In today’s briefing:
- GMO Internet (4784) Offering – This Is a GINORMOUS Re-IPO – AVOID LIKE THE PLAGUE
- CSI 500/1000 Index Rebalance Preview: Strong Near-Term Outperformance
- GMO Internet (4784 JP): A Huge US$1.9 Billion Secondary Offering
- Raymond Lifestyle: Governance Crisis?
- Webjet (WJL AU) In Play: BGH/Weiss’ NBIO And Helloworld’s Substantial Stake
- Sankyo Co: Big Buyback + Five Years Left Until Opening of Mega MGM Osaka Integrated Casino Resort
- Sibling Conflict Between Yoon Sang-Hyun (Brother) And Yoon Yeo-Won (Sister) At Kolmar Group
- Part 2: What Could Go Wrong at Chagee (CHA)
- Trust in Muji Reaps Big Returns
- Porsche Automobile Holding: Q1 2025, Discount to NAV
GMO Internet (4784) Offering – This Is a GINORMOUS Re-IPO – AVOID LIKE THE PLAGUE
- Last year, GMO injected its internet business into GMO Internet (4784 JP) and took shares as consideration. Somehow, GMO Internet got a TOPIX inclusion earlier this year.
- The company has 1.24% float of 3.4mm shares. GMO Internet Group – the parent – will now offload 91.7mm shares in an equity offering to meet TSE Continued Listing Requirements.
- That is about ¥279bn at current price against float of ¥10bn. Full market cap is ¥850bn. That’s 170x Dec25e Net Income. I expect the price will fall. You were warned.
CSI 500/1000 Index Rebalance Preview: Strong Near-Term Outperformance
- With the review period complete, there could be 50 changes for the CSI Smallcap 500 Index and 100 changes for the CSI 1000 Index in June.
- There are a lot of migrations expected between the two indices and the impacts for those stocks are lower with much of the flow cancelling out.
- The outright adds have outperformed the outright deletes over the last few months with the profit-taking in March giving way to renewed outperformance in April.
GMO Internet (4784 JP): A Huge US$1.9 Billion Secondary Offering
- GMO Internet (4784 JP) has announced a secondary offering of 91.7 million shares, worth around US$1.9 billion.
- The selling shareholder is GMO Internet Group (9449 JP). The secondary offering aims to increase the tradable share ratio to satisfy the TSE Prime Market’s continued listing criteria.
- The offering represents 239.4 days of the 1-year ADV, the highest compared to the recent large Japanese placements. Pricing is likely to be on 5 June.
Raymond Lifestyle: Governance Crisis?
- Raymond Lifestyle’s stock plummets 60% in six months post-demerger, due to lots of governance lapses.
- Corporate Governance Crisis: CEO,CFO, Director Resignations, Delayed disclosures, Controversial Remuneration and Many More.
- The company gave excuses such as inflation, an IT incident, etc. in their management meeting after not being able to deliver the performance.
Webjet (WJL AU) In Play: BGH/Weiss’ NBIO And Helloworld’s Substantial Stake
- In Webjet (WJL AU): Undisclosed Buyer Buying, I addressed the rumours that an undisclosed buyer with ~5% was seeking to add an additional 5% (19.6mn shares).
- On the 12th May, Helloworld Ltd (HLO AU) emerged with a 5.015% stake. The same day, BGH said it had 10.76%. BGH followed with a A$0.80/share NBIO.
- BGH wants a controlling stake in Webjet (WJL AU), and potentially maintaining the listing; suggesting an off-market Offer, with say, a 50% acceptance hurdle being one possibility.
Sankyo Co: Big Buyback + Five Years Left Until Opening of Mega MGM Osaka Integrated Casino Resort
- On 12 May, Sankyo Co Ltd (6417 JP) announced a big share buyback worth 13.66% of total issued shares (excluding treasury shares).
- Aggregate amount of the purchase cost is up to 60 billion yen (9.7% of its current market cap).
- We continue to have a Positive view of Sankyo which continues to demonstrate its commitment to deliver higher shareholder returns through aggressive share buybacks.
Sibling Conflict Between Yoon Sang-Hyun (Brother) And Yoon Yeo-Won (Sister) At Kolmar Group
- There is a brewing sibling conflict at the Kolmar Group. Kolmar Holdings and Kolmar BNH have clashed regarding the reorganization of Kolmar BNH’s board of directors.
- Yoon Sang-Hyun (brother) wants to shake things up. Yoon Sang-Hyun wants to appoint new members at Kolmar BNH’s BOD but his sister Yoon Yeo-Won is opposing this.
- We see a higher upside for Kolmar Holdings. Our base case valuation of Kolmar Holdings is NAV per share of 14,675 won (57.5% upside from current levels).
Part 2: What Could Go Wrong at Chagee (CHA)
- Last week, I wrote a quick article flagging the seemingly absurd valuation discrepancy of Chagee vis-a-vis beverage peers on the HK stock exchange i.e. Mixue and Guming, as well as Luckin Coffee on the OTC markets.
- Chagee currently trades around ~31 (doing extremely poorly on a good day), and at the bottom of its recent trading range; there is no analyst coverage and the firm has yet to report its Q1 25 results so it’s just really stuck in no-man’s land.
- I postulated then that delisting risk was an overhang on Chagee, a Chinese ADR, but lo and behold, it appears that the market has shrugged off a large portion of it for the large cap Chinese tech companies.
Trust in Muji Reaps Big Returns
- Muji continues its impressive growth streak both at home and abroad – sales in March alone rose 33% in Japan.
- Muji has grown in part because of its ability to move into new categories, even cosmetics and food, possible because Muji’s biggest asset is how well it is trusted.
- The latest, with significant potential given inbound demand, is Muji Stay which includes its own hotels, rooms in other hotels and inns, as well as house rentals on Airbnb.
Porsche Automobile Holding: Q1 2025, Discount to NAV
- Dividend cut reflects strategic shift: Porsche SE cut its 2024 dividend due to reduced Volkswagen inflows and focus on deleveraging, limiting its near-term appeal as a dividend pass-through holding structure.
- Diversification stillsSuperficial: despite claims of expanding into defense and infrastructure, Porsche SE’s portfolio remains 99% tied to Volkswagen and Porsche AG, making its diversification strategy more rhetorical than real.
- Discount to NAV remains high: Porsche SE trades at a 33.4% NAV discount, reflecting legal overhangs and structural inefficiencies. Favorable rulings could trigger re-rating if legal risks prove overstated.
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