Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

Thematic (Sector/Industry)

The vote to leave the European Union will have both shorter and longer term impacts on the UK economy. There will be a shorter term impact on demand and, separately, on potential supply. The longer term one will depend largely on the policy response. Any decline in demand can in principle be offset by a lower exchange rate or by fiscal or monetary stimulus. A reduction in potential supply can only be offset, after a delay, by increased investment. This is therefore the key challenge and policy success will be determined by the extent to which investment is stimulated and adequate long- term growth thereby assured. In addition, there is also likely to be a reduction in living standards through a deterioration in the terms of trade as a result of weaker sterling, but this was in any event likely as the exchange rate appeared overvalued before the vote.

The vote to leave the European Union will have both shorter and longer term impacts on the UK economy. There will be a shorter term impact on demand and, separately, on potential supply. The longer term one will depend largely on the policy response. Any decline in demand can in principle be offset by a lower exchange rate or by fiscal or monetary stimulus. A reduction in potential supply can only be offset, after a delay, by increased investment. This is therefore the key challenge and policy success will be determined by the extent to which investment is stimulated and adequate long- term growth thereby assured. In addition, there is also likely to be a reduction in living standards through a deterioration in the terms of trade as a result of weaker sterling, but this was in any event likely as the exchange rate appeared overvalued before the vote.  

Chairman, sgtradex

Tan Chin-Hwee

Chairman

Cameron has to take the fall as he took a huge strategic risk for partisan reasons, misreading the mood. The question is: do you as a business owner hire and invest?Uncertainty is often lumped together as risk but there is a different: risk can be measured but uncertainty cannot. Daniel Ellsberg devised the famous experiment where there are 2 jars. The first jar, you are told, contains 50 red balls and 50 black balls. The 2nd jars contain 100 red and black balls but the number of each is…

Cameron has to take the fall as he took a huge strategic risk for partisan reasons, misreading the mood. The question is: do you as a business owner hire and invest?Uncertainty is often lumped together as risk but there is a different: risk can be measured but uncertainty cannot. Daniel Ellsberg devised the famous experiment where there are 2 jars. The first jar, you are told, contains 50 red balls and 50 black balls. The 2nd jars contain 100 red and black balls but the number of each is…

Markets from Here-Uncertainty Is NOT Risk

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<a href="https://www.smartkarma.com/entities/sanne-group-plc" target="_blank" data-smartkarma-citation="entities:22155:1" rel="noopener">Sanne Group PLC (SNN LN)</a> has agreed to a £1.51 billion takeover by Apex, a PE-backed competing provider of services to the financial industry.
The offer is 920p/share, 0.5% above my estimate of fair value of 915p (see <a href="https://www.smartkarma.com/insights/cinven-sweetens-possible-offer-for-sanne" target="_blank" data-smartkarma-citation="insights:52932" rel="noopener">Cinven Sweetens Possible Offer for Sanne</a> ), and c. £90 mn higher than the previous prospective offer from Cinven (at 875p/share).
<ul>
<li>For an implied equity value of c. £1,509.4 mn and implied EV of £1,625.2 mn; 24.7x EV/21e EBITDA and 33.5x Fwd P/E (Capital IQ consensus).</li>
</ul>
The bid represents a further move in the consolidation of a sector that has proved resilient during the pandemic.
Sanne closed at 932p on 27 August, 1.3% above Apex's offer, and c. 11% higher than the levels the shares traded when I reiterated my long recommendation. The market believes there will be a counteroffer from Cinven.
Cinven must make an offer <a href="https://www.sannegroup.com/media/yt0jx1bc/continued-discussions-with-cinven-and-pusu-extension.pdf" target="_blank" rel="noopener">before</a><a href="https://www.sannegroup.com/media/yt0jx1bc/continued-discussions-with-cinven-and-pusu-extension.pdf" target="_blank" rel="noopener"> 5.00pm on 30 August</a>. This time Cinven will highly likely make a serious counteroffer as opposed to the previous low-ball bids, in my view. A bid could come at levels close to 950p/share, 3.2% above Apex's offer, 29.7x P/22e E (on Capital IQ consensus), which does not sound excessive. The industry is consolidating and with money inflows into alternative assets, great benefits could be captured from gaining scale. Reiterate long SNN LN.
Sanne belongs to the FTSE 250 index.

