Equity Capital Markets

Weekly Top Ten Equity Capital Markets – Jul 7, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Big ¥500bn Honda (7267) Offering Is Small

By Travis Lundy, Quiddity Advisors

  • Just pre-close on 2 July, Reuters carried an article suggesting a ¥500bn secondary offering in Honda Motor (7267 JP) as insurers sold. The stock fell 4% in minutes. 
  • Honda semi-confirmed but it took two days to get to the details, now out. The stock climbed in the meantime. 
  • At launch, this deal is two-thirds covered by buyback + passive demand but the supply is heavily-weighted to retail. Cheaper than it looks, lots of moving parts. Read the details!

2. Timee (215A JP) IPO: The Bull Case

By Arun George, Global Equity Research Ltd

  • Timee Inc (215A JP), a leading part-time job platform in Japan, is seeking to raise up to US$286 million. Book-building runs from 9 to 23 July.   
  • Timee’s app allows users to work shifts as short as one hour at restaurants, convenience stores, and hotels, with quick payment for their work.   
  • The bull case rests on favourable market trends, best-in-class revenue growth, good retention rates, credible growth drivers, and top-quartile EBITDA margins.

3. Shift Up IPO Book Building Results Analysis

By Douglas Kim, Douglas Research Advisory

  • Shift Up reported solid IPO book building results. Shift Up’s IPO price has been determined at 60,000 won won, which is at the high end of the IPO price range.
  • According to Hankyung Business Daily, the demand ratio was 223 to 1. Shift Up will start trading on 11 July.
  • Our base case valuation of Shift Up is market cap of 5.7 trillion won or target price of 95,510 won (59% higher than the IPO price of 60,000 won).

4. Honda (7267 JP): A US$3.3 Billion Secondary Offering

By Arun George, Global Equity Research Ltd

  • Honda Motor (7267 JP) has announced a secondary offering of up to 298.9 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY535 billion (US$3.3 million).
  • The offering is another sign that the unwinding of cross-shareholdings is catching pace as part of Japan’s corporate governance reforms.
  • Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 17 and 22 July (likely 17 July).

5. Aisin (7259 JP): The Current Playbook

By Arun George, Global Equity Research Ltd

  • Since the US$1.1 billion secondary placement announcement, Aisin (7259 JP)’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).
  • Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.
  • The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

6. Timee Pre-IPO – Peer Comparison – Stronger Growth Has Allowed It to Close the Margin Gap

By Clarence Chu, Aequitas Research

  • Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
  • Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan. 
  • In an earlier note, we looked at the firm’s past performance. In this note, we undertake a peer comparison.

7. ECM Weekly (1st July 2024)-Aisin, Mitsui, Japan Hotel, Allied Blenders, Webtoon, Hyundai India

By Sumeet Singh, Aequitas Research

  • Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
  • On the IPO front, we looked at the upcoming mega-listing for Hyundai Motor India.
  • On the placement front, the week was dominated by the cross-shareholding unwinds in Aisin (7259 JP) and Mitsui & Co Ltd (8031 JP)

8. Aisin Corp Placement – Follow Up – Could Fall into a Similar Fate as past Large JP Secondary Deals

By Clarence Chu, Aequitas Research

9. Honda Motor Placement – Large in Size, Relatively Small in Other Terms

By Sumeet Singh, Aequitas Research

  • A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP) .
  • The possibility of such a selldown was flagged earlier in the week by Reuters. Thus, the deal is well flagged.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

10. Toenec (1946 JP) Offering – Nearly $50mm on SmallCap Utility Infra Co as Chubu EPCO Sells Down

By Travis Lundy, Quiddity Advisors

  • Today, Toenec Corp (1946 JP) – an integrated facilities company 50+% owned by Chubu Electric Power Co (9502 JP) announced Chubu EPCO would sell down 7.7% to go to 43%+.
  • This is surprising. It suggests there are more selldowns to come. It’s also “big” at 88 days of ADV and about 26% of Max Real World Float (85% retail).
  • This is an odd sell-down. Chubu EPCO obviously doesn’t want to buy it in. That means overhang for years.