This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Goodman Group (GMG AU) – Big Placement, Big Index Flow But…
- After a minor “disaster” in a secondary placement in December, this morning industrial/infrastructure (including data centres) REIT/etc Goodman Group (GMG AU) announced results and an A$4bn primary offering.
- The large offering comes at a 6.9% discount, and For a combination of reasons, there is a LOT of buying to do with index tracking over the next short while.
- But that too has complications. Some is immediate. Some a little delayed. A bunch may be supplied by short sellers. There is one easy trade. A few more complicated.
2. Sony To Sell Down SRE Holdings (2980 JP) Block – AI-Related Growth Stock Should See Support
- SRE Holdings Corp (2980 JP) does a business in AI Cloud&Consulting for the real estate, finance, and Life & Healthcare business. Sony Corp (6758 JP) is selling a stake.
- The offering is for about US$50mm assuming a 10% discount today’s close. It is not clear how much this was expected but there is a decent-sized short position.
- The stock has its ups and downs, and recently decided it liked Q3 earnings and guidance. That bodes well for the offering.
3. JX Advance Metals Pre-IPO – The Positives – Transforming
- JX Advance Metal’s (JXAM) parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.6bn via selling more than half of its stake in JXAM in its Japan IPO.
- JXAM engages in business activities primarily focused on the development, manufacture and sale of materials made from copper and rare metals, which are used in the semiconductor and ICT fields.
- In this note, we talk about the positive aspects of the deal.
4. Goodman Group Placement – Large Deal, Doesn’t Seem Well Flagged, Not Particularly Exciting
- Goodman Group (GMG AU) is looking to raise around US$2.5bn to partly fund its data centre expansion plans.
- Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
- In this note, we will talk about the placement and run the deal through our ECM framework.
5. JX Advance Metals Pre-IPO – The Negatives – Isn’t There Yet
- JX Advance Metal’s (JXAM) parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.6bn via selling more than half of its stake in JXAM in its Japan IPO.
- JXAM engages in business activities primarily focused on the development, manufacture and sale of materials made from copper and rare metals, which are used in the semiconductor and ICT fields.
- In this note, we talk about the not-so-positive aspects of the deal.
6. JX Advanced Metals (5016 JP) IPO: The Bull Case
- JX Advanced Metals (5016 JP) is a global leader in the semiconductor and ICT materials sector. It is seeking to raise up to US$2.6 billion.
- JXAM is a wholly owned subsidiary of ENEOS Holdings (5020 JP). After the listing, it is expected to become an equity-method affiliate of ENEOS.
- The bull case rests on its leading market position, focus businesses’ improving performance, improving profitability, shift to cash generation, and low leverage.
7. MIXUE Group IPO: The Leading Player that Justifies a Premium
- Mixue Group (MIX HK) has a whopping market share of 32.7% in 2023, based on number of cups sold. It also has the highest profit in the sector.
- With a strong profit record and net cash, it is a leader that captures industry growth. Its extensive network targets low-tier cities’ potential and the franchise model drives expansion.
- It justifies trading on a premium to sector average PER of 19.6x for FY25. If aligning P/B with ROE on the best-fit line, it should be priced at 5.1x pre-money.
8. Sotetsu Holdings (9003) – Crossholders Sell Down – Big ADV Multiple, Low Earnings Multiple, Boring
- Sotetsu Holdings (9003 JP) today announced a large-ish secondary equity offering – 10% of shares out and 20% of Max Real World Float.
- This is crossholders selling down roughly 30% of what they own. Sotetsu announced a buyback for a quarter of the offering over the next six months.
- The shareholder structure and distribution within Max Real World Float tells you all you need to know.
9. Tsumura (4540 JP) Equity Offering – Easy To Swallow, and Not Expensive
- Tsumura & Co (4540 JP) shocked everyone a year ago when they announced an immediate large price hike across the board for its kampo medicines. The stock was +35% immediately.
- It did not fall back. Now the stock is up 60% from a year ago and earnings are too. It’s still <10x PER. Now we get a ¥10bn secondary offering.
- It’s 12 days of ADV but not super heavy, and there is a buyback on the back end.
10. Hexaware Technologies IPO Trading – Very Strong Anchor, Very Poor Overall
- Hexaware Technologies raised around US$1bn in its India IPO, while its anchor book was strong, overall coverage was not.
- Hexaware is a global digital and technology services company with AI at its core, delivering innovative solutions that help customers in their digital transformation journey and subsequent operations.
- We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.