Sanne Group PLC (SNN LN) has agreed to a £1.51 billion takeover by Apex, a PE-backed competing provider of services to the financial industry.
The offer is 920p/share, 0.5% above my estimate of fair value of 915p (see Cinven Sweetens Possible Offer for Sanne ), and c. £90 mn higher than the previous prospective offer from Cinven (at 875p/share).

For an implied equity value of c. £1,509.4 mn and implied EV of £1,625.2 mn; 24.7x EV/21e EBITDA and 33.5x Fwd P/E (Capital IQ consensus).

The bid represents a further move in the consolidation of a sector that has proved resilient during the pandemic.
Sanne closed at 932p on 27 August, 1.3% above Apex's offer, and c. 11% higher than the levels the shares traded when I reiterated my long recommendation. The market believes there will be a counteroffer from Cinven.
Cinven must make an offer before 5.00pm on 30 August. This time Cinven will highly likely make a serious counteroffer as opposed to the previous low-ball bids, in my view. A bid could come at levels close to 950p/share, 3.2% above Apex's offer, 29.7x P/22e E (on Capital IQ consensus), which does not sound excessive. The industry is consolidating and with money inflows into alternative assets, great benefits could be captured from gaining scale. Reiterate long SNN LN.
Sanne belongs to the FTSE 250 index.

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

For our next Smartkarma Webinar, we have the pleasure of welcoming back Insight Provider <a href="https://www.smartkarma.com/profiles/jesus-rodriguez-aguilar" target="_blank" data-smartkarma-citation="accounts:5842" rel="noopener">Jesus Rodriguez Aguilar</a> to go over ideas in European Event-Driven. Jesus will examine offers that target FTSE 250 companies (particularly in healthcare and financial services); the real estate sector in Central and Eastern Europe; and special situations in European share classes and holding companies.
<h3>The webinar was hosted on Wednesday, 16 June 2021, 17:00 SGT/HKT.<a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=89974520966" target="_blank" rel="noopener"></a>
</h3>
Watch the session here:
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Jesus Rodriguez Aguilar is an Event-Driven Analyst looking across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations.

For our next Smartkarma Webinar, we have the pleasure of welcoming back Insight Provider Jesus Rodriguez Aguilar to go over ideas in European Event-Driven. Jesus will examine offers that target FTSE 250 companies (particularly in healthcare and financial services); the real estate sector in Central and Eastern Europe; and special situations in European share classes and holding companies.
The webinar was hosted on Wednesday, 16 June 2021, 17:00 SGT/HKT.

Watch the session here:
Or subscribe to our podcast feed and listen on the go:

Jesus Rodriguez Aguilar is an Event-Driven Analyst looking across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations.

Smartkarma Webinar | European Event-Driven: Top Ideas

In my previous Insight about Sanne, I said an improved price for the intended offer by Cinven for <a href="https://www.smartkarma.com/entities/sanne-group-plc" target="_blank" data-smartkarma-citation="entities:22155:1" rel="noopener">Sanne Group PLC (SNN LN)</a>  before the PUSU deadline was highly likely (see <a href="https://www.smartkarma.com/insights/cinven-sanne-pusu-deadline-is-tomorrow" target="_blank" data-smartkarma-citation="insights:52390" rel="noopener">Cinven/Sanne: PUSU Deadline Is Tomorrow</a> ).
As it happens, on 11 June Cinven increased the price of its possible offer from 850p to 875p, which may be the prelude to the final stages to the game of brinksmanship between Cinven and Sanne.
The Board of Sanne confirmed it had consequently decided to enter into discussions with Cinven. The Takeover Panel consented to an extension of the PUSU deadline, until 17:00 on 9 July 2021.
Medium and long-term structural growth prospects for alternative assets remained strong, irrespective of the pandemic. For instance, Sanne saw a robust top line organic growth performance and good double-digit profit growth in 2020 despite a significant slowdown in its target markets.
Management suggests that Sanne could scale and expand its highly cash-generative and defensive model (indeed Sanne is a specialist in hedge funds, private debt, private equity, real assets, venture capital, as well as accounting, administration, fiduciary, governance and tax compliance services) and that its acquisitions-led strategy can surpass Capital IQ consensus estimates of £52.36 mn by 2023. Indeed Capital IQ consensus points to a double-digit revenue growth until 2023e.
On 11 June, Sanne closed at 840p, c.9% above the previous closing price (VWAP was 855p with c. £20 mn traded).
Gross spread to last prospective offer is 4%, which I think is an interesting level as there are high chances that the fifth offer was the opening gambit for the Board to engage in discussions leading to an increased offer. There may be further upside, albeit not a knock-out offer. My fair value estimate is 915p (4% above the offer).
Reiterate Buy SNN LN.
This is the latest offer by a private equity group on a UK midcap, after Aggreko, Equiniti, John Laing, Signature, UDG Healthcare (all covered here), and others such as St Mowden and Marston's. Pandemic and Brexit have had an impact on valuations and some investors are picking up bargains.

