Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-paint-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7387:1" rel="noopener">Nippon Paint Holdings (4612 JP)</a> is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.</li>
<li>The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.</li>
<li>Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn't own as much NPH one week ago.</li>
</ul>



Nippon Paint Holdings (4612 JP) is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.
The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.
Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn't own as much NPH one week ago.


Nippon Paint (4612) Secondary Pricing Approaches - Cheaper But...

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.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pt-avia-avian" target="_blank" data-smartkarma-citation="entities:35034:1" rel="noopener">PT Avia Avian (AVIA IJ)</a> will raise up to $405 million at an IPO range of IDR780-930. Selling shareholders will also raise up to $364 million through a private placement. </li>
<li>In <a href="https://www.smartkarma.com/insights/avia-avian-ipo-initiation-painting-by-numbers" target="_blank" data-smartkarma-citation="insights:61202" rel="noopener">Avia Avian IPO Initiation: Painting by Numbers</a>, we noted that Avia is delivering strong growth, rising margins and strong cash generation. We concluded that Avia is worth a look.</li>
<li>Our valuation analysis suggests that Avia is fully priced at the IPO price range. Consequently, we would remain on the sidelines seeking a lower entry point. </li>
</ul>



PT Avia Avian (AVIA IJ) will raise up to $405 million at an IPO range of IDR780-930. Selling shareholders will also raise up to $364 million through a private placement. 
In Avia Avian IPO Initiation: Painting by Numbers, we noted that Avia is delivering strong growth, rising margins and strong cash generation. We concluded that Avia is worth a look.
Our valuation analysis suggests that Avia is fully priced at the IPO price range. Consequently, we would remain on the sidelines seeking a lower entry point. 


<ul>
<li>
<a href="https://www.smartkarma.com/entities/pt-avia-avian" target="_blank" data-smartkarma-citation="entities:35034:1" rel="noopener">PT Avia Avian (AVIA IJ)</a> is a market leader in the decorative paints and coatings industry in Indonesia, with around a 20% market share based on sales revenue in 2020. </li>
<li>Avia is seeking to raise up to $405 million at an IPO price range of IDR780-930. Selling shareholders will also raise up to $364 million through a private placement.</li>
<li>The fundamentals are attractive as Avia is delivering strong growth in both its segments, rising group margins and strong cash generation. Overall, we believe that Avia is worth a look.</li>
</ul>



PT Avia Avian (AVIA IJ) is a market leader in the decorative paints and coatings industry in Indonesia, with around a 20% market share based on sales revenue in 2020. 
Avia is seeking to raise up to $405 million at an IPO price range of IDR780-930. Selling shareholders will also raise up to $364 million through a private placement.
The fundamentals are attractive as Avia is delivering strong growth in both its segments, rising group margins and strong cash generation. Overall, we believe that Avia is worth a look.


