Daily BriefsJapan

Japan: Softbank Corp, Softbank Group, Yukiguni Maitake, Gift Inc and more

By September 15, 2020 No Comments

In today’s briefing:

  • Softbank Corp (9434) – Time To Cover
  • Softbank – Interpreting the Arm Sale
  • Yukiguni Maitake IPO: Bain’s Remaining 6.65% Ownership Is an Overhang
  • TOPIX Inclusion (9279 JP): Gift Inc

Softbank Corp (9434) – Time To Cover

By Travis Lundy

When the Softbank Corp (9434 JP) block was announced on 28 August after the close, it was one of the larger secondary blocks ever placed in Japan, and it was underwritten.

It was always going to get sold rather than bought, and it appears that it has been sold. For some reason I could not figure out, the shares only fell 3-4% or so on the first day and then stayed stable for a few days. I thought it needed more of a wallop to see pricing come out right. 

It has, in the interim, been walloped. 

Now is the time to cover that sale in the market if you shorted, and to buy back if you sold long. 

The implied dividend yield on the offering is now (as I write) above 7%. Suganomics may not favor telcos but I expect the telcos probably have enough leverage to push back from time to time. 

More below the fold.

Softbank – Interpreting the Arm Sale

By Mio Kato

So the Arm sale is finally here, as is the $40bn that Softbank was looking for… sort of. We had commented previously that we felt Softbank’s mark for Arm was optimistic (this could be debated now but we actually feel this acquisition lends credence to this view), the acquisition would probably be heavy on the share component, and that exclusion of Arm’s IoT business from the deal would be a no-confidence vote from Nvidia and a repudiation of Son’s “Vision”. On the latter point we believe we were correct.

Yukiguni Maitake IPO: Bain’s Remaining 6.65% Ownership Is an Overhang

By Oshadhi Kumarasiri

Yukiguni Maitake (1378 JP), the market leader in Maitake mushrooms, has priced its shares at ¥2,200 per share, at the mid-point of the IPO price range (¥2,000-2,400). The book-building period ended on Tuesday, and the final offer price was announced on Wednesday 9th September.

Furthermore, it was also decided that the shares will be listed on the 1st section of the Tokyo Stock Exchange from 17th September 2020 under the Fishery, Agriculture and Forestry sector.

The selling shareholder (Bain Capital) will generate ¥38.8 billion ($366m) by selling 17.7m Yukiguni Maitake (1378 JP) shares- an overallotment option, if exercised, could increase the IPO by ¥5.8 billion.

Before the IPO price range was announced, we expressed our desire to subscribe to the IPO at a reasonable valuation despite an unconvincing growth story, due to stable revenue and operating cash flows alongside attractive operating margins (13.2% in FY2020), even amidst COVID-19.

Yukiguni Maitake: Stable Maitake Mushroom Business With Limited Growth Opportunities

As the price range was announced at ¥2,000-2,400 per share, we expressed that the company is generously valued and there could be little upside potential for IPO investors.

Yukiguni Maitake IPO Valuation: Bain Capital Is Out and Leaving Little Upside for IPO Investors

In this insight, we take a look at the company’s valuation against the Fishery, Agriculture and Forestry sector peer basket, and discuss implications of Topix inclusion and possible overhang from Bain Capital’s remaining 6.65% ownership share.

TOPIX Inclusion (9279 JP): Gift Inc

By Janaghan Jeyakumar, CFA

TSE Mothers-listed noodle restaurant chain Gift Inc (9279 JP) announced (J-only) on Friday after market close it had received approval to move to TSE1 as of 18th September 2020. 

TSE1 reassignment triggers inclusion into the TOPIX Index and the Inclusion Event can be expected to be at the close of trading 29th October 2020. 

In this insight, we take a look at the Index Inclusion Parameters and the Fundamentals of the company to evaluate the upside potential of the TOPIX Inclusion Event. 

Before it’s here, it’s on Smartkarma