Telco/Internet specialist

Kirk Boodry

Redex Research

Thematic (Sector/Industry)

<p>The Nikkei reports the Ministry of Industry Affairs and Communications (MIC, the regulator) will not allow NTT’s local exchange companies to give a wholly owned DoCoMo preferential treatment. This is not surprising and whilst it may modestly impact sentiment in the near-term, the real issue is competition in selling integrated fixed-wireless services to corporate users and that will develop no matter how NTT is regulated.  Meanwhile, a shift in political and regulatory focus away from mobile pricing is good news for everyone and we remain overweight with NTT as our top pick.</p>

The Nikkei reports the Ministry of Industry Affairs and Communications (MIC, the regulator) will not allow NTT’s local exchange companies to give a wholly owned DoCoMo preferential treatment. This is not surprising and whilst it may modestly impact sentiment in the near-term, the real issue is competition in selling integrated fixed-wireless services to corporate users and that will develop no matter how NTT is regulated.  Meanwhile, a shift in political and regulatory focus away from mobile pricing is good news for everyone and we remain overweight with NTT as our top pick.

Japan Telecom Sector - Regulator to Signal Level Playing Field for DoCoMo

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Ebook Initiative Japan Co Ltd / Event-Driven

<p>Back in April I discussed how those looking at <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> on an EV/EBITDA basis would be measuring the company incorrectly. The insight was <a href="https://www.smartkarma.com/insights/softbank-corp-accounting-for-the-accounting-is-complicated" target="_blank" data-smartkarma-citation="insights:50684" rel="noopener">Softbank Corp - Accounting for The Accounting Is Complicated</a>.</p><p>Yeah... it was an accounting thing. </p><p>When you look at Softbank Corp and its consolidated revenues and EBITDA, you were looking at the parent co business of telecoms, then because Softbank Corp owned 50% of a company which owned 65% of <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a> which itself consolidated <a href="https://www.smartkarma.com/entities/ebook-initiative-japan-co-lt" target="_blank" data-smartkarma-citation="entities:10613:1" rel="noopener">Ebook Initiative Japan Co Lt (3658 JP)</a> because of the 43% it held, it meant that Softbank Corp consolidated 100% of the top line but only 14% of the bottom line. </p><p>That is about to get weirder as LINE Digital Frontier has just announced a Tender Offer to take out "minorities" in Ebook Initiative Japan at ¥4750/share. That takeout price is a lifetime high, a 4-bagger since covid-crash lows, 10x book, 550+x EBITDA and one could add more comments that suggest it is a superlative exit for investors. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/841/original/Screenshot+2021-09-30+at+3.58.23+PM.png?1632988893" class="editor-image img-responsive" data-smartkarma-image-id="232841"></figure></section><p>Those things are nice, but....</p><p>But it is likely to tick off some people. I discuss why in more detail below but a summary can be...</p><p>This kind of transaction is yet another situation where the METI Fair M&amp;A Guidelines introduced in summer 2019 have been roundly ignored. There is a lack of good procedure and governance, the valuation is inadequate, the advise provided insufficient, the price manifestly too low, synergies explicitly unaccounted for, no fairness opinion, and the takeover premium is as low as I have seen. </p><p>And other than that Mrs Lincoln, how was the play?</p><p>This situation begs for some cowbell (and, obviously, <a href="https://www.smartkarma.com/insights/japan-needs-more-cowbell" target="_blank" data-smartkarma-citation="insights:41191" rel="noopener">Japan Needs More Cowbell</a>) </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/870/original/more+cowbell.gif?1632996696" class="editor-image img-responsive" data-smartkarma-image-id="232870"></figure></section><p>Much more below the fold. </p>

Back in April I discussed how those looking at Softbank Corp (9434 JP) on an EV/EBITDA basis would be measuring the company incorrectly. The insight was Softbank Corp - Accounting for The Accounting Is Complicated.Yeah... it was an accounting thing. When you look at Softbank Corp and its consolidated revenues and EBITDA, you were looking at the parent co business of telecoms, then because Softbank Corp owned 50% of a company which owned 65% of Z Holdings (4689 JP) which itself consolidated Ebook Initiative Japan Co Lt (3658 JP) because of the 43% it held, it meant that Softbank Corp consolidated 100% of the top line but only 14% of the bottom line. That is about to get weirder as LINE Digital Frontier has just announced a Tender Offer to take out "minorities" in Ebook Initiative Japan at ¥4750/share. That takeout price is a lifetime high, a 4-bagger since covid-crash lows, 10x book, 550+x EBITDA and one could add more comments that suggest it is a superlative exit for investors. Those things are nice, but....But it is likely to tick off some people. I discuss why in more detail below but a summary can be...This kind of transaction is yet another situation where the METI Fair M&amp;A Guidelines introduced in summer 2019 have been roundly ignored. There is a lack of good procedure and governance, the valuation is inadequate, the advise provided insufficient, the price manifestly too low, synergies explicitly unaccounted for, no fairness opinion, and the takeover premium is as low as I have seen. And other than that Mrs Lincoln, how was the play?This situation begs for some cowbell (and, obviously, Japan Needs More Cowbell) Much more below the fold. 

