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>I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads:<a href="https://www.smartkarma.com/entities/mayne-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:757:1" rel="noopener">Mayne Pharma (MYX AU)</a>, <a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang HEC Changjiang Pharma (1558 HK)</a>, <a href="https://www.smartkarma.com/entities/insignia-financial-ltd" target="_blank" data-smartkarma-citation="entities:12349:1" rel="noopener">Insignia Financial (IFL AU)</a>, <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a>.
</li>
<li>Lowest spreads: <a href="https://www.smartkarma.com/entities/bright-smart-securities-and" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities And (1428 HK)</a>, <a href="https://www.smartkarma.com/entities/hainan-meilan-international-airport-company-limited" target="_blank" data-smartkarma-citation="entities:12545:1" rel="noopener">Hainan Meilan International Airport (357 HK)</a>, <a href="https://www.smartkarma.com/entities/new-world-resources-ltd" target="_blank" data-smartkarma-citation="entities:9712:1" rel="noopener">New World Resources (NWC AU)</a>, <a href="https://www.smartkarma.com/entities/humm-group" target="_blank" data-smartkarma-citation="entities:35366:1" rel="noopener">Humm Group (HUM AU)</a>, <a href="https://www.smartkarma.com/entities/avjennings-ltd" target="_blank" data-smartkarma-citation="entities:12578:1" rel="noopener">Avjennings Ltd (AVJ AU)</a>. 
</li>
</ul>


I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads:Mayne Pharma (MYX AU), Yichang HEC Changjiang Pharma (1558 HK), Insignia Financial (IFL AU), ENN Energy (2688 HK), Seven &amp; I Holdings (3382 JP), Santos Ltd (STO AU).

Lowest spreads: Bright Smart Securities And (1428 HK), Hainan Meilan International Airport (357 HK), New World Resources (NWC AU), Humm Group (HUM AU), Avjennings Ltd (AVJ AU). 



Merger Arb Mondays (07 Jul) - Seven & I, Shibaura, Insignia, New World, ENN Energy, HKBN, Fengxiang

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads: <a href="https://www.smartkarma.com/entities/mayne-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:757:1" rel="noopener">Mayne Pharma (MYX AU)</a>, <a href="https://www.smartkarma.com/entities/insignia-financial-ltd" target="_blank" data-smartkarma-citation="entities:12349:1" rel="noopener">Insignia Financial (IFL AU)</a>, <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, <a href="https://www.smartkarma.com/entities/smartpay-holdings-ltd" target="_blank" data-smartkarma-citation="entities:20456:1" rel="noopener">Smartpay Holdings (SPY NZ)</a>, <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a>. </li>
<li>Lowest spreads: <a href="https://www.smartkarma.com/entities/bright-smart-securities-and" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities And (1428 HK)</a>, <a href="https://www.smartkarma.com/entities/ascentech-kk" target="_blank" data-smartkarma-citation="entities:29277:1" rel="noopener">Ascentech KK (3565 JP)</a>, <a href="https://www.smartkarma.com/entities/brickworks-ltd" target="_blank" data-smartkarma-citation="entities:2726:1" rel="noopener">Brickworks Ltd (BKW AU)</a>, <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>, <a href="https://www.smartkarma.com/entities/avjennings-ltd" target="_blank" data-smartkarma-citation="entities:12578:1" rel="noopener">Avjennings Ltd (AVJ AU)</a>, <a href="https://www.smartkarma.com/entities/hainan-meilan-international-airport-company-limited" target="_blank" data-smartkarma-citation="entities:12545:1" rel="noopener">Hainan Meilan International Airport (357 HK)</a>. 
</li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Mayne Pharma (MYX AU), Insignia Financial (IFL AU), ENN Energy (2688 HK), Smartpay Holdings (SPY NZ), Seven &amp; I Holdings (3382 JP), Santos Ltd (STO AU). 
Lowest spreads: Bright Smart Securities And (1428 HK), Ascentech KK (3565 JP), Brickworks Ltd (BKW AU), Toyota Industries (6201 JP), Avjennings Ltd (AVJ AU), Hainan Meilan International Airport (357 HK). 



