOJ to widen interest rate target range to support bank profits" and indeed in the article it noted that the BOJ would allow the long end of the curve to fluctuate more widely, creating a slightly steeper curve. This could lead to slightly better bank profits less because of the extra 5bp on the curve but more because of the expectation of forcing borrowers to pay more on an absolute basis. What was MORE important for equity markets was the idea that the BOJ "would also abolish its target for purchasing exchange-traded funds, now 6 trillion yen ($55 billion) per year, and instead vow to make such purchases only in times of market turmoil."The article also suggested that the "Target" would be removed for the ¥90bn of J-REITs they buy as a base case (doubled now to ¥180bn as the ¥6trln was doubled to ¥12trln in the depths of the covid crash of March 2020). This move caused Nikkei to underperform TOPIX on the day. TOPIX actually ended up on the day, and ended above where the market closed the AM session before the article came out. Nikkei fell, and started underperforming TOPIX from that point on. Nikkei underperformed TOPIX in the AM session on Friday, and when the BOJ announcements came mid-day on Friday, there were additional subtleties involved. The details are here. The presentation with the basic details is here.
The target rates for ETF and REIT buying will be abolished, but the current "Target Rate" of annual buying will become annual maxima (¥12 trillion for ETFs, ¥180bn for J-REITs, with ongoing maximum ownership limits on ETFs in place).
Buying of ETFs and J-REITs will be conducted "as necessary" "in times of market turbulence" and such buying will be done only on TOPIX ETFs.
The "Special Rules for Purchases of ETFs to Support Firms Proactively Investing in Physical and Human Capital" will continue as before with only specific ETFs permitted in this group. The amount of ~¥300bn/year and ¥1.2bn per business day will continue.
It based the new policy on the Reference document which backs up the changes in policy is much more interesting reading.  Appendix 5 and Chart 12 are the parts you want to read.The hypotheses and results are described here.There are a couple of other side conclusions but the base understanding is...When the BOJ steps into the market in size, in times of market turbulence, and when stocks are trading below their medium-term average, it has a greater effect per dollar spent on market-wide risk premia as measured in option premia than buying in normal times, and size matters when looking at the risk premia change on single stocks.  What This Means
When the BOJ steps into the market in size, in times of market turbulence, and when stocks are trading below their medium-term average, it has a greater effect per dollar spent on market-wide risk premia as measured in option premia than buying in normal times, and size matters when looking at the risk premia change on single stocks.  
Expect the BOJ to follow the concept of its study (Appendix 5 again).
Expect the BOJ to pay greater attention to futures activity. 
What This Does NOT MeanIt does NOT mean the BOJ will be selling any ETFs.It is worthwhile taking a look at WHY the market reacted the way it did on Thursday and Friday afternoon, and it is worthwhile looking at what the BOJ ETF buying might look like going forward. So we do so below the fold.Note: This is part 1 of the analysis of potential future BOJ ETF Buying. Part II looks at the difference in single stock makeup. 

Quantifying the BOJ Change in ETF Policy: Assessing Future ETF Buying Methodology

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/163/original/2019-03-17_07-32-23.png?1552775594" class="editor-image img-responsive" data-smartkarma-image-id="82163"></figure>Source: Japan Analytics
</div>SIDEWAYS - Japanese equities have gove up half of their late-February gains in US dollar terms over the last two weeks. Poised just 1.7% above the fifty-day moving average, last breached to the downside six months ago, the market needs fresh catalysts. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/164/original/2019-03-17_07-54-56.png?1552777022" class="editor-image img-responsive" data-smartkarma-image-id="82164"></figure><div class="content-caption">Source: Japan Analytics</div>BOJ IS BACK - After almost a one-month hiatus, the Bank of Japan resumed purchases of exchange-traded funds, intervening four times in the last nine trading days. Further intervention is to be expected as the market adjusts to the continuing stream of weak macro data.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/165/original/2019-03-17_08-15-44.png?1552778203" class="editor-image img-responsive" data-smartkarma-image-id="82165"></figure><div class="content-caption">Source: Japan Analytics</div>THANK YOU, MIZUHO - <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho' s (8411 JP)</a> ¥680b retail branch, software and foreign bond write down, and net profit forecast of ¥80b for FY 2018 has resulted in the market composite forecast for net income falling to ¥43.6t, 5.6% below the November peak. Forecast net income is now 1.2% below the level of one year ago, and seven sectors' forecasts are more than 10% lower than a year ago.   MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Machinery, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on the Auto sector,  <a href="https://www.smartkarma.com/entities/1411" target="_blank" data-smartkarma-citation="entities:1411:1">Sumitomo Realty (8830 JP)</a>, <a href="https://www.smartkarma.com/entities/4508" target="_blank" data-smartkarma-citation="entities:4508:1">Sekisui House (1928 JP)</a>, <a href="https://www.smartkarma.com/entities/3294" target="_blank" data-smartkarma-citation="entities:3294:1">Pigeon (7956 JP)</a>, <a href="https://www.smartkarma.com/entities/8723" target="_blank" data-smartkarma-citation="entities:8723:1">Fuji Seal (7864 JP)</a>, and <a href="https://www.smartkarma.com/entities/3548" target="_blank" data-smartkarma-citation="entities:3548:1">Kawasaki Kisen (9107 JP)</a>