Avia Avian IPO Initiation: Painting by Numbers

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<p>On 18 January <a href="https://www.smartkarma.com/entities/akzo-nobel-nv" target="_blank" data-smartkarma-citation="entities:21093:1" rel="noopener">Akzo Nobel NV (AKZA NA)</a> made a non-binding proposal to acquire <a href="https://www.smartkarma.com/entities/tikkurila-oyj" target="_blank" data-smartkarma-citation="entities:21786:1" rel="noopener">Tikkurila Oyj (TIK1V FH)</a> for €1.4 billion, at €31.25 per share.</p>
<ul>
<li>The offer is 13% higher than that made by PPG on 5 January.</li>
<li>Tikkurila's shares closed at €32.55, 16.5% higher than the prior trading session and 4.1% above Akzo Nobel's non-binding proposal.</li>
</ul>
<p>Tikkurila was already the subject of a <a href="https://www.smartkarma.com/entities/ppg-industries-inc" target="_blank" data-smartkarma-citation="entities:8775:1" rel="noopener">Ppg Industries (PPG US)</a>'s voluntary recommended public cash tender offer for all shares, at €27.75 per share (increased from €25 per share).</p>
<ul>
<li>PPG increased its bid after Tikkurila said it had received a competing offer (from Hempel AS).</li>
<li>The tender offer period started on 15 January.  </li>
</ul>
<p>The bid is relatively high and could lead to a bidding war with PPG.</p>
<ul>
<li>It happens in the midst of a bidding war, offering over a 113% premium vs. where Tikkurila was trading three months prior to when it became in play</li>
<li>There's the risk of a winning curse.</li>
</ul>
<p>Both PPG and Akzo Nobel seems willing to pay dearly for market share in Scandinavia, the Baltic region and beyond (China and Russia). Cost synergies do not seem to be the main reason for the bid</p>
<ul>
<li>Cost synergies could be relevant in raw metals and logistics, and would probably  be higher for Akzo Nobel, about 5% of gross sales, than for PPG.</li>
<li>Bidders seem to focus on revenue synergies.</li>
</ul>
<p>In spite of the latest consolidation moves, the industry remains very fragmented with c. 50% of global revenues coming from small producers.</p>
<ul>
<li>Acquisitions are generally under 10x EV/EBITDA with synergies. Targets  typically can be brought in a relatively short time-frame to the higher margins of the larger scale acquirers.</li>
<li>Tikkurila is already trading at 17.4x EV/2020e EBITDA.</li>
</ul>
<p>Putting Tikkurila on the same EV/EBITDA multiple of PPG, 16.55x EV/2020e EBITDA, I obtain an equity value of €30.87. Adding €2.5 per share worth of synergies (lower for PPG than in the case of Akzo Nobel), gives €33.38 per share,</p>
<ul>
<li>c. 7% higher than the offer by Akzo Nobel and 2.5% higher than the last close price on 18 January.</li>
<li>Another raise could be the next move for PPG. Akzo Nobel is watching closely and surely is counting on it.</li>
<li>Like in the case of G4S, Tikkurila seems to be a scarce asset (at least for both bidders), that was undervalued and attracting plenty of courtship right now.</li>
</ul>
<p>Recommendation is <strong>LONG Tikkurila, TP  33.38.</strong></p>

On 18 January Akzo Nobel NV (AKZA NA) made a non-binding proposal to acquire Tikkurila Oyj (TIK1V FH) for €1.4 billion, at €31.25 per share.

The offer is 13% higher than that made by PPG on 5 January.
Tikkurila's shares closed at €32.55, 16.5% higher than the prior trading session and 4.1% above Akzo Nobel's non-binding proposal.

Tikkurila was already the subject of a Ppg Industries (PPG US)'s voluntary recommended public cash tender offer for all shares, at €27.75 per share (increased from €25 per share).

PPG increased its bid after Tikkurila said it had received a competing offer (from Hempel AS).
The tender offer period started on 15 January.  

The bid is relatively high and could lead to a bidding war with PPG.

It happens in the midst of a bidding war, offering over a 113% premium vs. where Tikkurila was trading three months prior to when it became in play
There's the risk of a winning curse.

Both PPG and Akzo Nobel seems willing to pay dearly for market share in Scandinavia, the Baltic region and beyond (China and Russia). Cost synergies do not seem to be the main reason for the bid

Cost synergies could be relevant in raw metals and logistics, and would probably  be higher for Akzo Nobel, about 5% of gross sales, than for PPG.
Bidders seem to focus on revenue synergies.

In spite of the latest consolidation moves, the industry remains very fragmented with c. 50% of global revenues coming from small producers.

Acquisitions are generally under 10x EV/EBITDA with synergies. Targets  typically can be brought in a relatively short time-frame to the higher margins of the larger scale acquirers.
Tikkurila is already trading at 17.4x EV/2020e EBITDA.