Merger Arb Mondays (23 June) - ENN Energy, Dickson, HKBN, Mayne, Insignia, Santos, Smartpay

<ul>
<li>A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.</li>
<li>ECM developments: <a href="https://www.smartkarma.com/entities/zhejiang-sanhua-intelligent-controls" target="_blank" data-smartkarma-citation="entities:45277:1" rel="noopener">Zhejiang Sanhua Intelligent Controls (2050 HK)</a> H share listing and <a href="https://www.smartkarma.com/entities/caocao-inc" target="_blank" data-smartkarma-citation="entities:42803:1" rel="noopener">CaoCao (2643 HK)</a> and <a href="https://www.smartkarma.com/entities/fwd-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:34332:1" rel="noopener">FWD Group Holdings (FWD HK)</a> IPOs.</li>
<li>Event-Driven developments: <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a>, <a href="https://www.smartkarma.com/entities/pointsbet-holdings-ltd" target="_blank" data-smartkarma-citation="entities:29102:1" rel="noopener">PointsBet Holdings (PBH AU)</a>, <a href="https://www.smartkarma.com/entities/mayne-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:757:1" rel="noopener">Mayne Pharma (MYX AU)</a>, <a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" data-smartkarma-citation="entities:289:1" rel="noopener">HKBN Ltd (1310 HK)</a>, <a href="https://www.smartkarma.com/entities/ascentech-kk" target="_blank" data-smartkarma-citation="entities:29277:1" rel="noopener">Ascentech KK (3565 JP)</a>, <a href="https://www.smartkarma.com/entities/carta-holdings-inc" target="_blank" data-smartkarma-citation="entities:9634:1" rel="noopener">Carta Holdings, Inc. (3688 JP)</a>. 
</li>
</ul>


A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Zhejiang Sanhua Intelligent Controls (2050 HK) H share listing and CaoCao (2643 HK) and FWD Group Holdings (FWD HK) IPOs.
Event-Driven developments: Santos Ltd (STO AU), PointsBet Holdings (PBH AU), Mayne Pharma (MYX AU), HKBN Ltd (1310 HK), Ascentech KK (3565 JP), Carta Holdings, Inc. (3688 JP). 



Weekly Deals Digest (22 Jun) - Santos, PointsBet, Mayne, HKBN, Carta, Nakano, Sanhua, FWD, CaoCao

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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)

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/477/original/2020-07-23_10-42-06.png?1595468537" class="editor-image img-responsive" data-smartkarma-image-id="147477"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/478/original/2020-07-23_10-44-59.png?1595468712" class="editor-image img-responsive" data-smartkarma-image-id="147478"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/483/original/2020-07-23_11-31-51.png?1595471532" class="editor-image img-responsive" data-smartkarma-image-id="147483"></figure><div class="content-caption">Source • Japan Analytics</div>
<a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">OBIC (4684 JP)</a>- OBIC was the largest-cap company to report on Wednesday before the four-day holiday break. Despite a deceleration in the rate of revenue growth, the operating profit margin reached a record level of 58% in the first quarter as both COGS and SG&amp;A continue to decline. The other end of the Income Statement is less impressive. The 17 percentage point gap between the operating and CITC margins is also a new record. OBIC's ability to control its securities investment and returns at unconsolidated subsidiaries is much less impressive. OBIC is now the most Overbought IT Sector company in Japan, although the company's peer-relative earnings and forecast momentum has been declining. At an EV/ TTM OP of 34x times, valuations have only been higher during the 1999/2000 tech bubble and will act a constraint to the upside. With little margin for safety, we would not be buyers at this level.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/485/original/2020-07-23_11-40-21.png?1595472039" class="editor-image img-responsive" data-smartkarma-image-id="147485"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/480/original/2020-07-23_11-19-55.png?1595470809" class="editor-image img-responsive" data-smartkarma-image-id="147480"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/479/original/2020-07-23_10-46-52.png?1595468831" class="editor-image img-responsive" data-smartkarma-image-id="147479"></figure><div class="content-caption">Source • Japan Analytics<hr>
</div>
DAILY STATS
</div><hr><div>24 Quarterly Results</div><div><ul>
<li>
Results Score: 10 Positive / 1 Neutral / 13 Negative</li>
<li>
Average Results Score Change: -1.3</li>
<li>
Average % Change in Revenue: +1.8% Quarter YoY / +2.9% Rolling TTM YoY (exc. Kosei Secs) 
</li>
<li>
Average Operating Profit Margin Change: -0.3ppt (exc. Kosei Secs)
</li>
<li>
Percentage Making Quarterly Losses: 25%</li>
</ul></div><hr><div> 13 Annual • 11 Interim Forecasts/Revisions</div><div><ul>
<li>Annual Forecast/Revision Score: 3 Positive / 2 Neutral / 8 Negative</li>
<li>Interim Forecast/Revision Score Change: 3 Positive / 1 Neutral / 7 Negative</li>
<li>Average Forecast/Revision Score Change: -7.6</li>
</ul></div>


