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>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/arcadium-lithium-plc" target="_blank" data-smartkarma-citation="entities:40438:1" rel="noopener">Arcadium Lithium (LTM AU)</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/get-nice-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:29667:1" rel="noopener">Get Nice Financial Group Ltd (1469 HK)</a>, <a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a>, <a href="https://www.smartkarma.com/entities/goldlion-holdings-ltd" target="_blank" data-smartkarma-citation="entities:12359:1" rel="noopener">Goldlion Holdings (533 HK)</a>. </li>
<li>Lowest spreads: <a href="https://www.smartkarma.com/entities/lifestyle-china-group-ltd" target="_blank" data-smartkarma-citation="entities:26090:1" rel="noopener">Lifestyle China (2136 HK)</a>, <a href="https://www.smartkarma.com/entities/renewable-japan-co-ltd" target="_blank" data-smartkarma-citation="entities:35211:1" rel="noopener">Renewable Japan (9522 JP)</a>, <a href="https://www.smartkarma.com/entities/macromill-inc" target="_blank" data-smartkarma-citation="entities:24026:1" rel="noopener">Macromill, Inc (3978 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-soft-inc" target="_blank" data-smartkarma-citation="entities:17504:1" rel="noopener">Fuji Soft Inc (9749 JP)</a>, <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</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: Arcadium Lithium (LTM AU), Seven &amp; I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), ESR Group (1821 HK), Goldlion Holdings (533 HK). 
Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks &amp; System Integr (1973 JP).     


Merger Arb Mondays (23 Dec) - Seven & I, Fuji Soft, NEC Networks, Pentamaster, Goldlion, Henlius

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pentamaster-international-ltd" target="_blank" data-smartkarma-citation="entities:31099:1" rel="noopener">Pentamaster International (1665 HK)</a> disclosed a Cayman scheme privatisation offer from <a href="https://www.smartkarma.com/entities/pentamaster-corp-bhd" target="_blank" data-smartkarma-citation="entities:15302:1" rel="noopener">Pentamaster Corp (PENT MK)</a> and AchiCapital at HK$1.00 (HK$0.93 cash + HK$0.07 dividend), a 56.3% premium to the undisturbed price. </li>
<li>The offer is final but unattractive compared to peer multiples. The shareholder with a blocking stake is a seller, but there is risk due to a high AGM participation rate.</li>
<li>An arguably light offer in which the Holdco is privatising its OpCo by arbitraging the valuation discrepancies across two exchanges may not sit well with minorities.</li>
</ul>



Pentamaster International (1665 HK) disclosed a Cayman scheme privatisation offer from Pentamaster Corp (PENT MK) and AchiCapital at HK$1.00 (HK$0.93 cash + HK$0.07 dividend), a 56.3% premium to the undisturbed price. 
The offer is final but unattractive compared to peer multiples. The shareholder with a blocking stake is a seller, but there is risk due to a high AGM participation rate.
An arguably light offer in which the Holdco is privatising its OpCo by arbitraging the valuation discrepancies across two exchanges may not sit well with minorities.


Pentamaster International (1665 HK): Pentamaster Corp and AchiCapital’s Light Scheme Offer

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>Automation systems play <a href="https://www.smartkarma.com/entities/pentamaster-corp-bhd" target="_blank" data-smartkarma-citation="entities:15302:1" rel="noopener">Pentamaster Corp (PENT MK)</a> expects the supply of semiconductors testers to the electric vehicle business will be key growth driver in 2023.</li>
<li>PENT estimates half of the orders for its semiconductor testers will be sourced from the EV segment, generating ~40% of the group’s revenue.</li>
<li>PENT is a curious stock in which its pseudo dual-listed twin trades under <a href="https://www.smartkarma.com/entities/pentamaster-international-ltd" target="_blank" data-smartkarma-citation="entities:31099:1" rel="noopener">Pentamaster International (1665 HK)</a>, but at a significant discount. </li>
</ul>


Automation systems play Pentamaster Corp (PENT MK) expects the supply of semiconductors testers to the electric vehicle business will be key growth driver in 2023.
PENT estimates half of the orders for its semiconductor testers will be sourced from the EV segment, generating ~40% of the group’s revenue.
PENT is a curious stock in which its pseudo dual-listed twin trades under Pentamaster International (1665 HK), but at a significant discount. 


