In today’s briefing:
- Curator’s Cut: The Next Labubu, Crypto Equities and Tracking APAC Buybacks
- [Japan M&A] Private Co Takeout of Fuji Corp (7605 JP) – A Done Deal
- Fuji Corp (7605 JP): Usami Koyu’s JPY2,830 Tender Offer Is Light but Done
- Weekly Deals Digest (08 Jun) – Toyota Industries, Makino, Fuji Corp, Tam Jai, PointsBet, Mayne
- Tam Jai Intl (2217 HK): Privatisation Stays Appealing Despite…
- A Reluctance to Confront Shareholders Is at the Root of Many Problems
- KTM Saga, Short Bajaj Auto – There’s a Lot to Chew On
- Zhou Liu Fu Pre-IPO: Business Is Deteriorating Despite Rosy Gold Prices
Curator’s Cut: The Next Labubu, Crypto Equities and Tracking APAC Buybacks
- Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,200+ insights published over the past two weeks on Smartkarma
- In this cut, we look at an Asian toy manufacturer not named Pop Mart or Dream Int’l, the mashup between crypto and equity markets and the takeaways from tracking buybacks
- Want to dig deeper? Comment or message on the themes you think should be highlighted next
[Japan M&A] Private Co Takeout of Fuji Corp (7605 JP) – A Done Deal
- The long-term major owner now chairman is getting out. The company was shopped. And bought. And this is the deal. ¥2,830 which is about 5.7x this year’s EBITDA.
- It could have been done a bit better, but irrevocables are 48.5% out of the 50.01% minimum and other directors get this past the minimum hurdle.
- Transparency is lacking but it is an all-time high and you can’t do much about it.
Fuji Corp (7605 JP): Usami Koyu’s JPY2,830 Tender Offer Is Light but Done
- Fuji Corp (7605 JP) has recommended a tender offer from Usami Koyu at JPY2,830, a 32.2% premium to the last close price.
- Unusually for a Board recommended offer, the lower limit will not achieve a 66.67% ownership ratio. Based on past EGM voting ratios, it is set at a 50.01% ownership ratio.
- While the offer represents an all-time high, it is below the midpoint of the IFA DCF valuation range. However, due to irrevocables, this is a done deal.
Weekly Deals Digest (08 Jun) – Toyota Industries, Makino, Fuji Corp, Tam Jai, PointsBet, Mayne
- 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: Foshan Haitian Flavouring & Food (603288 CH) has filed its PHIP for an H Share listing to raise US$1 billion.
- Event-Driven developments: Toyota Industries (6201 JP), Makino Milling Machine Co (6135 JP), Fuji Corp (7605 JP), Tam Jai International (2217 HK), PointsBet Holdings (PBH AU), Mayne Pharma (MYX AU).
Tam Jai Intl (2217 HK): Privatisation Stays Appealing Despite…
- Despite some disgruntled investors, the privatisation of Tam Jai International (2217 HK) is appealing. If it is successful, payment will be made on or before 26 Aug.
- The proposed price of HK$1.58 equals a 24% premium to the peer CY25F PER. The poor reported peer results and earnings downgrades are the reasons for a narrower premium.
- Since the announcement of privatisation, the sector has retreated by 7.8%, vs. a 5.2% gain in HSI, reflecting the industry’s tough operating environment. It remains wise to exit.
A Reluctance to Confront Shareholders Is at the Root of Many Problems
- Until now, listed companies have been reluctant to even lower the minimum shareholder purchase amount for reasons of economic rationality and administrative costs.
- The same issues underlie reluctance of companies in lowering amount to purchase shares, online AGMs, electronic delivery of text in notice of convocations, and pre-AGM disclosure of annual securities reports.
- Companies have been focused on controlling AGM rather than facing shareholders to increase their interests. This practice is problem that can lead to slower ROE and excessive cash on hand.
KTM Saga, Short Bajaj Auto – There’s a Lot to Chew On
- We cover the multiple factors which led to the operational and financial mess at Pierer Mobility AG, the holding company of KTM.
- This insight highlights the past not so great track record of Indian companies acquiring European businesses due to cultural, operational integration and higher restructuring costs.
- Bajaj Auto Ltd (BJAUT IN) remains strong domestically, but KTM’s losses, debt, and integration hurdles risk compressing margins and return ratios at the consolidated level. We recommend Shorting Bajaj Auto.
Zhou Liu Fu Pre-IPO: Business Is Deteriorating Despite Rosy Gold Prices
- Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH) is looking to raise $US200m in its upcoming Hong Kong IPO.
- It is a leading and fast growing jewellery franchise in China offering a diverse range of products through offline and online sales channels.
- In this note, we provide updates on the firm’s past performance.
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