This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. BYD US$5.2bn Placement – Large Only in Absolute Size, past Deals Have Done Well
- BYD (1211 HK) is looking to raise around US$5.2bn via selling 4% additional shares.
- The company has undertaken a few deals before and they have ended up performing well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
2. Local Brokers Sound Off on 40% IPO Lock-Up—A Major Setup for Offshore Traders
- This 40% rule will distort bookbuilding, force down-pricing, choke float post-listing, and amplify volatility.
- Offshore investors like us benefit most—cheap IPO pricing with no lock-up. Local brokers see this as a giveaway to foreign funds and pushed back hard last Friday.
- FSS won’t budge—40% lock-up is happening. If issues arise post-implementation, they might adjust later.
3. Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis
- Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
- JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
- We have looked at the deal dynamics in our previous notes. In this note, we talk about updates and look at discounts vs performance for past secondary deals.
4. JX Advance Metals IPO – Digestable, but Not Really Attractive
- JX Advanced Metals (5016 JP)’s parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.5bn 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.
- We have covered various aspects of the deal in our previous notes. In this note, we will talk about the IPO pricing.
5. JX Advanced Metals IPO Preview
- JX Advanced Metals (5016 JP) is seeking to raise about ¥460 billion in the upcoming IPO on the Tokyo Stock Exchange. The indicative IPO price is ¥862 per share.
- The final IPO pricing will be on 10 March. JX Advanced Metals will be listed on 19 March. Eneos is selling as many as 534.9 million shares in the IPO.
- The company has a strong customer base. It is a key supplier to TSMC, Samsung, Intel, SK Hynix, and Micron for sputtering targets and high-purity metals.
6. Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings
- The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
- Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
- Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.
7. Japan Post Bank (7182 JP): The Current Playbook
- Since the offer announcement, Japan Post Bank (7182 JP)/JPB’s shares have declined by 2.5%. On 3 March, JPB completed the ToSTNeT-3 buyback by acquiring 13.3 million shares for JPY20 billion.
- To understand JPB’s trading pattern, it is instructive to examine its 2023 offering, Japan Post Insurance (7181 JP)/JPI’s 2019 offering, and Japan Post Holdings (6178 JP)/ JPH’s 2021 offering.
- JPB’s shares follow the trading pattern playbook of its 2023 and JPH’s 2021 offerings, in which investors buying the offer were rewarded with positive returns at the payment date.
8. Chifeng Jilong A/H Listing: Why Not Own International Peers Instead?
- Chifeng Jilong Gold Mining (600988 CH) , a gold mining company in China, is now looking to raise up to US$419m in its H-share listing in Hong Kong.
- It operates six gold mines in Asia and Africa and has been listed on the Shenzhen Stock Exchange since 2004.
- We have covered the company and deal background in our previous notes. In this note, we talk about the IPO pricing.
9. JX Advanced Metals IPO Valuation Analysis
- On 3 March, JX Advanced Metals (5016 JP) announced that the IPO will be offered at ¥810 to ¥820 per share (down from the initial indicative price of ¥862 per share).
- Our base case valuation per share is ¥863 which is 5.8% higher than the mid-point of the expected IPO price range of ¥810 to ¥820 per share.
- Given the lack of upside, we have a Negative view of this JX Advanced Metal IPO.
10. JX Advanced Metals (5016 JP) IPO: Price Range Is Fair
- JX Advanced Metals (5016 JP) has announced an IPO price range of JPY810-820 per share, which is 6.0%-4.9% below the IPO reference price range of JPY862.
- Relevant notes – JX Advanced Metals (5016 JP) IPO: The Bull Case, JX Advanced Metals (5016 JP) IPO: The Bear Case and JX Advanced Metals (5016 JP) IPO: Valuation Insights.
- My SoTP valuation of JPY860 is modestly above the IPO price range, suggesting that the price range is fair.