Source • Japan Analytics
OBIC (4684 JP)- OBIC was the largest-cap company to report on Wednesday before the four-day holiday break. Despite a deceleration in the rate of revenue growth, the operating profit margin reached a record level of 58% in the first quarter as both COGS and SG&amp;A continue to decline. The other end of the Income Statement is less impressive. The 17 percentage point gap between the operating and CITC margins is also a new record. OBIC's ability to control its securities investment and returns at unconsolidated subsidiaries is much less impressive. OBIC is now the most Overbought IT Sector company in Japan, although the company's peer-relative earnings and forecast momentum has been declining. At an EV/ TTM OP of 34x times, valuations have only been higher during the 1999/2000 tech bubble and will act a constraint to the upside. With little margin for safety, we would not be buyers at this level.
Source • Japan Analytics

DAILY STATS
24 Quarterly Results

Results Score: 10 Positive / 1 Neutral / 13 Negative

Average Results Score Change: -1.3

Average % Change in Revenue: +1.8% Quarter YoY / +2.9% Rolling TTM YoY (exc. Kosei Secs) 


Average Operating Profit Margin Change: -0.3ppt (exc. Kosei Secs)


Percentage Making Quarterly Losses: 25%
 13 Annual • 11 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 3 Positive / 2 Neutral / 8 Negative
Interim Forecast/Revision Score Change: 3 Positive / 1 Neutral / 7 Negative
Average Forecast/Revision Score Change: -7.6


🇯🇵 JAPAN • Results & Revisions 22nd July - OBIC, CyberAgent, Tokyo Steel & The Deep Freeze

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

On 6 August 2019, pachinko machinery maker <a href="https://www.smartkarma.com/entities/sankyo-co-ltd" target="_blank" data-smartkarma-citation="entities:12385:1" rel="noopener">Sankyo Co Ltd (6417 JP)</a> announced that it would try to buy back just over 22,000,000 shares for ¥75.37 billion, and announced it would cancel the resulting treasury shares after the completion of the buyback.
The company has consistently bought back shares for the past ten years, and has traded in a reasonably stable price range in that period, despite seeing Revenues and Operating Profits fall sharply in that period. The company has been significantly cash-rich for the twenty years I have watched it.
Of course, in an industry like Sankyo inhabits, given the general level of skepticism about the industry's long-term future, good capital policy should be seen as super-important. One might consider the business to be in permanent long-term run-off.
<h2>The Buyback News</h2>
The company will buy back those shares principally from Marf Corporation ("MC"), which is the personal company of Mr. Hideyuki Busujima who is the Representative Director and Chairman of Sankyo, and son of founder Kunio Busujima who passed away in 2016. MC held 28.346mm shares as of 31 March, or 34.92%. Family members own a bit more under their own names.
The buyback will be conducted through the means of a Tender Offer at JPY 3,426/share which is a 10.0% discount to the one-month average closing price in the month to 5 August. It was a 5.6% discount to the closing price before the announcement was made.
International active investors should take note of three really important things here:
<ol>
<li>This tender offer is not for you, even if the share price falls below the Tender Offer Price. There are mechanics to these things which make it unattractive for you. </li>
<li>There may be another way to achieve a slightly better result than the Tender Offer if you want to sell shares. The company has created the means of effectively enlarging the size of the buyback if there are willing sellers.</li>
<li>The more people who sell, the more this becomes interesting on the back end. </li>
</ol>
Read on below for more.
<hr>
For more information on Japanese Tender Offers and M&amp;A, please refer to the <a href="https://www.smartkarma.com/insights/quiddity-japan-m-a-guide-2019" target="_blank" rel="noopener">Quiddity Japan M&amp;A Guide</a> which is meant as a guide to the rules and practices of M&amp;A and Tender Offers in Japan, including minority and dissenter rights.

