In today’s briefing:
- Toshiba Board to Shareholders: “Yes, Meh But We Did Our Job, Now It’s Up To You (We’re Tired Too)”
- InvoCare (IVC AU): TPG’s A$12.65/Share NBIO
- Toshiba – Thoughts On The Tender Opinion
- Rakuten Bank IPO – Recent Filings Updates and Quick Thoughts on Valuation
- Toyota Industries: Guilty As Charged. But Excessively Punished
- Crisis, What Crisis! – The Drivers of Global Liquidity and What to Watch Out For?
- KOSPI200 Ad Hoc Index Rebalance: DGB Financial (139130 KS) To Replace Meritz Sec (008560 KS)
- Index Rebalance & ETF Flow Recap: MSCI KR, S&P/ASX, SSE50, ChiNext, NIFTY, KQ150, AMFI, Rakuten Bank
- Estia Health (EHE AU): Bain Capital’s A$3.00 Offer
- Japan Weekly | Financials Still a Concern, Recruit, Toyota Industries
Toshiba Board to Shareholders: “Yes, Meh But We Did Our Job, Now It’s Up To You (We’re Tired Too)”
- Just post-close, the Nikkei reported Toshiba’s Board had agreed a JIP deal at “around ¥2trln.” Toshiba confirmed HOURS later indicating language was still being hashed out. And the dividend cancelled.
- Toshiba “supports” the deal because it aligns a single shareholder with management goals. They cannot recommend to general shareholders because it is too low. But JIP was the only bidder.
- It raises the question of whether activists will submit to “Toshiba Fatigue” at what the Board admits is too low a price, or whether there is still fight left.
InvoCare (IVC AU): TPG’s A$12.65/Share NBIO
- Invocare Ltd (IVC AU) has received an unsolicited, preliminary, non-binding indicative offer from TPG Global to acquire the company at A$12.65/share in cash.
- TPG has also acquired 17.8% of the shares in Invocare Ltd (IVC AU) via a combination of stock and derivatives.
- With the company now in play, there could be competing offers. Already owning 17.8% of the company, TPG is now invested in ensuring they gain control.
Toshiba – Thoughts On The Tender Opinion
- Toshiba released documents on the tender and a notice that the FY end dividend would be cancelled shortly after our last report was published.
- They are interesting in that the Special Committee’s opinions are relatively frank but details on the valuation process are almost non-existent.
- In addition, the information regarding other bids and alternatives was a little surprising to us.
Rakuten Bank IPO – Recent Filings Updates and Quick Thoughts on Valuation
- Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m in its Japan listing in April 2023.
- RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
- In our earlier notes, we have looked at the company’s past performance. In this note, we talk about the updates from its recent filings.
Toyota Industries: Guilty As Charged. But Excessively Punished
- Toyota Industries (6201 JP), one of the world’s leading forklift manufacturers, has admitted to fabricating the results of parts testing, forcing some forklift shipments to be halted.
- TICO has decided to suspend the shipping of three models of forklifts equipped with the suspect engines, which account for ~6% of total forklift sales (in terms of count).
- Shares, quite rightly, have taken a hit. But this correction appears excessive.
Crisis, What Crisis! – The Drivers of Global Liquidity and What to Watch Out For?
- Global Liquidity is the key driver of asset markets. Global Liquidity bottomed in October. Expect a small rise in 2023
- Central Banks, led by the US Fed seem to be restarting a QE program and injecting more liquidity
- Watch the MOVE Index and the daily size of Reverse Repos (RRP) for clues about the direction of Global Liquidity
KOSPI200 Ad Hoc Index Rebalance: DGB Financial (139130 KS) To Replace Meritz Sec (008560 KS)
- As expected, DGB Financial Group (139130 KS) replaces Meritz Securities (008560 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 31 March.
- We estimate passive trackers will need to buy 5.15m shares (KRW 35.5bn; 12.1 days of ADV) of DGB Financial Group (139130 KS) at the close of trading on 31 March.
- DGB Financial Group (139130 KS) trades cheaper than its peers on forward PE and Price to Book. There could be relative outperformance over the next week.
Index Rebalance & ETF Flow Recap: MSCI KR, S&P/ASX, SSE50, ChiNext, NIFTY, KQ150, AMFI, Rakuten Bank
- There are a bunch of implementations in the coming week, the largest being the Nikkei 225 (NKY INDEX) March rebalance.
- There are some ad hoc changes to the KOSPI2 INDEX and KOSDAQ 150 Index following constituent stocks being designated as Administrative Issues and Investment Attention Issues.
- Inflows to the iShares MSCI Emerging Markets ex China ETF (EMXC US) have continued and has taken AUM to a new high.
Estia Health (EHE AU): Bain Capital’s A$3.00 Offer
- Estia Health (EHE AU) confirmed it has received a non-binding indicative proposal from Bain Capital at A$3.00 per share, a 28.2% premium to the undisturbed price (23 March).
- The offer is attractive in comparison to historical share prices and multiples and implies a premium to Regis Healthcare (REG AU)’s (the key peer) multiples.
- However, the offer is light in comparison to precedent transactions multiples. The largest shareholder has also suggested the terms are light, which suggests a requirement for a bump.
Japan Weekly | Financials Still a Concern, Recruit, Toyota Industries
- Japanese equities were marginally higher on the week as global markets continued to focus on problems in the banking system
- The Fed, The Bank of England and the Swiss National Bank continued to fight the war on inflation.
- In Japan, Recruit was the standout performer after the company announced a hefty cut to its workforce (in a bad news is good news kinda way)
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