Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

On Friday March 6, <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a> announced that during the month of February it had repurchased 14.4mm shares for the sum of ¥44.78bn. That is a fair bit, and represented 16.6% of volume traded during the month and almost exactly 800,000 shares a day. January was ~500,000 shares a day.
That leaves Docomo with less than a month of buying to complete its current ¥300bn buyback, and then it is back to "Customer Return."
As shown in <a href="https://www.smartkarma.com/insights/docomo-buyback-nearly-done-ntt-docomo-cheapest-fundamentally-in-a-looooong-time" target="_blank" data-smartkarma-citation="insights:36486" rel="noopener">Docomo Buyback Nearly Done; NTT/Docomo Cheapest Fundamentally in A Looooong Time</a>, during times when one of the pair is buying back shares, there is clear bias to performance (it is not smooth, but over time it matters). 
Since this buyback started, the 3yr average forward EPS ratio of NTT vs Docomo has moved very little (slightly up) but it is at decade-plus highs today, and the non-Docomo portion of NTT OP is now at a record high and consensus forecast is for it to move higher.
And NTT is coming back to do more buybacks according to its CEO speaking three weeks ago.
The state suggests NTT is cheap. The forward flow suggests the next couple of hundred billion yen of buybacks probably favors NTT, and the if NTT repeats the last on-market buyback, it would be ¥250bn which would be

On Friday March 6, NTT Docomo Inc (9437 JP) announced that during the month of February it had repurchased 14.4mm shares for the sum of ¥44.78bn. That is a fair bit, and represented 16.6% of volume traded during the month and almost exactly 800,000 shares a day. January was ~500,000 shares a day.
That leaves Docomo with less than a month of buying to complete its current ¥300bn buyback, and then it is back to "Customer Return."
As shown in Docomo Buyback Nearly Done; NTT/Docomo Cheapest Fundamentally in A Looooong Time, during times when one of the pair is buying back shares, there is clear bias to performance (it is not smooth, but over time it matters). 
Since this buyback started, the 3yr average forward EPS ratio of NTT vs Docomo has moved very little (slightly up) but it is at decade-plus highs today, and the non-Docomo portion of NTT OP is now at a record high and consensus forecast is for it to move higher.
And NTT is coming back to do more buybacks according to its CEO speaking three weeks ago.
The state suggests NTT is cheap. The forward flow suggests the next couple of hundred billion yen of buybacks probably favors NTT, and the if NTT repeats the last on-market buyback, it would be ¥250bn which would be 

Days Left on Docomo Buyback; Completely the Wrong Price Vs NTT

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/367/original/2020-02-05_03-43-39.png?1580847984" class="editor-image img-responsive" data-smartkarma-image-id="116367"></figure><div class="content-caption">Source • Japan Analytics</div>4TH FEBRUARY ROUNDUP - As expected the 121 Results and 41 Forecast/Revision announcements yesterday took our Results Score 16bps lower to a new three-year low, although the Score is still positive. The Forecast/REvision Score added 13bps helped by <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> and <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao (4452 JP)</a> although the latter's forecast is optimistic as we discuss in the DETAIL below.<hr>• SECTOR TIMELINE •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/368/original/2020-02-05_03-47-58.png?1580848469" class="editor-image img-responsive" data-smartkarma-image-id="116368"></figure><div class="content-caption">Source • Japan Analytics</div>SECTOR TIMELINE - <a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya (7741 JP)</a>'s results were the largest factor in the decline in the Other Commerical Products Sector. <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> helped Healthcare tick up, while <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-gro" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a> fuelled the strong recovery in the Banks Sector.  <a href="https://www.smartkarma.com/entities/systena-corp" target="_blank" data-smartkarma-citation="entities:20438:1" rel="noopener">Systena (2317 JP)</a> and <a href="https://www.smartkarma.com/entities/ntt-data-corp" target="_blank" data-smartkarma-citation="entities:11232:1" rel="noopener">NTT Data (9613 JP)</a> added to the erosion of the Information Technology Sector's lead, although partially offset by <a href="https://www.smartkarma.com/entities/itochu-techno-solutions-corp" target="_blank" data-smartkarma-citation="entities:2431:1" rel="noopener">Itochu Techno Solutions (4739 JP)</a>.  <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui (8031 JP)</a> 21% yoy decline in Q3 Net Income continued to downtrend in the Wholesale Sector's Score.

Source • Japan Analytics4TH FEBRUARY ROUNDUP - As expected the 121 Results and 41 Forecast/Revision announcements yesterday took our Results Score 16bps lower to a new three-year low, although the Score is still positive. The Forecast/REvision Score added 13bps helped by Takeda Pharmaceutical (4502 JP) and Kao (4452 JP) although the latter's forecast is optimistic as we discuss in the DETAIL below.• SECTOR TIMELINE •Source • Japan AnalyticsSECTOR TIMELINE - Hoya (7741 JP)'s results were the largest factor in the decline in the Other Commerical Products Sector. Takeda Pharmaceutical (4502 JP) helped Healthcare tick up, while Mitsubishi UFJ Financial (MUFG) (8306 JP) fuelled the strong recovery in the Banks Sector.  Systena (2317 JP) and NTT Data (9613 JP) added to the erosion of the Information Technology Sector's lead, although partially offset by Itochu Techno Solutions (4739 JP).  Mitsui (8031 JP) 21% yoy decline in Q3 Net Income continued to downtrend in the Wholesale Sector's Score.   