Pentamaster Corp: In The (EV) Driver's Seat

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pentamaster-corp-bhd" target="_blank" data-smartkarma-citation="entities:15302:1" rel="noopener">Pentamaster Corp (PENT MK)</a> specialises in the manufacturing of automated testing equipment (ATE segment) and the provision of factory automated solutions (FAS segment). </li>
<li>Pentamaster's solid track record, exposure to structural trends (electric vehicles), profitability, cash generation and healthy balance sheet are attractive. The shares are up 12.9% YTD.</li>
<li>However, the shares reflect this story and the valuation looks full compared to peers and historical multiples. We like the fundamentals and would be buyers of any prolonged weakness.</li>
</ul>



Pentamaster Corp (PENT MK) specialises in the manufacturing of automated testing equipment (ATE segment) and the provision of factory automated solutions (FAS segment). 
Pentamaster's solid track record, exposure to structural trends (electric vehicles), profitability, cash generation and healthy balance sheet are attractive. The shares are up 12.9% YTD.
However, the shares reflect this story and the valuation looks full compared to peers and historical multiples. We like the fundamentals and would be buyers of any prolonged weakness.


Pentamaster Corp (PENT MK): Good Story, at What Price?

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM (AEM SP)</a> posted 1Q21 results which were relatively soft YoY. Management noted that 1Q21 was still much stronger than 1Q19 and 1Q20 was an anomaly. AEM also shared annual guidance between 460-520M SGD for 2021. This was the first time management shared guidance for the year. Given AEM's history we believe this guidance is conservative.During the call the CEO and CFO were confident that growth would significantly pick up from 3Q21 as its largest customer <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a> ramps up requirement for its latest test handlers. Longer term the company is hopeful to announce multiple new significant customer wins by 2022. This has been a multi-year process which could now bear fruits next year and would be an important catalyst for the company. We remain convinced AEM also becomes an M&amp;A target at some point which provides downside support to the stock.Nothing in 1Q21 results changes the long-term bull thesis on AEM. Fair Value remains unchanged 5 SGD (40% upside).

AEM (AEM SP) posted 1Q21 results which were relatively soft YoY. Management noted that 1Q21 was still much stronger than 1Q19 and 1Q20 was an anomaly. AEM also shared annual guidance between 460-520M SGD for 2021. This was the first time management shared guidance for the year. Given AEM's history we believe this guidance is conservative.During the call the CEO and CFO were confident that growth would significantly pick up from 3Q21 as its largest customer Intel Corp (INTC US) ramps up requirement for its latest test handlers. Longer term the company is hopeful to announce multiple new significant customer wins by 2022. This has been a multi-year process which could now bear fruits next year and would be an important catalyst for the company. We remain convinced AEM also becomes an M&amp;A target at some point which provides downside support to the stock.Nothing in 1Q21 results changes the long-term bull thesis on AEM. Fair Value remains unchanged 5 SGD (40% upside). 

AEM: Temporary Weakness Creates Buying Opportunity Going into New Product Cycle as of 3Q21

Malaysia

Pentamaster Corporation Berhad is an investment holding company.  The Company, through its subsidiaries, manufactures automated and semi-automated machines and equipment, designs and manufactures precision machinery components, as well as assembles and installs computerized automation systems and equipment.

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Pentamaster Corp (PENT MK)

Merger Arb Mondays (23 Dec) - Seven & I, Fuji Soft, NEC Networks, Pentamaster, Goldlion, Henlius

This week, the highest gross spreads are Arcadium Lithium (20.6%), Seven & I (17.8%), Get Nice Financial (10.3%), ESR (8.9%), Goldlion (7.3%),...

Arun George

Pentamaster International (1665 HK): Pentamaster Corp and AchiCapital’s Light Scheme Offer

The risk/reward is unattractive. An arguably light offer in which the Holdco is privatising its OpCo by arbitraging the valuation discrepancies...

Arun George

Pentamaster Corp: In The (EV) Driver's Seat

PENT should trend higher as it rides on the coattails of the automotive electrification trend. Yet at 33x FY23E EV/EBITDA, it is not inexpensive....

David Blennerhassett