Source: Japan Analytics
SIDEWAYS - Japanese equities have gove up half of their late-February gains in US dollar terms over the last two weeks. Poised just 1.7% above the fifty-day moving average, last breached to the downside six months ago, the market needs fresh catalysts. Source: Japan AnalyticsBOJ IS BACK - After almost a one-month hiatus, the Bank of Japan resumed purchases of exchange-traded funds, intervening four times in the last nine trading days. Further intervention is to be expected as the market adjusts to the continuing stream of weak macro data.  Source: Japan AnalyticsTHANK YOU, MIZUHO - Mizuho' s (8411 JP) ¥680b retail branch, software and foreign bond write down, and net profit forecast of ¥80b for FY 2018 has resulted in the market composite forecast for net income falling to ¥43.6t, 5.6% below the November peak. Forecast net income is now 1.2% below the level of one year ago, and seven sectors' forecasts are more than 10% lower than a year ago.   MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Machinery, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on the Auto sector,  Sumitomo Realty (8830 JP), Sekisui House (1928 JP), Pigeon (7956 JP), Fuji Seal (7864 JP), and Kawasaki Kisen (9107 JP)

🇯🇵 Japan • Fortnightly Update - Reverse Gear

Those who have been steady observers of the capital structure of <a href="https://www.smartkarma.com/entities/623" target="_blank" data-smartkarma-citation="entities:623:1">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> have oft-wondered why <a href="https://www.smartkarma.com/entities/4221" target="_blank" data-smartkarma-citation="entities:4221:1">NTT Urban Development (8933 JP)</a> was left as a virtual 'orphan', left to conduct its business without quite as much input as one might have hoped, and since the GFC, a thorn in the side of owners who thought it should be done better, differently, by a different owner, with bigger ambitions. Today, NTT - which owns 67.3% of the real estate developer/leaser - <a href="http://www.ntt.co.jp/news2018/1810e/pdf/181015a.pdf" target="_blank">announced</a> (<a href="http://www.ntt.co.jp/news2018/1810/pdf/181015a.pdf" target="_blank">J</a>) that it wanted to buy in the 27.7% of NTT Urban that it did not own through a Tender Offer to start October 16th and run 30 business days through November 27th.The price offered is ¥1680/share, which is a 29.8% premium to today's close (28.6% vs Friday), a 31.6% premium to the 1-month average, and 39.2% and 39.8% to the 3-month and 6-month averages to Friday. It is also a 5-year high price and other than a single day May 13th 2013 (just before the first 'Abenomics bubble' burst a week later) - where the shares closed at ¥1688 - the Tender Offer Price is at 10-year high.The deal is subject to a 'two-step' process whereby after a tender offer, NTT will seek to squeeze out minorities. If NTT gets to 90%, there will be a share cash-out demand by NTT to NTT Urban, who will then oblige remaining minorities to sell their shares. If at the end of the tender, NTT owns more than two-thirds of the shares outstanding but less than 90%, NTT will call for Urban to hold an EGM to vote on a consolidation (reverse share split) of shares where odd lots get cashed out. The result of that would be that all minorities would also be cashed out, but it will take longer. The trick here is that NTT already owns more than two-thirds so this is a fait accompli. There is no minimum share tender required to make it successful, and strictly speaking, NTT needs no shares to squeeze out minorities from here.It's all over but the shouting. Even before it starts. <table class="table table-striped"><tbody>
<tr><td colspan="2"><h2> Schedule of Tender Offer </h2></td></tr>
<tr>
<td> Event </td>
<td>Date</td>
</tr>
<tr>
<td> Announcement Date </td>
<td>15-Oct-18</td>
</tr>
<tr>
<td> Start Date </td>
<td>16-Oct-18</td>
</tr>
<tr>
<td> Closing Date </td>
<td>27-Nov-18</td>
</tr>
<tr>
<td> Payment Date </td>
<td>4-Dec-18</td>
</tr>
<tr>
<td>Likely Squeeze Out if &gt;90%</td>
<td>early January 2019</td>
</tr>
</tbody></table>More below.