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 4th February ▲2371 4502 4739 ▼7741 4452 2317

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> today announced its well-flagged additional buyback for this fiscal year which is designed to buy shares from the Japanese government. This has been signalled/known since last December when a line was proposed in the budget for non-tax revenue to provide stimulus/buffer to offset the upcoming consumption tax hike. The buyback is tomorrow morning at 8:00-8:45am local time on the ToSTNeT-3 venue of the Tokyo Stock Exchange. This is a 53 million share buyback at ¥5,126/share - a price which is at the top end of the recent range. This is not a surprise. It was announced 6 August as being up to 53mm shares spending up to ¥300 billion (discussed in <a href="https://www.smartkarma.com/insights/another-ntt-buyback-and-more-accretion" target="_blank" data-smartkarma-citation="insights:31550" rel="noopener">Another NTT Buyback and More Accretion</a>), which was in some ways a signal that they were willing to pay up for the shares (it averages to ¥5,660/share they could have paid), but the time limit was 30 September to get under the wire for the government spending year. Helpfully, there is also a headline which says...<div class="content-highlight">*JAPAN MOF PLANS TO SELL BACK 48.7M NTT SHARES VIA TOSTNET-3</div>This is a ToSTNeT-3 transaction which means everyone can participate up to their full size (if you put in for more than 53 million shares, the exchange will cap you at the size of the ToSTNeT-3 maximum. This transaction has ramifications for the NTT/Docomo ratio going forward. Thoughts below.

NTT (Nippon Telegraph &amp; Telephone) (9432 JP) today announced its well-flagged additional buyback for this fiscal year which is designed to buy shares from the Japanese government. This has been signalled/known since last December when a line was proposed in the budget for non-tax revenue to provide stimulus/buffer to offset the upcoming consumption tax hike. The buyback is tomorrow morning at 8:00-8:45am local time on the ToSTNeT-3 venue of the Tokyo Stock Exchange. This is a 53 million share buyback at ¥5,126/share - a price which is at the top end of the recent range. This is not a surprise. It was announced 6 August as being up to 53mm shares spending up to ¥300 billion (discussed in Another NTT Buyback and More Accretion), which was in some ways a signal that they were willing to pay up for the shares (it averages to ¥5,660/share they could have paid), but the time limit was 30 September to get under the wire for the government spending year. Helpfully, there is also a headline which says...*JAPAN MOF PLANS TO SELL BACK 48.7M NTT SHARES VIA TOSTNET-3This is a ToSTNeT-3 transaction which means everyone can participate up to their full size (if you put in for more than 53 million shares, the exchange will cap you at the size of the ToSTNeT-3 maximum. This transaction has ramifications for the NTT/Docomo ratio going forward. Thoughts below.

Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a>  has announced a secondary offering of 21.5m shares (around 7.2% of the total shares outstanding). The offer allows thirteen of its current shareholders to reduce their holdings in the company. The offer will be priced between 10th-12th of September at a 0%-10% discount.In this note, we take closer look at Recruit’s fundamentals ahead of its proposed secondary offer.

Recruit Holdings (6098 JP)  has announced a secondary offering of 21.5m shares (around 7.2% of the total shares outstanding). The offer allows thirteen of its current shareholders to reduce their holdings in the company. The offer will be priced between 10th-12th of September at a 0%-10% discount.In this note, we take closer look at Recruit’s fundamentals ahead of its proposed secondary offer.

Recruit Holdings: A Closer Look at Fundamentals Ahead of the Secondary Offer

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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.

Equity Capital Markets

Recruit Holdings / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options are fully exercised. Recruit has launched the offering to provide an opportunity for thirteen shareholders to reduce their holdings.<div class="content-highlight">Recruit shares have increased around 3x in three years, adjusting for the three-for-one stock split effective on July 2017. The strong outperformance is due to the solid performance of its three business segments - HR Technology, Media &amp; Solutions and Staffing. However, from a valuation perspective, Recruit is fully priced, and we would need a 10% discount to participate in the offering.</div>

Recruit Holdings (6098 JP) announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options are fully exercised. Recruit has launched the offering to provide an opportunity for thirteen shareholders to reduce their holdings.Recruit shares have increased around 3x in three years, adjusting for the three-for-one stock split effective on July 2017. The strong outperformance is due to the solid performance of its three business segments - HR Technology, Media &amp; Solutions and Staffing. However, from a valuation perspective, Recruit is fully priced, and we would need a 10% discount to participate in the offering.

Recruit Holdings Secondary Offering: Coming at a Full Valuation

Japan

NTT Data Corporation mainly provides large scale system integration and networking system services. System integration involves data transmission system design, sales, leasing, and services.  Network System Services include internet related and linked computer networks, and data provision and management of data. The Company is a subsidiary of Nippon Telegraph & Telephone Corporation.

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NTT Data Corp (9613 JP)

Days Left on Docomo Buyback; Completely the Wrong Price Vs NTT

On Friday March 6, NTT Docomo Inc (9437 JP) announced that during the month of February it had repurchased 14.4mm shares for the sum of ¥44.78bn....

Travis Lundy

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 4th February ▲2371 4502 4739 ▼7741 4452 2317

4TH FEBRUARY ROUNDUP - As expected the 121 Results and 41 Forecast/Revision announcements yesterday took our Results Score 16bps lower to a new...

Campbell Gunn

NTT: The Last Big Buyback This Year?

NTT (Nippon Telegraph & Telephone) (9432 JP) today announced its well-flagged additional buyback for this fiscal year which is designed to buy...

Travis Lundy

Recruit Holdings: A Closer Look at Fundamentals Ahead of the Secondary Offer

Recruit Holdings (6098 JP) has announced a secondary offering of 21.5m shares (around 7.2% of the total shares outstanding). The offer allows...

Supun Walpola

Recruit Holdings Secondary Offering: Coming at a Full Valuation

Recruit Holdings (6098 JP) announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options...

Arun George

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