On November 13, 2024, it was announced that Fine Today Holdings received approval for listing on the Tokyo Stock Exchange’s Prime Market. In this article, I will discuss the company’s profile, business details, offering outline at the time of the IPO, the price considerations based on the prospectus, and first-day price predictions. The analysis also takes into account the detailed information disclosed in the prospectus, so I recommend reading through it thoroughly.
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Company Overview and Business of Fine Today Holdings
Fine Today Holdings is a pure holding company with multiple subsidiaries and brands operating both domestically and internationally. The main regions of business expansion include Japan, China/Hong Kong, and the Asia-Pacific (APAC) region across 11 countries/areas. The company owns factories in Kuki, Saitama, Japan, and in Vietnam, and has established a vertically integrated business system covering research and development, production, and sales. For the fiscal year ending December 2023, the revenue breakdown was as follows: Japan 42.6%, China/Hong Kong 40.1%, and APAC 17.3%.
The company’s major brands include “fino” and “TSUBAKI,” which care for hair and skin, “SENKA,” a high-performance skincare brand, the men’s grooming brand “uno,” the body care brand “KUYURA” for China/Hong Kong, and “AG Deo24,” focused on odor care. These brands have a strong presence in each region, with fino, TSUBAKI, SENKA, and KUYURA each generating over 10 billion yen in revenue. Additionally, the company also markets other brands such as +tmr, SUPER MiLD, MA CHERIE, AQUAIR, and Sea Breeze.
Fine Today Holdings’ corporate purpose is to “help everyone weave wonderful days and live a beautiful and fulfilling life,” offering high-quality personal care products focused on hair care, skincare, and body care.
For detailed business content, I recommend reading the “Business Description” section of the securities registration statement submitted by Fine Today Holdings. The document can be accessed at the link below (this version on the Tokyo Stock Exchange site does not contain securities-related information): https://www.jpx.co.jp/listing/stocks/new/mklp77000000lami-att/12FineTodayHoldings-1s.pdf Additionally, Fine Today Holdings is an IPO case with a fund as a shareholder. The company was established in January 2021 by an investment fund or vehicle advised by CVC Asia Pacific Limited or its affiliates (hereinafter referred to as “CVC”) and focuses on the production, marketing, and sales of personal care products. The company traces its origins back to Shiseido Trading Co., Ltd., established in 1959.
IPO Offering Outline
- Listing Approval Date: November 13, 2024
- Preliminary Price Decision Date: December 2, 2024
- Price Decision Date: December 9, 2024
- Listing Date: December 17, 2024
Fine Today Holdings will offer shares not only to Japanese investors but also in overseas markets (with U.S. sales limited to qualified institutional buyers under Rule 144A of the U.S. Securities Act of 1933). This IPO follows the “Global Offering” method, used when the market capitalization and offering amount are large.
The main underwriters and syndicate members for this offering are as follows:
- Domestic Lead Underwriters: Daiwa Securities, SMBC Nikko Securities, Mizuho Securities, UBS Securities
- Domestic Syndicate Members: SBI Securities, Rakuten Securities
- Joint Global Coordinators: Daiwa Securities, Mizuho Securities, SMBC Nikko Securities, UBS Securities
The price stated in the prospectus is 2,150 yen, with the offering amount outlined as follows:
- Domestic Offering: Approximately 32.64 billion yen
- Overseas Offering: Approximately 44.16 billion yen
- Over-allotment: Approximately 11.52 billion yen
- Total: Approximately 88.31 billion yen
Price Considerations Based on the Prospectus
The expected price in the prospectus is 2,150 yen. The full-dilution market capitalization, considering all elements that impact dilution, can be calculated as follows: 2,150 yen × Fully Diluted Shares (102,389,966 shares) = Approximately 220.14 billion yen.
Although the company’s 2024 fiscal year forecast has not been disclosed yet, their medium-term plan sets a target for annual revenue growth of 6%. Assuming a 6% increase in revenue for the current period, we forecast the sales revenue at 106.18 billion yen. We also assume the net profit margin to be 11% based on their medium-term target for 2026 and calculate the expected net income at 1.168 billion yen.
Based on these assumptions, we calculate an EPS (earnings per share) of 114.08 yen, resulting in a price-to-earnings ratio (PER) of 18.85.
Comparison with Competitors
In the cosmetics sector, competitors such as Shiseido, Kose, Kao, Pola Orbis, and Mandom show significant variability in their PERs, largely due to downward revisions of earnings forecasts. For instance, Shiseido’s PER is a high 182x, making it less relevant for comparison. Pola Orbis, with a market cap of around 310 billion yen and a PER of 25.8x, is a more suitable comparable company.
Assuming a 20% IPO discount, the PER discount would be 20.64x (25.8 × 0.8). With the EPS of 114.08 yen, we calculate a price of 2,355 yen, which is lower than the 2,150 yen price in the prospectus.
First-Day Price Prediction
Given the forecasted fair value of approximately 2,943 yen (based on EPS of 114.08 yen × PER of 25.8), it is unlikely that the first-day price will immediately reach this level, considering that this is a fund exit case. Instead, I expect the stock price to rise gradually after the listing.
While this remains speculative, I predict that the public offering price will be slightly above the prospectus price of 2,150 yen, at around 2,200 yen. The first-day price may reach 2,355 yen, reflecting a 20% discount relative to Pola Orbis.
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