In today’s briefing:
- Anycolor (5032) Overseas Offering – Pre-IPO VCs Selling This High Growth Name
- Anycolor Placement – First Placement Since Listing but Should Do Fine
- Kyocera (6971 JP): Another Leg Down
- JAFCO (8595) Tender Offer Close Imminent – Decent Conviction to Not Be Long
- Sosei Group (4565 JP): Partners’ Pipeline Progress Reflects Power of Drug Discovery Platform
- Calbee’s FY24 OP Is Bound to Exceed ¥30.0bn
- Seiyu Plans ¥100 Billion Investment
Anycolor (5032) Overseas Offering – Pre-IPO VCs Selling This High Growth Name
- In late December, I wrote 2023 High Conviction – Anycolor (5032) Aiming at TSE Prime and TOPIX – And How!. Shares closed at ¥6,470 that day. Then went to ¥5,500.
- They have since rebounded some, and now 3 pre-IPO VC investors have announced an overseas offering. This was NOT unexpected. They need more shares to get their TSE Prime listing.
- The Offering is 3.27mm shares which is 5-6 days of volume. This lifts the TSE Prime inclusion amount, eventually, but the story is still about growth and model.
Anycolor Placement – First Placement Since Listing but Should Do Fine
- Some shareholders of Anycolor (5032 JP) are looking to raise US$151.5m via an International Only Follow-on offering.
- The deal is a relatively small one to digest in terms of ADV, representing only 4 days of three-month ADV. Although, it is still 10% of current mcap.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Kyocera (6971 JP): Another Leg Down
- Kyocera’s aggressive long-term investment plan makes sense: abandon an unnecessary zero-debt policy and borrow while interest rates are still low. The resulting debt/equity ratio should be manageable.
- But the near- to medium-term outlook is not encouraging. Semiconductor inventories are still too high and demand is down. Recovery is likely to be slow.
- The shares have dropped 21% since mid-September, but FY Mar-23 guidance looks too high and both consumer and corporate spending are weak. Wait for capitulation.
JAFCO (8595) Tender Offer Close Imminent – Decent Conviction to Not Be Long
- The Jafco Co Ltd (8595 JP) Greenmail Tender Offer to take Murakami-san out of his position is nearing its close.
- Investors should make a decision imminently about where they believe the stock should trade in Price/NAV terms after the buyback is complete, once management is “stabilised.”
- My earlier piece written on the day of the announcement needs a few corrections. Those are below.
Sosei Group (4565 JP): Partners’ Pipeline Progress Reflects Power of Drug Discovery Platform
- Sosei Group (4565 JP) is currently eligible for total milestone payment of more than $9.5B for its existing collaborations. During 9MFY23, Sosei reported revenue growth of 141% YoY to ¥8.6B.
- Pfizer Inc (PFE US) has dosed first subject in phase 2 clinical trial of type 2 diabetes drug candidate PF-07081532. Achievement of this milestone triggers a $10M payment to Sosei.
- Sosei has four programs in preclinical studies and 10+ in discovery phase, which are still unpartnered. The company has a cash runway into 2025 to fund its drug discovery activities.
Calbee’s FY24 OP Is Bound to Exceed ¥30.0bn
- Japan’s largest snacks maker, Calbee Inc (2229 JP) has raised prices by 10-20% for almost 75% of its product range.
- Meanwhile, main inputs such as potatoes and palm oil have seen extensive price drops in the past few months.
- With margin pressures alleviating from both angles (revenue & cost), we think Calbee’s FY24 OP is bound to exceed ¥30.0bn.
Seiyu Plans ¥100 Billion Investment
- Rakuten only has a 15% stake in Seiyu, alongside majority shareholder, KKR, but the pivot by Seiyu post-acquisition shows the potential for Rakuten in this sector.
- Building on the 5 year plan that it set out in 2021, Seiyu last month announced a ¥100 billion in investment over the next 5 years.
- Funds will be used to increase integration with Rakuten’s online supermarket, with the aim to become the biggest GMS retailer.
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