In my previous Insight about Sanne, I said an improved price for the intended offer by Cinven for Sanne Group PLC (SNN LN)  before the PUSU deadline was highly likely (see Cinven/Sanne: PUSU Deadline Is Tomorrow ).
As it happens, on 11 June Cinven increased the price of its possible offer from 850p to 875p, which may be the prelude to the final stages to the game of brinksmanship between Cinven and Sanne.
The Board of Sanne confirmed it had consequently decided to enter into discussions with Cinven. The Takeover Panel consented to an extension of the PUSU deadline, until 17:00 on 9 July 2021.
Medium and long-term structural growth prospects for alternative assets remained strong, irrespective of the pandemic. For instance, Sanne saw a robust top line organic growth performance and good double-digit profit growth in 2020 despite a significant slowdown in its target markets.
Management suggests that Sanne could scale and expand its highly cash-generative and defensive model (indeed Sanne is a specialist in hedge funds, private debt, private equity, real assets, venture capital, as well as accounting, administration, fiduciary, governance and tax compliance services) and that its acquisitions-led strategy can surpass Capital IQ consensus estimates of £52.36 mn by 2023. Indeed Capital IQ consensus points to a double-digit revenue growth until 2023e.
On 11 June, Sanne closed at 840p, c.9% above the previous closing price (VWAP was 855p with c. £20 mn traded).
Gross spread to last prospective offer is 4%, which I think is an interesting level as there are high chances that the fifth offer was the opening gambit for the Board to engage in discussions leading to an increased offer. There may be further upside, albeit not a knock-out offer. My fair value estimate is 915p (4% above the offer).
Reiterate Buy SNN LN.
This is the latest offer by a private equity group on a UK midcap, after Aggreko, Equiniti, John Laing, Signature, UDG Healthcare (all covered here), and others such as St Mowden and Marston's. Pandemic and Brexit have had an impact on valuations and some investors are picking up bargains.

United Kingdom

Sanne Group PLC was a global provider of outsourced administration, reporting, and fiduciary services, specializing in fund administration for alternative assets like private equity, private debt, real assets, and hedge funds. They also offered corporate governance, compliance, and depositary solutions. The company was founded in 1988 in Jersey, Channel Islands, and was headquartered in London, United Kingdom prior to its acquisition by Apex Group in August 2022.

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Sanne (SNN LN)

The UK Economy - After Brexit

The vote to leave the European Union will have both shorter and longer term impacts on the UK economy. There will be a shorter term impact on...

Pelham Smithers Associates

Markets from Here-Uncertainty Is NOT Risk

Cameron has to take the fall as he took a huge strategic risk for partisan reasons, misreading the mood. The question is: do you as a business...

Tan Chin-Hwee

Apex Leads Takeover Contest for Sanne

Sanne closed 1.3% above Apex's, c.11% higher than when my last long recommendation. PUSU 5.00pm/30 August. Cinven will make a serious counteroffer...

Jesus Rodriguez Aguilar

Smartkarma Webinar | European Event-Driven: Top Ideas

On 16 June, 5pm SGT, join us and Jesus Rodriguez Aguilar to go over top ideas in European Event-Driven, including offers that target FTSE 250...

Smartkarma Research

Cinven Sweetens Possible Offer for Sanne

Gross spread to last prospective offer is 4%, an interesting level as the fifth offer may be the opening gambit for discussions leading to an...

Jesus Rodriguez Aguilar

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