On 6 August 2019, pachinko machinery maker Sankyo Co Ltd (6417 JP) announced that it would try to buy back just over 22,000,000 shares for ¥75.37 billion, and announced it would cancel the resulting treasury shares after the completion of the buyback.
The company has consistently bought back shares for the past ten years, and has traded in a reasonably stable price range in that period, despite seeing Revenues and Operating Profits fall sharply in that period. The company has been significantly cash-rich for the twenty years I have watched it.
Of course, in an industry like Sankyo inhabits, given the general level of skepticism about the industry's long-term future, good capital policy should be seen as super-important. One might consider the business to be in permanent long-term run-off.
The Buyback News
The company will buy back those shares principally from Marf Corporation ("MC"), which is the personal company of Mr. Hideyuki Busujima who is the Representative Director and Chairman of Sankyo, and son of founder Kunio Busujima who passed away in 2016. MC held 28.346mm shares as of 31 March, or 34.92%. Family members own a bit more under their own names.
The buyback will be conducted through the means of a Tender Offer at JPY 3,426/share which is a 10.0% discount to the one-month average closing price in the month to 5 August. It was a 5.6% discount to the closing price before the announcement was made.
International active investors should take note of three really important things here:

This tender offer is not for you, even if the share price falls below the Tender Offer Price. There are mechanics to these things which make it unattractive for you. 
There may be another way to achieve a slightly better result than the Tender Offer if you want to sell shares. The company has created the means of effectively enlarging the size of the buyback if there are willing sellers.
The more people who sell, the more this becomes interesting on the back end. 

Read on below for more.

For more information on Japanese Tender Offers and M&amp;A, please refer to the Quiddity Japan M&amp;A Guide which is meant as a guide to the rules and practices of M&amp;A and Tender Offers in Japan, including minority and dissenter rights.

Accretive Sankyo Self-Tender - Boring But A Good Kind of Boring, With Something For Everyone

Japan

NAKANO REFRIGERATORS CO., LTD. manufactures, wholesales, repairs, and maintains commercial freezers and refrigeration showcases.  The Company's products are used to encase foods such as vegetables, fruits, meat, ice cream, and other frozen foods.  Nakano Refrigerators, based in Tokyo, exports freezers and refrigeration showcases to China through its subsidiary.

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Nakano Refrigerators (6411 JP)

Merger Arb Mondays (07 Jul) - Seven & I, Shibaura, Insignia, New World, ENN Energy, HKBN, Fengxiang

I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan,...

Arun George

Merger Arb Mondays (23 June) - ENN Energy, Dickson, HKBN, Mayne, Insignia, Santos, Smartpay

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan,...

Arun George

Weekly Deals Digest (22 Jun) - Santos, PointsBet, Mayne, HKBN, Carta, Nakano, Sanhua, FWD, CaoCao

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, NZ, Singapore, Japan, Indonesia,...

Arun George

🇯🇵 JAPAN • Results & Revisions 22nd July - OBIC, CyberAgent, Tokyo Steel & The Deep Freeze

OBIC (4684 JP)- OBIC was the largest-cap company to report on Wednesday before the four-day holiday break. Despite a deceleration in the rate of...

Campbell Gunn

Accretive Sankyo Self-Tender - Boring But A Good Kind of Boring, With Something For Everyone

On 6 August 2019, pachinko machinery maker Sankyo Co Ltd (6417 JP) announced that it would try to buy back just over 22,000,000 shares for ¥75.37...

Travis Lundy

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