Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Overseas: SPX +0.1% , Nasdaq +0.1%; Relatively stable day. Walmart stock -8% on cautious outlook, Burberry -9% on weak luxury spend</li>
<li>Today: NKY Futs -0.1% v cash. JPY 150.8/$; Japan to scrap quarterly reporting? Asahi Group Share Offering</li>
<li>ValueAct’s investment into Recruit highlights continued opportunities and value in the Japanese market</li>
</ul>


Overseas: SPX +0.1% , Nasdaq +0.1%; Relatively stable day. Walmart stock -8% on cautious outlook, Burberry -9% on weak luxury spend
Today: NKY Futs -0.1% v cash. JPY 150.8/$; Japan to scrap quarterly reporting? Asahi Group Share Offering
ValueAct’s investment into Recruit highlights continued opportunities and value in the Japanese market


Ohayo Japan | November Rally Takes a Rest; ValueAct Finds Value in Recruit

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>
<a href="https://www.smartkarma.com/entities/benefit-one-inc" target="_blank" data-smartkarma-citation="entities:14502:1" rel="noopener">Benefit One Inc (2412 JP)</a> announced a partial tender offer from <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> at JPY1,600 per share, a 40.0% premium to the undisturbed price. </li>
<li>The transaction facilitates <a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona Group (2168 JP)</a>'s exit. The offer is for a minimum of 81.2 million shares (51.16% ownership ratio) and a maximum of 87.3 million shares (55.00%). </li>
<li>Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The offer is light vs. historical multiples and share prices. </li>
</ul>



Benefit One Inc (2412 JP) announced a partial tender offer from M3 Inc (2413 JP) at JPY1,600 per share, a 40.0% premium to the undisturbed price. 
The transaction facilitates Pasona Group (2168 JP)'s exit. The offer is for a minimum of 81.2 million shares (51.16% ownership ratio) and a maximum of 87.3 million shares (55.00%). 
Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The offer is light vs. historical multiples and share prices. 


Benefit One (2412 JP): M3’s Partial Tender Offer

APAC IPOs & Placements, Aequitas Research

Ethan Aw

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

Renesas Electronics / Equity Capital Markets

<ul>
<li>INCJ aims to raise around US$1.8bn via a secondary sell-down in <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a>. This will be a clean-up trade as INCJ has been paring down its stake. </li>
<li>The deal is a slightly large one to digest at 12 days of three month ADV and around 6% of current mcap.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>


INCJ aims to raise around US$1.8bn via a secondary sell-down in Renesas Electronics (6723 JP). This will be a clean-up trade as INCJ has been paring down its stake. 
The deal is a slightly large one to digest at 12 days of three month ADV and around 6% of current mcap.
In this note, we will talk about the placement and run the deal through our ECM framework.


Renesas Electronics Placement - Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

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.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a>  reported 2QFY03/2024 results today. Revenues decreased YoY due to decline in HR Tech revenues, while operating profit for the quarter increased YoY. OP missed consensus marginally.</li>
<li>As we expected, the new pricing model has negatively impacted HR Tech revenues, and the segment’s earnings are forecast to decline further going into the second half.</li>
<li>There is further downside to earnings and the company's share price has moved up during the last few days, and we are set to nicely gain on the Short side.</li>
</ul>



Recruit Holdings (6098 JP)  reported 2QFY03/2024 results today. Revenues decreased YoY due to decline in HR Tech revenues, while operating profit for the quarter increased YoY. OP missed consensus marginally.
As we expected, the new pricing model has negatively impacted HR Tech revenues, and the segment’s earnings are forecast to decline further going into the second half.
There is further downside to earnings and the company's share price has moved up during the last few days, and we are set to nicely gain on the Short side.


Recruit 2Q: Earnings Further Slows Down; 2H To Be Even More Challenging

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.</li>
<li>Our main pre-event candidate <a href="https://www.smartkarma.com/entities/celsys-inc" target="_blank" data-smartkarma-citation="entities:20774:1" rel="noopener">CELSYS (3663 JP)</a> has outperformed TOPIX by ~12.6% since 1 Sep (when it was highlighted) and 6 Nov 2023.</li>
<li>There are three TOPIX Inclusion events confirmed for the end of November and two other interesting pre-event names we are closely monitoring.</li>
</ul>


Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Our main pre-event candidate CELSYS (3663 JP) has outperformed TOPIX by ~12.6% since 1 Sep (when it was highlighted) and 6 Nov 2023.
There are three TOPIX Inclusion events confirmed for the end of November and two other interesting pre-event names we are closely monitoring.


TOPIX Inclusions: Who Is Ready (Nov 2023)

Japan

Recruit Holdings Co. Ltd. operates information providing services in human resource, housing, bridal, travel, restaurants, beauty, automobiles, and education and more. The company also operate staffing services and advertising business.

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Recruit Holdings (6098 JP)

Ohayo Japan | November Rally Takes a Rest; ValueAct Finds Value in Recruit

Walmart and Burberry stocks decline, Japan considers scrapping quarterly reporting, ValueAct invests in Recruit. Japanese market offers...

Mark Chadwick

Benefit One (2412 JP): M3’s Partial Tender Offer

Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The JPY1,600 partial offer is light vs....

Arun George

Renesas Electronics Placement - Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help

INCJ aims to raise around US$1.8bn via a secondary sell-down in Renesas Electronics (6723 JP). This will be a clean-up trade as INCJ has been...

Ethan Aw

Recruit 2Q: Earnings Further Slows Down; 2H To Be Even More Challenging

Recruit's 2Q revenues further declined due to slowdown in HR Tech business. The new pricing model has negatively impacted HR Tech, earnings are...

Shifara Samsudeen, FCMA, CGMA

TOPIX Inclusions: Who Is Ready (Nov 2023)

Celsys, Visional, and Core Concept Technologies are interesting pre-event names for TOPIX Inclusion Events worth tracking over the next few months.

Janaghan Jeyakumar, CFA

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Ohayo Japan | November Rally Takes a Rest; ValueAct Finds Value in Recruit

​Walmart and Burberry stocks decline, Japan considers scrapping quarterly reporting, ValueAct invests in Recruit. Japanese market offers...

Mark Chadwick

Benefit One (2412 JP): M3’s Partial Tender Offer

Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The JPY1,600 partial offer is light vs....

Arun George

Renesas Electronics Placement - Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help

INCJ aims to raise around US$1.8bn via a secondary sell-down in Renesas Electronics (6723 JP). This will be a clean-up trade as INCJ has been...

Ethan Aw

Recruit 2Q: Earnings Further Slows Down; 2H To Be Even More Challenging

​Recruit's 2Q revenues further declined due to slowdown in HR Tech business. The new pricing model has negatively impacted HR Tech, earnings are...

Shifara Samsudeen, FCMA, CGMA

TOPIX Inclusions: Who Is Ready (Nov 2023)

Celsys, Visional, and Core Concept Technologies are interesting pre-event names for TOPIX Inclusion Events worth tracking over the next few months.

Janaghan Jeyakumar, CFA

Walmart and Burberry stocks decline, Japan considers scrapping quarterly reporting, ValueAct invests in Recruit. Japanese market offers...

Recruit's 2Q revenues further declined due to slowdown in HR Tech business. The new pricing model has negatively impacted HR Tech, earnings are...