Report
EUR 94.03
For Business Accounts Only
We discussed in our previous note that the company has a long track record in the memory industry with more than 30 years of history. It was the technology leader as the inventor of NAND flash memory as well as 3D NAND technology. Kioxia is currently the second-largest player in the NAND market. The NAND flash market was characterized by a supply glut in 2019 and has been recovering in 2020. Looking forward, we think the demand is uncertain in the near term given the declining shipment of mobile devices but we believe that over the longer term, the demand growth is visible both due to the expansion of memory in mobile devices and demand from data centers.
In this note, we analyse the deal dynamics, provide forecasts and compare the company's valuation against memory peers. We are of the view that it shall trade at a PER multiple close to peer average though it offers a pure exposure to the NAND market. The deal scores at the borderline for participation in the Aequitas ECM Framework. We would only buy at the low end of the price but we are also aware of the weak sentiment for its memory peers.
Kioxia IPO - Push factors for a NAND pure-play premium valuation
Kioxia, formerly the Toshiba Memory Corporation, started book building to raise up to USD 2.9bn to list on TSE. .We discussed in our previous note that the company has a long track record in the memory industry with more than 30 years of history. It was the technology leader as the inventor of NAND flash memory as well as 3D NAND technology. Kioxia is currently the second-largest player in the NAND market. The NAND flash market was characterized by a supply glut in 2019 and has been recovering in 2020. Looking forward, we think the demand is uncertain in the near term given the declining shipment of mobile devices but we believe that over the longer term, the demand growth is visible both due to the expansion of memory in mobile devices and demand from data centers.
In this note, we analyse the deal dynamics, provide forecasts and compare the company's valuation against memory peers. We are of the view that it shall trade at a PER multiple close to peer average though it offers a pure exposure to the NAND market. The deal scores at the borderline for participation in the Aequitas ECM Framework. We would only buy at the low end of the price but we are also aware of the weak sentiment for its memory peers.
Underlying
Kioxia Holdings (6600 JT)
Provider
Aequitas Research
Aequitas Research is a leading ECM research firm with a focus on IPOs and placements/follow-on offerings across the Asia Pacific with deal size of over USD100m.
Since 2015, we have covered 400+ IPOs and 450+ placements with a hit rate of 73% and 65%, respectively. We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic analysis.
Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis. We also provide a more quant driven analysis on placement/follow-on offerings.
Markets that we cover include:
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Ke Yan
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