IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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/makino-milling-machine-co" target="_blank" data-smartkarma-citation="entities:5200:1" rel="noopener">Makino Milling Machine Co (6135 JP)</a> has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.</li>
<li>My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.</li>
<li>
<a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec Corp (6594 JP)</a> will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.</li>
</ul>



Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.

Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.


Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

<ul>
<li>On 27 December, <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec Corp (6594 JP)</a> announced a hostile preconditional tender offer for <a href="https://www.smartkarma.com/entities/makino-milling-machine-co" target="_blank" data-smartkarma-citation="entities:5200:1" rel="noopener">Makino Milling Machine Co (6135 JP)</a> at JPY11,000 per share.</li>
<li>The Board has raised several issues with the Nidec proposal through two questionnaires. Some assertions are valid, while others do not stand up to scrutiny.</li>
<li>The Board has launched an ambitious MTM plan to thwart the offer and hinted at potential competing offers. Nidec’s offer increasingly needs a bump. </li>
</ul>


On 27 December, Nidec Corp (6594 JP) announced a hostile preconditional tender offer for Makino Milling Machine Co (6135 JP) at JPY11,000 per share.
The Board has raised several issues with the Nidec proposal through two questionnaires. Some assertions are valid, while others do not stand up to scrutiny.
The Board has launched an ambitious MTM plan to thwart the offer and hinted at potential competing offers. Nidec’s offer increasingly needs a bump. 


Makino Milling Machine (6135 JP): State of Play

Japan Experts, Extraordinary Performance, Astris Advisory Japan

Astris Advisory Japan

Japan Experts, Extraordinary Performance

Our Corporate Advisory service is designed to give clients access to a wider range of investors. These include Japan specialists as well as global investors. The goal is to help achieve a fair equity valuation.

Equity Bottom-Up

<ul><li>Reforms transforming returns – Although the demand environment remains somewhat mixed, we believe that demand has bottomed for the key product Electronic Discharge Machines.</li><li>Q1-3 FY12/24 results highlighted that definitive progress is being made in terms of raising returns through structural reforms.</li><li>This focus on raising profitability can be seen through upselling activities and improved factory utilization.</li></ul>

Reforms transforming returns – Although the demand environment remains somewhat mixed, we believe that demand has bottomed for the key product Electronic Discharge Machines.Q1-3 FY12/24 results highlighted that definitive progress is being made in terms of raising returns through structural reforms.This focus on raising profitability can be seen through upselling activities and improved factory utilization.

Sodick (6143 JP) - Key Metrics Point to Recovery and Upside

<ul><li>Q1-2FY12/24 results were a positive surprise in our view.</li><li>Quarterly Q2 FY12/24 OPM of 4% returned to positive territory after four consecutive quarters of losses, driven by a combination of price hikes, revision to the product line-up to improve sales mix, restructuring measures, and sales volume expansion with a marked jump in China demand for electronic discharge machines.</li><li>We believe Sodick has begun to transform to become more resilient and operationally efficient. </li></ul>

Q1-2FY12/24 results were a positive surprise in our view.Quarterly Q2 FY12/24 OPM of 4% returned to positive territory after four consecutive quarters of losses, driven by a combination of price hikes, revision to the product line-up to improve sales mix, restructuring measures, and sales volume expansion with a marked jump in China demand for electronic discharge machines.We believe Sodick has begun to transform to become more resilient and operationally efficient. 

Sodick (6143) - An Upbeat Result Reflecting Transformational Efforts

<ul><li>An uplift in China orders – Q1 FY12/24 results saw a continued decline in sales by 7.4% YoY and 9.3% QoQ.</li><li>However, the core Machine Tools segment saw flat sales QoQ, and order visibility improved with China orders rising by 39.4% QoQ albeit from a low base.</li><li>Cost reduction efforts have commenced and are set to accelerate into Q2 FY12/24 which should improve the scope for profitability, although ultimately this will be sales volume dependent. </li></ul>

An uplift in China orders – Q1 FY12/24 results saw a continued decline in sales by 7.4% YoY and 9.3% QoQ.However, the core Machine Tools segment saw flat sales QoQ, and order visibility improved with China orders rising by 39.4% QoQ albeit from a low base.Cost reduction efforts have commenced and are set to accelerate into Q2 FY12/24 which should improve the scope for profitability, although ultimately this will be sales volume dependent. 

Sodick (6143 JP) - Incremental Progress Is Being Made

Japan

Sodick Co., Ltd. develops, manufactures, and sells electric machines and equipment.  The Company's product line includes computerized numerical control electrical discharge machine (EDM), super high precision wire cut EDM, CAD/CAM system for mold design and production, injection molding machine, and high speed manual drilling machine.

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Sodick Co Ltd (6143 JP)

Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the...

Arun George

Makino Milling Machine (6135 JP): State of Play

The Board has launched an ambitious MTM plan to thwart the offer and hinted at potential competing offers. Nidec’s offer increasingly needs a bump.

Arun George

Sodick (6143 JP) - Key Metrics Point to Recovery and Upside

Although the demand environment remains somewhat mixed, we believe that demand has bottomed for the key product Electronic Discharge Machines.

Astris Advisory Japan

Sodick (6143) - An Upbeat Result Reflecting Transformational Efforts

Q1-2FY12/24 results were a positive surprise in our view. Quarterly Q2 FY12/24 OPM of 4% returned to positive territory after four consecutive...

Astris Advisory Japan

Sodick (6143 JP) - Incremental Progress Is Being Made

Sodick continues to execute its business transformation efforts, and we believe with a demand recovery scenario the company will be better...

Astris Advisory Japan

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