In today’s briefing:
- Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
- Kakaku.com Inc.: A Deep-Dive View
- Meituan: New Reporting Structure Conceals Loss-Making Businesses and Hard to Assess Core Businesses
- Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak
Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
- On Friday, Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would each sell NRI shares in a Secondary Offering.
- JAFCO is selling to fund a giant buyback. Nomura is selling to round out the offering size. The total is 37mm shares plus greenshoe of 5.5mm shares.
- At Friday’s price that is ~¥140bn (including greenshoe), 7% of shares out, 10% of float, and about 25% of Real World Float. There are index implications.
Kakaku.com Inc.: A Deep-Dive View
- Kakaku.com Inc. can be a rare species among listed companies in Japan;
- We had multiple email exchanges and meetings with the management team for a deep-dive view covering corporate cultural, management style, capital allocation, business model, and competitive strength.
- We would wait for a 20%-30% pullback in the share price before looking to add to our position but would certainly remain reluctant to sell any share that we own.
Meituan: New Reporting Structure Conceals Loss-Making Businesses and Hard to Assess Core Businesses
- Meituan reported 3Q2022 results. Revenue increased 28.2% YoY to RMB62.6bn (vs consensus RMB62.3bn) while reported an OP of RMB988m (consensus OP loss of RMB935m) for the first time since 3Q2019.
- However, on adjusted basis, Meituan made an adjusted operating loss of RMB1.1bn (1.7% of revenue) of revenues compared to an adjusted operating loss of RMB7.7bn (15.1% of revenue) in 3Q2022.
- Tencent announced that it will distribute majority of its shareholding on Meituan (3690 HK) to its shareholders in dividends and Naspers is expected to sell the Meituan Shares it receives from Tencent.
Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak
- Nomura Holdings (8604 JP) and Jafco Co Ltd (8595 JP) are looking to raise around US$850m via selling 5.7% of Nomura Research Institute Ltd (4307 JP).
- This is not the first sale by Nomura and marks a clean up for Jafco. Hence it might not come as a complete surprise.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
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