Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Ebook Initiative Japan Co Ltd / Event-Driven

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>.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 <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. 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. <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>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, <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>) <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>Much more below the fold.

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

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

There were some fears that e-commerce growth would stall following massive consumer adoption after March 2020 but for <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> at least, repeat customers have helped sustain momentum. <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> had a trickier start to the year, however. Last year, excluding the big convenience stores, <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> overtook Fast Retailing to become Japan’s third largest retailer and one of just four with sales over ¥2 trillion and  accounted for 3.2% of all retail sales in Nikkei’s survey of 488 companies.Despite early, pessimistic forecasts for e-commerce in 2020, METI’s latest annual survey released in July shows that BtoC e-commerce surged 21.7% to ¥12.23 trillion.

There were some fears that e-commerce growth would stall following massive consumer adoption after March 2020 but for Rakuten Inc (4755 JP) at least, repeat customers have helped sustain momentum. Z Holdings (4689 JP) had a trickier start to the year, however. Last year, excluding the big convenience stores, Amazon.com Inc (AMZN US) overtook Fast Retailing to become Japan’s third largest retailer and one of just four with sales over ¥2 trillion and  accounted for 3.2% of all retail sales in Nikkei’s survey of 488 companies.Despite early, pessimistic forecasts for e-commerce in 2020, METI’s latest annual survey released in July shows that BtoC e-commerce surged 21.7% to ¥12.23 trillion.

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Askul posted a mixed quarter as revenue growth slowed but margin improvements continued apace. FY22 is largely a rebuilding year as the company more tightly integrates B2C and logistics into the Z Holdings ecosystem and Q1 performance gives them a solid start in meeting full-year guidance. We do not cover Askul but we follow it as part of our Z Holdings coverage.

Askul posted a mixed quarter as revenue growth slowed but margin improvements continued apace. FY22 is largely a rebuilding year as the company more tightly integrates B2C and logistics into the Z Holdings ecosystem and Q1 performance gives them a solid start in meeting full-year guidance. We do not cover Askul but we follow it as part of our Z Holdings coverage.   

Askul Corp Q1 22 Results Reaction: Slowing Revenue Growth but Profit Beat

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

Demae-Can Co., Ltd. / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/demae-can-co-ltd" target="_blank" data-smartkarma-citation="entities:10524:1" rel="noopener">Demae-Can Co., Ltd. (2484 JP)</a>  is looking to raise up to a total of JPY80bn (US$730m) from a combination of overseas offering to investors and share sale to <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> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>.In this note, we will take a brief look at deal dynamics, fundamentals, and run the deal through our ECM framework.

Demae-Can Co., Ltd. (2484 JP)  is looking to raise up to a total of JPY80bn (US$730m) from a combination of overseas offering to investors and share sale to Z Holdings (4689 JP) and Naver Corp (035420 KS).In this note, we will take a brief look at deal dynamics, fundamentals, and run the deal through our ECM framework.

Demae-Can Placement - Massive Dilution to Pursue Market Share

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Japan-based food delivery company <a href="https://www.smartkarma.com/entities/demae-can-co-ltd" target="_blank" data-smartkarma-citation="entities:10524:1" rel="noopener">Demae-Can Co., Ltd. (2484 JP)</a> launched a follow-on equity offering after market-close today to raise capital for business expansion. In this offering the company will be issuing 55,436,400 new shares and selling 3,240,000 treasury shares out of which a total of 19,293,900 shares will be allocated to the public and 39,382,500 shares will be allocated for <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> and South-Korea based <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>. Based on today's closing price, the total size of this equity offering could be around ~¥105bn (US$950mn) and the portion allocated to public shareholders could be around ~¥35bn (US$315mn). However, the official announcement estimates the minimum size of the equity offering to be around ~¥80bn (US$726mn) and the above-mentioned allocation can change slightly depending on share price movement and public investor interest. There is a really interesting event angle here which should pique the interest of investors. More below.

Japan-based food delivery company Demae-Can Co., Ltd. (2484 JP) launched a follow-on equity offering after market-close today to raise capital for business expansion. In this offering the company will be issuing 55,436,400 new shares and selling 3,240,000 treasury shares out of which a total of 19,293,900 shares will be allocated to the public and 39,382,500 shares will be allocated for Z Holdings (4689 JP) and South-Korea based Naver Corp (035420 KS). Based on today's closing price, the total size of this equity offering could be around ~¥105bn (US$950mn) and the portion allocated to public shareholders could be around ~¥35bn (US$315mn). However, the official announcement estimates the minimum size of the equity offering to be around ~¥80bn (US$726mn) and the above-mentioned allocation can change slightly depending on share price movement and public investor interest. There is a really interesting event angle here which should pique the interest of investors. More below.

Demae-Can's Latest Offering Preserves The Potential for TOPIX Inclusion

Japan

LY Corporation operates as an internet search engine "Yahoo! JAPAN". The Company provides electronic commerce and settlement finance services for small medium enterprises and individuals. LY also operates media business including search linked advertising and display advertising services.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

LY (4689 JP)

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

Japanese E-Commerce Growth Continues

Japan is well-known for lagging some markets in e-commerce penetration but sales surged last year to more than 20%. Only Rakuten and Amazon seem to...

Michael Causton

Askul Corp Q1 22 Results Reaction: Slowing Revenue Growth but Profit Beat

Askul posted a mixed quarter as revenue growth slowed but margin improvements continued apace. Covid-19 dislocation makes it hard to find real...

Kirk Boodry

Demae-Can's Latest Offering Preserves The Potential for TOPIX Inclusion

Japan-based food delivery company Demae-Can announced a large equity offering to boost their marketing expenditure and defend their market share in...

Janaghan Jeyakumar, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Japanese E-Commerce Growth Continues

Japan is well-known for lagging some markets in e-commerce penetration but sales surged last year to more than 20%. Only Rakuten and Amazon seem to...

Michael Causton

Askul Corp Q1 22 Results Reaction: Slowing Revenue Growth but Profit Beat

Askul posted a mixed quarter as revenue growth slowed but margin improvements continued apace. Covid-19 dislocation makes it hard to find real...

Kirk Boodry

Demae-Can Placement - Massive Dilution to Pursue Market Share

Demae-Can Co., Ltd. (2484 JP) is looking to raise up to a total of JPY80bn (US$730m) from a combination of overseas offering to investors and...

Sumeet Singh

Demae-Can's Latest Offering Preserves The Potential for TOPIX Inclusion

Japan-based food delivery company Demae-Can announced a large equity offering to boost their marketing expenditure and defend their market share in...

Janaghan Jeyakumar, CFA