In today’s briefing:
- Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours
- LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion
- Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
- S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible
- Kito (6409) – KKR/Crosby Takeover Launches – High Premium in Weak Year, But Still Light to Value
- CALB IPO: Valuation Insights
- Porsche IPO Valuation Analysis
- Sands China (1928 HK): Positives And Negatives
- Socionext Pre-IPO Valuation – Thoughts on Valuation
- Leapmotor IPO: Forecasts and Valuation
Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours
- Activist Murakami-san and entities spent 4+ years going from 2% to 30% of Central Glass (4044 JP). In that period, they helped management change governance.
- There were buybacks, asset sales, cross-holding sale decisions, and a new Mid-Term Management Plan. The stock went up, so now it is time to get out.
- True to Murakami-san style/form, it is an own-share Tender Offer by the TargetCo which means most other active holders can’t really participate. It’s high-quality greenmailgagement.
LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion
- LG Energy’s locked shares approach 96-97% of SO. Now, we will see an additional passive flow equivalent to another 1% of SO: KOSPI 200/MSCI Standard up-weights and LIT inclusion.
- Each passive impact is also substantial. The MSCI up-weight alone will cause an impact equivalent to 2.44x ADTV. It would be 2.20x for the KOSPI 200 and 1.03x for LIT.
- For the KOSPI 200 December review, the event-driven flow will likely focus on up-weights, including LG Energy. For LIT, we should consider an aggressive LONG/SHORT with LG Chem.
Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
- Today, Nagoya Premier-listed Chubu Steel Plate (5461 JP) announced that it had applied today to be listed in Tokyo.
- It is one of very few Japan names not listed in Tokyo. A TSE listing examination will be conducted, and there is a possibility it moves to TSE Prime.
- There are 6 key segment transfer and listing requirements to gain a listing in TSE Prime. Chubu Steel Plate is really close.
S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible
- In this insight, we take a look at the potential index changes for S&P ASX 200, 100, 50, and 20 in the run up to the December 2022 Rebalance.
- Tassal (TGR AU) and Nearmap Ltd (NEA AU) could get deleted from ASX200 before the December Rebalance, triggering high-impact intra-review additions. There should be two changes in the Review itself.
- Pilbara Minerals (PLS AU) is close to becoming an ASX 50 ADD and Lendlease Group (LLC AU) is close to becoming an ASX 50 DEL in the December 2022 review.
Kito (6409) – KKR/Crosby Takeover Launches – High Premium in Weak Year, But Still Light to Value
- KKR-Owned Crosby got SAMR approval to buy Kito Corporation (6409 JP) several days ago apparently and has launched its deal. It will be a 21-day tender. Very quick.
- It was a strong premium, but still a light price, at announcement. And that was when USD/yen was lower. Since then, earnings and forecasts are way up. But price unchanged.
- What looked like a likely candidate for bump agitation has seen none (that I am aware of) so this is pretty straightforward.
CALB IPO: Valuation Insights
- CALB (CALBLZ CH) has launched its HKEx listing at HK$38.00-51.00 per share to raise up to US$1.7 billion. Books are open from 23 to 28 September.
- We previously discussed the IPO in CALB IPO: The Bull Case, CALB IPO: The Bear Case, CALB IPO: Updates Support the Bull Case, CALB IPO: What’s It Worth?.
- CALB should be, at least, valued in line with the median peer multiples. CALB is attractively valued at the IPO price range. We would participate.
Porsche IPO Valuation Analysis
- Our base case valuation of Porsche is EV of 83.6 billion EUR, implied market cap of 88.9 billion EUR, and target base case price target of 98 EUR per share.
- This represents 23% higher than the mid-point of the IPO price range. Given the relative solid upside, we have a Positive View of the Porsche IPO.
- The market related risk is clearly the biggest risk for the Porsche IPO right now in our view.
Sands China (1928 HK): Positives And Negatives
- Macau gaming companies gained this week as Hong Kong is expected to ease Covid restrictions, with Macau expected to follow suit.
- Last week, the six incumbent Macau gaming operators submitted tenders for the gaming concessions, together with last-minute interloper, the Genting Group.
- Sands China (1928 HK) has borrowed heavily and also leads other Macau gaming plays in dividends paid out to shareholders. This may not be lost on Macau officials.
Socionext Pre-IPO Valuation – Thoughts on Valuation
- Socionext (6526 JP) is looking to raise up to US$285m in its Japan IPO.
- As stated in our earlier notes, Socionext has been growing its number of design wins per year historically, which should aid to its near/medium term sales and profitability.
- In our previous note, we undertook a peer comparison. In this note, we will talk about valuations.
Leapmotor IPO: Forecasts and Valuation
- Leapmotor (2007699D HK) is a leading smart EV company in China. The company plans to raise net proceeds of US$904m through its HKEx IPO.
- In our previous insight Leapmotor IPO: Stuck in the Middle , we concluded that the company will have to compromise on margins to grow its top line.
- Our valuation analysis suggests that Leapmotor’s shares are not even attractive at the lower-end of the IPO price range and the premium vs local peers is hard to justify.
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