Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>Z Holdings will integrate its eCommerce platforms in a move that boosts the PayPay brand and may generate some (very) modest synergies</li>
<li>We are publishing updated forecasts and setting a new target price at ¥550 but we remain cautious on the shares in the near term as consensus remains high</li>
<li>Shares of ZHD still appear expensive at 14-16x our estimate of FY22e EBITDA and are more expensive than Alphabet at these levels (12x EBITDA)</li>
</ul>


Z Holdings will integrate its eCommerce platforms in a move that boosts the PayPay brand and may generate some (very) modest synergies
We are publishing updated forecasts and setting a new target price at ¥550 but we remain cautious on the shares in the near term as consensus remains high
Shares of ZHD still appear expensive at 14-16x our estimate of FY22e EBITDA and are more expensive than Alphabet at these levels (12x EBITDA)


Z Holdings (Neutral) - PayPay Rebranding of ECommerce; We Remain Cautious in a Rebuilding Year

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, 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.

Event-Driven

<ul>
<li>TPG Telecom was formed by a merger of Vodafone and TPG in Jul 2020. The merger resulted in the shares owned by Vodafone, Hutchison and DavidTeoh, being put in escrow.</li>
<li>The lockup on those shares will expire this month. David Teoh, TPG’s founder, has sold some stock before in Dec 21 and could look to exit his remaining shareholding.</li>
<li>In this note, we talk about the upcoming lock-up release and its dynamics.</li>
</ul>


TPG Telecom was formed by a merger of Vodafone and TPG in Jul 2020. The merger resulted in the shares owned by Vodafone, Hutchison and DavidTeoh, being put in escrow.
The lockup on those shares will expire this month. David Teoh, TPG’s founder, has sold some stock before in Dec 21 and could look to exit his remaining shareholding.
In this note, we talk about the upcoming lock-up release and its dynamics.


TPG Telecom Possible Selldown - Founder Could Look to Raise up to US$1bn with a Clean Exit

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

<ul>
<li>One of Japan’s largest internet companies, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> applied to list its consolidated subsidiary, <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (EBANKZ JP)</a> on the Tokyo Stock Exchange on the 4th of July.</li>
<li>With steady customer account growth mostly assured through leveraging Rakuten’s eco-system with more than 36.0m monthly active users, Rakuten Bank is likely to be valued at over ¥500bn.</li>
<li>Thus, we think the Rakuten Bank IPO could change Rakuten’s fortunes and help the share price bounce back from a 10-year low level.</li>
</ul>


One of Japan’s largest internet companies, Rakuten Inc (4755 JP) applied to list its consolidated subsidiary, Rakuten Bank (EBANKZ JP) on the Tokyo Stock Exchange on the 4th of July.
With steady customer account growth mostly assured through leveraging Rakuten’s eco-system with more than 36.0m monthly active users, Rakuten Bank is likely to be valued at over ¥500bn.
Thus, we think the Rakuten Bank IPO could change Rakuten’s fortunes and help the share price bounce back from a 10-year low level.


Rakuten's Fortunes Could Change With The Rakuten Bank IPO

<ul>
<li>KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints </li>
<li>There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)</li>
<li>Looking past near-term weakness, KDDI remains an attractive defensive play </li>
</ul>


KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints 
There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)
Looking past near-term weakness, KDDI remains an attractive defensive play 


KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

<ul>
<li>Rakuten's stake in Goto is worth ¥13bn and the IPO of the latter in April and the subsequent value re-rating could provide some (very) modest offset to operating losses</li>
<li>Our forecasts remain unchanged from our mid-month update although we would flag up potential electricity resale upside for Rakuten and the sector from utility resale </li>
<li>We have lowered our price target to ¥1,000 from ¥1,150 but uncertainty over the timing of a Bank listing, mobile recovery and return to profitability keep us cautious</li>
</ul>


Rakuten's stake in Goto is worth ¥13bn and the IPO of the latter in April and the subsequent value re-rating could provide some (very) modest offset to operating losses
Our forecasts remain unchanged from our mid-month update although we would flag up potential electricity resale upside for Rakuten and the sector from utility resale 
We have lowered our price target to ¥1,000 from ¥1,150 but uncertainty over the timing of a Bank listing, mobile recovery and return to profitability keep us cautious


Rakuten (Neutral) - A Surprising Win with Goto Although Its Mobile Challenges Remain

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Z Holdings (Neutral) - PayPay Rebranding of ECommerce; We Remain Cautious in a Rebuilding Year

Z Holdings will integrate its two eCommerce platforms but this appears to be more about ambitious growth targets for fintech. We are publishing new...

Kirk Boodry

TPG Telecom Possible Selldown - Founder Could Look to Raise up to US$1bn with a Clean Exit

TPG Telecom was formed by a merger of Vodafone and TPG in Jul 2020. The merger resulted in the shares owned by Vodafone, Hutchison and David Teoh,...

Sumeet Singh

Rakuten's Fortunes Could Change With The Rakuten Bank IPO

The market is generally appreciative of Rakuten when its Internet Services performs and is quick to punish it when the Mobile business fails. The...

Oshadhi Kumarasiri

KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

KDDI's network outage was large-scale but financial and operational impacts should be limited to Q2 and our overall outlook on the stock as an...

Kirk Boodry

Rakuten (Neutral) - A Surprising Win with Goto Although Its Mobile Challenges Remain

The IPO of Goto was a win for Softbank Vision Fund but Rakuten has also come out well surfacing ¥13bn in value from early stage investments and...

Kirk Boodry

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