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/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing Inc (2427 JP)</a> has disclosed a weak 4Q materially below guidance due to cost overruns and JPY6,875 million in impairments. The results did not provide an update on Bain's tender.</li>
<li>The weak 4Q has raised concerns that Bain would reconsider terms. Our take is that the results will not warrant a change in the DCF valuation or breach a pre-condition. </li>
<li>Bain is likely to consider the results a reflection of near-term industry weakness rather than company-specific issues. The annualised spread for a March-end completion is 9.8%.</li>
</ul>



Outsourcing Inc (2427 JP) has disclosed a weak 4Q materially below guidance due to cost overruns and JPY6,875 million in impairments. The results did not provide an update on Bain's tender.
The weak 4Q has raised concerns that Bain would reconsider terms. Our take is that the results will not warrant a change in the DCF valuation or breach a pre-condition. 
Bain is likely to consider the results a reflection of near-term industry weakness rather than company-specific issues. The annualised spread for a March-end completion is 9.8%.


Outsourcing (2427 JP): The Weak 4Q Unlikely to Deter Bain

Equity Capital Markets

<ul>
<li>A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.</li>
<li>ECM developments: <a href="https://www.smartkarma.com/entities/toei-animation-co-ltd" target="_blank" data-smartkarma-citation="entities:18641:1" rel="noopener">Toei Animation (4816 JP)</a>'s US$550 Million secondary offering.</li>
<li>Event-Driven developments: <a href="https://www.smartkarma.com/entities/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing Inc (2427 JP)</a>, <a href="https://www.smartkarma.com/entities/altium-ltd" target="_blank" data-smartkarma-citation="entities:18626:1" rel="noopener">Altium Ltd (ALU AU)</a>, <a href="https://www.smartkarma.com/entities/ansarada-group-ltd" target="_blank" data-smartkarma-citation="entities:30718:1" rel="noopener">Ansarada Group Ltd (AND AU)</a>, <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>, <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a>. </li>
</ul>


A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Toei Animation (4816 JP)'s US$550 Million secondary offering.
Event-Driven developments: Outsourcing Inc (2427 JP), Altium Ltd (ALU AU), Ansarada Group Ltd (AND AU), China Traditional Chinese Medicine (570 HK), Vinda International (3331 HK). 


Weekly Deals Digest (18 Feb) - Toei, Outsourcing, YSK, Altium, Ansarada, China TCM, Vinda

<ul>
<li>
<a href="https://www.smartkarma.com/entities/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing Inc (2427 JP)</a> has delayed the announcement of its 4QFY2023 results from 14 to 19 February as the impairment loss accounting is yet to be completed. </li>
<li>Outsourcing has a history of impairments, resulting in missed forecasts, which suggests a weak 4Q. The concern is that a weak 4Q could force Bain to trim its JPY1,755 offer. </li>
<li>
<a href="https://www.smartkarma.com/entities/temp-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1428:1" rel="noopener">Persol Holdings (2181 JP)</a> guidance cut today suggests a weak 4Q reflects near-term industry weakness rather than company-specific issues. The weak 4Q is a valuable cover to justify the less-than-stellar offer.</li>
</ul>



Outsourcing Inc (2427 JP) has delayed the announcement of its 4QFY2023 results from 14 to 19 February as the impairment loss accounting is yet to be completed. 
Outsourcing has a history of impairments, resulting in missed forecasts, which suggests a weak 4Q. The concern is that a weak 4Q could force Bain to trim its JPY1,755 offer. 

Persol Holdings (2181 JP) guidance cut today suggests a weak 4Q reflects near-term industry weakness rather than company-specific issues. The weak 4Q is a valuable cover to justify the less-than-stellar offer.


Outsourcing (2427 JP): Keep Calm or Worry About the Earnings Delay?

<ul>
<li>Bain has delayed the <a href="https://www.smartkarma.com/entities/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing Inc (2427 JP)</a> tender start from late January due to more time required to satisfy the European regulatory approval pre-condition.</li>
<li>Potential reasons for bumping are opportunistic timing, re-rating of Japanese peers, a high minority acceptance rate, and an offer below the mid-point of the IFA DCF valuation range.</li>
<li>Potential reasons for keeping terms unchanged are no activists, a 52.1% premium to the undisturbed price, and an offer still attractive compared to Japanese peers’ multiples and price ratios.  </li>
</ul>


Bain has delayed the Outsourcing Inc (2427 JP) tender start from late January due to more time required to satisfy the European regulatory approval pre-condition.
Potential reasons for bumping are opportunistic timing, re-rating of Japanese peers, a high minority acceptance rate, and an offer below the mid-point of the IFA DCF valuation range.
Potential reasons for keeping terms unchanged are no activists, a 52.1% premium to the undisturbed price, and an offer still attractive compared to Japanese peers’ multiples and price ratios.  


Outsourcing (2427 JP): Tender Start Delayed, but Does Bain Need to Bump?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing Inc (2427 JP)</a> has recommended a Bain-backed preconditional MBO tender offer of JPY1,755 per share, a 52.1% premium to the undisturbed (8 December). </li>
<li>The offer is light vs. peer and historical multiples and opportunistically takes advantage of the 20% price fall due to the disclosure of employment adjustment subsidies issues on 1 August. </li>
<li>Based on the irrevocables, the minimum acceptance condition requires a 61.9% minority acceptance rate. The acceptance rate could prove challenging. The tender offer is to start by late January 2024. </li>
</ul>



Outsourcing Inc (2427 JP) has recommended a Bain-backed preconditional MBO tender offer of JPY1,755 per share, a 52.1% premium to the undisturbed (8 December). 
The offer is light vs. peer and historical multiples and opportunistically takes advantage of the 20% price fall due to the disclosure of employment adjustment subsidies issues on 1 August. 
Based on the irrevocables, the minimum acceptance condition requires a 61.9% minority acceptance rate. The acceptance rate could prove challenging. The tender offer is to start by late January 2024. 


Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755

Japan

Persol Holdings Co., Ltd. provides human resource solutions to a wide variety of customers worldwide. The Company's main operations include temporary staffing services, contract services, and employment services. Temp Holdings also provides outsourcing services and employment support services for job seekers.

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Persol Holdings (2181 JP)

Outsourcing (2427 JP): The Weak 4Q Unlikely to Deter Bain

Our take is that the results will not warrant a change in the IFA's DCF valuation or breach a pre-condition, suggesting Bain maintains terms. The...

Arun George

Weekly Deals Digest (18 Feb) - Toei, Outsourcing, YSK, Altium, Ansarada, China TCM, Vinda

Last week, notable developments occurred in Event-Driven (Outsourcing, YSK, Altium, Ansarada, China TCM, Vinda) and ECM (Toei Animation).

Arun George

Outsourcing (2427 JP): Keep Calm or Worry About the Earnings Delay?

Persol's guidance cut today suggests a potentially weak 4Q reflects near-term industry weakness. The ongoing impairments are a valuable cover for...

Arun George

Outsourcing (2427 JP): Tender Start Delayed, but Does Bain Need to Bump?

Barring the emergence of an activist, Bain will likely keep the offer unchanged. The risk/reward profile is unattractive as the downside (estimated...

Arun George

Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755

Despite the 52% premium, the offer is light and opportunistically timed. Meeting the minimum acceptance condition could prove challenging.

Arun George

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