Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

EXEDY Corporation manufactures drivetrain products for automobiles, industrial vehicles, and construction machinery.  The Company's products include manual clutches, torque converters, power shift transmissions, and hydraulic clutches. Exedy has its subsidiaries in South Korea, Australia, the US and the UK.

<ul>
<li>8 days ago I wrote Murakami-san upped his stake in <a href="https://www.smartkarma.com/entities/exedy-corp" target="_blank" data-smartkarma-citation="entities:6516:1" rel="noopener">Exedy Corp (7278 JP)</a> to 23.5%, could buy more into earnings, and earnings could deliver a buyback. That was ¥3495/3600.</li>
<li>He bought more, reported 24.72% as of 22-Oct). I bet he reports more in a week. Also, Exedy today reported a small yoy gain in H1 revenue. OP+76%yoy. NP+17%yoy.</li>
<li>The company also reported a BIG div hike to ¥200/yr and a giant ¥30bn buyback. Activists and Murakami hangers-on have won. So watch out! The playbook is different than expected.</li>
</ul>


8 days ago I wrote Murakami-san upped his stake in Exedy Corp (7278 JP) to 23.5%, could buy more into earnings, and earnings could deliver a buyback. That was ¥3495/3600.
He bought more, reported 24.72% as of 22-Oct). I bet he reports more in a week. Also, Exedy today reported a small yoy gain in H1 revenue. OP+76%yoy. NP+17%yoy.
The company also reported a BIG div hike to ¥200/yr and a giant ¥30bn buyback. Activists and Murakami hangers-on have won. So watch out! The playbook is different than expected.


[JAPAN ACTIVISM] Exedy (7278) - You Won, BIG Capital Payout, Murakami Up. Now Watch Out!

<ul>
<li>This past week, activist Murakami-san's City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?  ¥2,928/share.</li>
<li>The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They've since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.</li>
<li>If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is &lt;0.6x. ROE would be 7+%. There's room to run here, still. </li>
</ul>


This past week, activist Murakami-san's City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?  ¥2,928/share.
The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They've since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is &lt;0.6x. ROE would be 7+%. There's room to run here, still. 


[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) - LOTS of Room Left To Run

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>One of the sectors we like for the next phase of the Japanese stock market</li>
<li>The market is not giving the benefit of the doubt to monetisation of its property portfolio</li>
<li>The core  railway business is back to pre-Covid 19  levels</li>
</ul>


One of the sectors we like for the next phase of the Japanese stock market
The market is not giving the benefit of the doubt to monetisation of its property portfolio
The core  railway business is back to pre-Covid 19  levels


All Aboard! JR East and the Monetisation of Its Property Assets

Podcast by Dom Cooke to explore big businesses, Business Breakdowns

Business Breakdowns

Podcast by Dom Cooke to explore big businesses

Learn how companies work from the people who know them best. We do deep research and interview industry veterans, investment professionals, and corporate executives to explain the inner workings of public stocks and private businesses. For each company, we break down their history, business model, financial statements, secret sauce, and bull/bear case. We believe every business has lessons to teach us and Breakdowns is here to highlight them. Learn more and stay up to date at www.joincolossus.com.

Cross Asset Strategy

<ul><li>Introduction to new investment strategy: activism in Japan</li><li>Potential for high returns with unique approach to investing</li><li>Evolution of opportunity in Japan and potential for success due to increasing pro-shareholder culture</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Introduction to new investment strategy: activism in JapanPotential for high returns with unique approach to investingEvolution of opportunity in Japan and potential for success due to increasing pro-shareholder cultureThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Going Activist in Japan - [Business Breakdowns, EP.185]

<ul>
<li>In late May, Toyota Group member <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> announced it would sell its 37% stake in <a href="https://www.smartkarma.com/entities/exedy-corp" target="_blank" data-smartkarma-citation="entities:6516:1" rel="noopener">Exedy Corp (7278 JP)</a> . The market dropped. But that was the opportunity.</li>
<li>On 30 May, I said "Buy the deal, buy in the market. It's cheap and vulnerable." It's up 21.5% since (the day after). Peers are down 15-20%. </li>
<li>The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There's LOTS of cash left. </li>
</ul>


In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP) . The market dropped. But that was the opportunity.
On 30 May, I said "Buy the deal, buy in the market. It's cheap and vulnerable." It's up 21.5% since (the day after). Peers are down 15-20%. 
The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There's LOTS of cash left. 


[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) - LOTS of Room Left To Run

Governance & Activism in Japanese Markets

Japan Activism
Governance & Activism in Japanese Markets

[JAPAN ACTIVISM] Exedy (7278) - You Won, BIG Capital Payout, Murakami Up. Now Watch Out!

Exedy (7278) Earnings were OK/decent. Murakami-san has gone to 24.7%. We have a sharply higher dividend payout and policy, and a HUGE buyback....

Travis Lundy

[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) - LOTS of Room Left To Run

Muirakami-san continues to accumulate Exedy. Now at 23.5%. Remaining overhang from the 36+% offering is 2%. Earnings are in a week. Excess capital...

Travis Lundy

All Aboard! JR East and the Monetisation of Its Property Assets

An undervalued sector in the Japanese stock market which is at the intersection of a few key themes including activism, raising returns and...

Rikki Malik

Going Activist in Japan - [Business Breakdowns, EP.185]

Public.com is offering a high yield on bond accounts, while the Business Breakdowns podcast discusses activism in Japan as a compelling investment...

Business Breakdowns

[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) - LOTS of Room Left To Run

Murakami-san is up to 18% in Exedy. But that is 20.9% of voting rights. And that is at a price higher than pre-offering announcement. Since he...

Travis Lundy