Those who have been steady observers of the capital structure of NTT (Nippon Telegraph &amp; Telephone) (9432 JP) have oft-wondered why NTT Urban Development (8933 JP) was left as a virtual 'orphan', left to conduct its business without quite as much input as one might have hoped, and since the GFC, a thorn in the side of owners who thought it should be done better, differently, by a different owner, with bigger ambitions. Today, NTT - which owns 67.3% of the real estate developer/leaser - announced (J) that it wanted to buy in the 27.7% of NTT Urban that it did not own through a Tender Offer to start October 16th and run 30 business days through November 27th.The price offered is ¥1680/share, which is a 29.8% premium to today's close (28.6% vs Friday), a 31.6% premium to the 1-month average, and 39.2% and 39.8% to the 3-month and 6-month averages to Friday. It is also a 5-year high price and other than a single day May 13th 2013 (just before the first 'Abenomics bubble' burst a week later) - where the shares closed at ¥1688 - the Tender Offer Price is at 10-year high.The deal is subject to a 'two-step' process whereby after a tender offer, NTT will seek to squeeze out minorities. If NTT gets to 90%, there will be a share cash-out demand by NTT to NTT Urban, who will then oblige remaining minorities to sell their shares. If at the end of the tender, NTT owns more than two-thirds of the shares outstanding but less than 90%, NTT will call for Urban to hold an EGM to vote on a consolidation (reverse share split) of shares where odd lots get cashed out. The result of that would be that all minorities would also be cashed out, but it will take longer. The trick here is that NTT already owns more than two-thirds so this is a fait accompli. There is no minimum share tender required to make it successful, and strictly speaking, NTT needs no shares to squeeze out minorities from here.It's all over but the shouting. Even before it starts. 
 Schedule of Tender Offer 

 Event 
Date


 Announcement Date 
15-Oct-18


 Start Date 
16-Oct-18


 Closing Date 
27-Nov-18


 Payment Date 
4-Dec-18


Likely Squeeze Out if &gt;90%
early January 2019

More below.

NTT (9432 JP) Buyout of NTT Urban (8933 JP). FINALLY.

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

<ul><li>Cheap on a gross profit basis, good price momentum, and more attractive to analysts relative to its sector</li><li>Raised launch value target for 2018 by 30% should drive presales further, 1Q18 saw presales up by 168% YoY</li><li>More low-rise project launches should pay off as AP has proven to be successful in this segment, gross margin expansion of almost 4 ppts in 1Q18 YoY at strong low-rise presales</li><li>Attractive at 18CE* 12.8% ROE/PB versus Thai Real Estate at 3.5% and AP offers a nice 4.3% dividend yield</li><li>Risks: Project delays and increasing competition</li></ul>* Consensus Estimates

Cheap on a gross profit basis, good price momentum, and more attractive to analysts relative to its sectorRaised launch value target for 2018 by 30% should drive presales further, 1Q18 saw presales up by 168% YoYMore low-rise project launches should pay off as AP has proven to be successful in this segment, gross margin expansion of almost 4 ppts in 1Q18 YoY at strong low-rise presalesAttractive at 18CE* 12.8% ROE/PB versus Thai Real Estate at 3.5% and AP offers a nice 4.3% dividend yieldRisks: Project delays and increasing competition* Consensus Estimates

AP (AP TB): Raised Property-Launch Target in 2018 and Nice Dividend Yield

Japan

Mitsubishi Estate Company Ltd. invests in real estate properties in Japan.  The Company leases, manages, and develops commercial buildings in central Tokyo. Mitsubishi Estate also develops and sells residential properties and parking lots and manages recreational facilities including golf courses and tennis clubs.

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Mitsubishi Estate (8802 JP)

Mitsubishi Estate Logistics Placement - Annual Routine

Mitsubishi Estate Logistics (3481 JP) is looking to raise US$203m to acquire two new properties. In this note, we discuss the assets to be...

Clarence Chu

Quantifying the BOJ Change in ETF Policy: Assessing Future ETF Buying Methodology

The BOJ has announced a change in ETF Buying Program Parameters. The study/review they did is required reading to understand how they might buy...

Travis Lundy

🇯🇵 Japan • Fortnightly Update - Reverse Gear

SIDEWAYS - Japanese equities have gove up half of their late-February gains in US dollar terms over the last two weeks. Poised just 1.7% above the...

Campbell Gunn

NTT (9432 JP) Buyout of NTT Urban (8933 JP). FINALLY.

Those who have been steady observers of the capital structure of NTT (Nippon Telegraph & Telephone) (9432 JP) have oft-wondered why NTT Urban...

Travis Lundy

AP (AP TB): Raised Property-Launch Target in 2018 and Nice Dividend Yield

Cheap on a gross profit basis, good price momentum, and more attractive to analysts relative to its sector Raised launch value target for 2018 by...

A. Stotz Investment Research

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