Author Topic: 7235.JP - Tokyo Radiator Manufacturing  (Read 4542 times)

s8019

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #10 on: November 22, 2016, 02:44:06 AM »
An update: KKR agreed to acquire Calsonic at 1860 yen/share (tender offer expected in February 2017). It implies P/E of about 21 and P/B of 2.5. It's crazy valuation in my view but what do I know. TR still trades at P/E of 8.5x and P/B of 0.67.


writser

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #11 on: January 04, 2017, 11:42:10 AM »
For some reason I missed the boat on this one. Well done s8019. I'm not sure I like it at current prices as there i no timeline whatsoever. Still, not the worst idea in the world.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

constala

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #12 on: February 28, 2017, 09:23:37 AM »
From less than 700 to 1120 in 4 months and pretty much a straight line- this stock is the gift that keeps on giving! Funny how a slow steady rerating is satisfying.
Everything in moderation, including moderation.

writser

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #13 on: April 20, 2017, 10:12:51 AM »
Funny how a slow steady rerating is satisfying.
How about the steady rerating the past few weeks? (sorry, couldn't help myself .. )

I bought some shares the past few days. According to the latest quarterly they now have close to 10b in cash vs a 14b market cap. It seems like an absolute no-brainer for KKR to unlock the value on the balance sheet. Key issues are: will they do it quickly and will they screw minority holders (for example by doing a take-under) or treat them fairly (for example by pushing for a special dividend or share buyback). Also the question remains whether KKR can pull things off in Japan.

That said, if KKR pushes for a special dividend the company can easily pay out 8b yen. Valuing the stub at 8x earnings yields another 9b yen or so for a ~25% upside. And I think that's actually conservative: the company can probably sustain a larger return of capital and the stub has a very decent ROIC, generates decent cashflow and has a PE majority owner that will be looking for cost savings / synergies. And you can buy it at a ~3.5x ex-cash P/E. I like it.

Another interesting Japan idea was featured on VIC a few weeks ago: PanaHome. This is like the worst case scenario that could happen with Tokyo Radiator. Panasonic owns ~40% of PanaHome and tries to buy it on the cheap. A Hong Kong activist has bought 5% of PanaHome, is arguing the price is too low and goes to court. From the write-up:

Quote
They are litigating the fair value appraisal in Japanese courts and petitioning other shareholders in front of an upcoming June shareholder vote. Furthermore, Oasis has positioned the deal as a broader test of Japanís commitment to the corporate governance reforms that have been advanced under Prime Minister Shinzo Abe. Many of these reforms deal specifically with improving the protection of minority shareholders. As a result, the PanaHome deal is receiving high levels of scrutiny from both the media and business community.

Oasis believes that Panasonicís offer provides no credit for PanaHomeís large cash balance and that the fair value for the business is closer to •1300-•1600 per share when factoring in the cash, an analysis that is fairly self-evident. Oasis also believes that the process and methodologies used by PanaHomeís board to justify the takeover price are highly flawed. For example, the exchange ratio was set below the midpoint of the calculated fair value ranges and the comparable peers analysis includes a number of incomparable small and illiquid peers while omitting some very relevant peers.

At first glance the activists seem to have a point: to me the price paid looks (by Western standards) way too low. Currently PanaHome is trading at a 1.5% premium to the original offer. Most likely Panasonic buys the company on the cheap and you lose 1.5% but if the activists win the price could easily go up 30%. I have no position - still pondering whether this is a good idea or not. How likely is a 5% foreign activist to succeed? These guys did have some victories in the past - no total clowns.
« Last Edit: April 20, 2017, 10:16:33 AM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

writser

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #14 on: April 21, 2017, 04:05:28 AM »
Panasonic announced today they will switch to an all-cash offer of 1200 yen. Last trade: 1031 yen. Obviously I didn't buy PanaHome after pitching the idea here. **** me.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

giofranchi

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #15 on: April 21, 2017, 04:15:17 AM »
Panasonic announced today they will switch to an all-cash offer of 1200 yen. Last trade: 1031 yen. Obviously I didn't buy PanaHome after pitching the idea here. **** me.

Well, I guess you cannot possibly buy every single bargain out there...
Anyway, great job again!

Cheers,

Gio
Portfolio: AMZN, BRK.B, DIS, FB, FFH, FWONA, GOOG, IBB, JNJ, JPM, LBRDA, MKL, NKE, QQQ, SBUX, TRV, XBI

Paarslaars

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #16 on: April 21, 2017, 04:26:32 AM »
Panasonic announced today they will switch to an all-cash offer of 1200 yen. Last trade: 1031 yen. Obviously I didn't buy PanaHome after pitching the idea here. **** me.

Would have been some nice returns for a 1day trade  ;D

s8019

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #17 on: April 21, 2017, 06:47:57 AM »
Writser, it was not even my idea, it has been pitched in FT where probably several hundred thousand people read it or may be few millions.

Anyway what's your best guess for "base rate"? I mean how often KKR (or other PE firms) screw minorities in similar situations?


writser

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Re: 7235.JP - Tokyo Radiator Manufacturing
« Reply #18 on: April 24, 2017, 02:38:26 PM »
I have no idea and that's why I didn't pull the trigger on Panahome (i.e. I wanted to get the upside for free). I would guess the base rate is slim (<20%) but it could be possible that Abe's reforms are very slowly starting to have some effects. An article on Bloomberg today about activists in Japan: https://www.bloomberg.com/gadfly/articles/2017-04-24/yankee-hedge-funds-don-t-go-home-japan-wants-you . Also, the KKR deal itself was kind of a big deal: a US private equity firm buying a controlling stake in a Japanese company? Doesn't happen often afaik. Maybe the landscape is slowly shifting. But again, I don't know. Just some random thoughts.

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In the past, hedge funds in Japan faced not just hostile boards but a belligerent press and government in their attempts to shake up companies. Abe's push to have companies use cash more productively and better protect minority shareholder rights has changed the landscape.That may spell an end to on-the-cheap buyouts such as Toyota's $3.1 billion purchase of Daihatsu Motor Co. last year (which was opposed by Stamford, Connecticut-based Arga Investment Management LP) -- given the right kind of prodding from hedge funds.

I have a hard time keeping track of Japanese mergers (no Bloomberg). If anyone has some tips or a good website to track them it would be appreciated.
« Last Edit: April 24, 2017, 02:40:53 PM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.