Putting Tikkurila on the same EV/EBITDA multiple of PPG, 16.55x EV/2020e EBITDA, I obtain an equity value of €30.87. Adding €2.5 per share worth of synergies (lower for PPG than in the case of Akzo Nobel), gives €33.38 per share,

c. 7% higher than the offer by Akzo Nobel and 2.5% higher than the last close price on 18 January.
Another raise could be the next move for PPG. Akzo Nobel is watching closely and surely is counting on it.
Like in the case of G4S, Tikkurila seems to be a scarce asset (at least for both bidders), that was undervalued and attracting plenty of courtship right now.

Recommendation is LONG Tikkurila, TP  33.38.

Akzo Nobel Tops PPG's Offer for Tikkurila

<div><p><a href="https://www.smartkarma.com/entities/nanofilm-technologies-international" target="_blank" data-smartkarma-citation="entities:29700:1" rel="noopener">Nanofilm Technologies International (NTI SP)</a> designs, manufactures, and assembles its proprietary coating equipment (and auxiliary equipment and spare parts), and develops and provides its surface solutions and advanced materials in-house. At the proposed IPO price of S$2.59 per share, Nanofilm will have a market cap of S$1.7 billion ($1.3 billion). Nanofilm will raise proceeds of S$470 million ($346 million) with primary/secondary spilt of 42.5%/57.5%. Thirteen cornerstone investors will subscriber for 104.3 million of the offer shares.  </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/nanofilm-technologies-ipo-initiation-layer-by-layer" target="_blank" rel="noopener">our initiation note</a>, we highlighted that Nanofilm is an attractive growth story underpinned by proprietary technology, growing addressable markets, high customer stickiness, attractive margin profile and strong cash conversion. Our valuation analysis suggests that the IPO valuation is attractive. </p></div></div></div>

Nanofilm Technologies International (NTI SP) designs, manufactures, and assembles its proprietary coating equipment (and auxiliary equipment and spare parts), and develops and provides its surface solutions and advanced materials in-house. At the proposed IPO price of S$2.59 per share, Nanofilm will have a market cap of S$1.7 billion ($1.3 billion). Nanofilm will raise proceeds of S$470 million ($346 million) with primary/secondary spilt of 42.5%/57.5%. Thirteen cornerstone investors will subscriber for 104.3 million of the offer shares.  In our initiation note, we highlighted that Nanofilm is an attractive growth story underpinned by proprietary technology, growing addressable markets, high customer stickiness, attractive margin profile and strong cash conversion. Our valuation analysis suggests that the IPO valuation is attractive. 

Nanofilm Technologies IPO: Valuation Insights

United States

PPG Industries, Inc. supplies products for the manufacturing, construction, automotive, chemical processing, and other industries worldwide.  The Company makes protective and decorative coatings, flat glass, fabricated glass products, continuous-strand fiber glass products, and industrial and specialty chemicals.

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Ppg Industries (PPG US)

Nippon Paint (4612) Secondary Pricing Approaches - Cheaper But...

The Nippon Paint (4612) Secondary likely prices 17 January after the stock has fallen 24% in a week since the announcement. It's cheaper. It's not...

Travis Lundy

Avia Avian IPO: Valuation Insights

Our valuation analysis suggests that Avia is fully priced at the IPO price range. Consequently, we would remain on the sidelines seeking a lower...

Arun George

Avia Avian IPO Initiation: Painting by Numbers

Avia is seeking to raise up to $405 million at an IPO price range of IDR780-930. Avia is delivering robust growth, rising group margins and strong...

Arun George

Akzo Nobel Tops PPG's Offer for Tikkurila

Tikkurila seems to be a scarce asset (at least for both bidders), that was undervalued and attracting plenty of courtship right now (like G4S)....

Jesus Rodriguez Aguilar

Nanofilm Technologies IPO: Valuation Insights

Nanofilm will raise proceeds of S$470 million ($346 million) with primary/secondary spilt of 42.5%/57.5%. Our valuation analysis suggests that the...

Arun George

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