E-Book Initiative (3658 JP) Tender Offer Takeout - This One Needs Cowbell Too

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.

Equity Capital Markets

<div><p>PHC Holdings and its shareholders aim to raise around US$700m, down from US$1.8bn, via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).</p></div><div><p>PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).</p></div><div><p>We have covered the main aspects of the deal in our earlier notes<a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-many-companies-rolled-into-one" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Many companies rolled into one and </a><a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-peer-comparison" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Peer Comparison and</a> <a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">PHC Holdings Pre-IPO - Thoughts on Valuation</a>.</p></div><div><p>In this note we will talk about the IPO valuation.</p></div>

PHC Holdings and its shareholders aim to raise around US$700m, down from US$1.8bn, via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).We have covered the main aspects of the deal in our earlier notes PHC Holdings Pre-IPO - Many companies rolled into one and  PHC Holdings Pre-IPO - Peer Comparison and PHC Holdings Pre-IPO - Thoughts on Valuation.In this note we will talk about the IPO valuation.

PHC Holdings IPO - Should Have Cut the Price, Not Just the Size

Simplex Holdings / Equity Capital Markets

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<p>Simplex Holdings’ shareholders raised around US$300m via selling some of their stake in the company. Simplex has consistently been ranked among the top companies in IDC Fintech rankings over the past nine years.</p>
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<p>We have looked at the company’s past performance in our earlier notes:</p>
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<li>
<a href="https://www.smartkarma.com/insights/simplex-holdings-pre-ipo-steady-topline-growth-but-appears-to-be-at-peak-margins" target="_blank" rel="noopener">Simplex Holdings Pre-IPO - Steady topline growth but appears to be at peak margins</a> and  </li>
<li><a href="https://www.smartkarma.com/insights/simplex-holdings-pre-ipo-peer-comp-valuation-lagging-in-size-but-leading-in-growth-and-margins" target="_blank" rel="noopener">Simplex Holdings Pre-IPO - Peer Comp, Valuation - Lagging in Size but Leading in Growth and Margins and</a></li>
<li><a href="https://www.smartkarma.com/insights/simplex-holdings-ipo-valuation-looks-ok-past-performance-will-weigh-on-sentiment" target="_blank" rel="noopener">Simplex Holdings IPO - Valuation Looks Ok, past Performance Will Weigh on Sentiment</a></li>
</ul>
</div>
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<p>In this note, we'll look at the deal dynamics and provide a table with implied valuation at different share price levels.</p>
</div>


Simplex Holdings’ shareholders raised around US$300m via selling some of their stake in the company. Simplex has consistently been ranked among the top companies in IDC Fintech rankings over the past nine years.


We have looked at the company’s past performance in our earlier notes:




Simplex Holdings Pre-IPO - Steady topline growth but appears to be at peak margins and  
Simplex Holdings Pre-IPO - Peer Comp, Valuation - Lagging in Size but Leading in Growth and Margins and
Simplex Holdings IPO - Valuation Looks Ok, past Performance Will Weigh on Sentiment



In this note, we'll look at the deal dynamics and provide a table with implied valuation at different share price levels.


Simplex Holdings IPO Trading - Listing Round 2

<div><p>PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).</p></div><div><p>PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).</p></div><div>
<p>We have covered the main aspects of the deal in our earlier note<a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-many-companies-rolled-into-one" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Many companies rolled into one</a>.</p>
<p>In this note we will undertake a peer comparison.</p>
</div>

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).
We have covered the main aspects of the deal in our earlier note PHC Holdings Pre-IPO - Many companies rolled into one.
In this note we will undertake a peer comparison.


Japan

Softbank Corporation provides mobile phone telecommunication and networking services. The Company offers mobile communication opening, short messaging function opening, video function opening, and other services. Softbank also provides mobile phones.

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Softbank Corp (9434 JP)

Japan Telecom Sector - Regulator to Signal Level Playing Field for DoCoMo

The regulator will block preferential pricing for DoCoMo within NTT. This is not surprising. The real issue is competition for enterprise users...

Kirk Boodry

E-Book Initiative (3658 JP) Tender Offer Takeout - This One Needs Cowbell Too

This takeout of Ebook Initiatives "minorities" is a related party transaction which should have more procedural approval but governance here is a...

Travis Lundy

PHC Holdings IPO - Should Have Cut the Price, Not Just the Size

PHC Holdings and its shareholders aim to raise around US$700m, down from US$1.8bn, via selling a mix of primary and secondary shares in its Japan IPO.

Sumeet Singh

Simplex Holdings IPO Trading - Listing Round 2

Simplex Holdings’ shareholders raised around US$300m via selling some of their stake in the company. Simplex has consistently been ranked among the...

Sumeet Singh

PHC Holdings Pre-IPO - Peer Comparison

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is...

Sumeet Singh

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