IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

Weekly Deals Digest (11 Oct) - Taiyo, Arclands, BASE, PHC, Haitong Unitrust, Cleanaway, Ingenia/Peet

PHC Holdings (6523 JP): Willing Sellers, but Not at Toho's Rumoured Price

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toho-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:11546:1" rel="noopener">Toho Holdings (8129 JP)</a>'s rumoured JPY200bn proposal for <a href="https://www.smartkarma.com/entities/phc-holdings-corp" target="_blank" data-smartkarma-citation="entities:34198:1" rel="noopener">PHC Holdings (6523 JP)</a> implies about JPY1,571. Mitsubishi Chemical and Mitsui sold 3.4m shares on-market near that level, signalling little faith.</li>
<li>Their selling weakens the deal's risk/reward: it signals lower deal certainty, and there would be a large overhang of about 20% of the shares if Toho walks away.</li>
<li>My fair value range remains JPY1,800–2,030, but at the last close, JPY1,595, the risk/reward is skewed to the downside.</li>
</ul>



Toho Holdings (8129 JP)'s rumoured JPY200bn proposal for PHC Holdings (6523 JP) implies about JPY1,571. Mitsubishi Chemical and Mitsui sold 3.4m shares on-market near that level, signalling little faith.
Their selling weakens the deal's risk/reward: it signals lower deal certainty, and there would be a large overhang of about 20% of the shares if Toho walks away.
My fair value range remains JPY1,800–2,030, but at the last close, JPY1,595, the risk/reward is skewed to the downside.


PHC Holdings (6523 JP): Corporate Selling Tilts the Risk/Reward to the Downside