Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>In early November, <a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life Insurance (8750 JP)</a> announced it would buy <a href="https://www.smartkarma.com/entities/ipet-holdings-inc" target="_blank" data-smartkarma-citation="entities:36551:1" rel="noopener">ipet Holdings (7339 JP)</a>, of which listed VC/PE/incubator <a href="https://www.smartkarma.com/entities/dream-incubator-inc" target="_blank" data-smartkarma-citation="entities:1229:1" rel="noopener">Dream Incubator (4310 JP)</a> owned 55%. DI agreed. </li>
<li>Dream Incubator's exit is worth ¥21.54bn in cash and ¥18.2bn in extraordinary gains on the consolidated financial statements for March 2023. </li>
<li>That is nice. They have promised to deliver ¥10bn of proceeds to shareholders and reinvest the other ¥5bn to grow their consulting business. It's a nice little asset.</li>
</ul>


In early November, Dai Ichi Life Insurance (8750 JP) announced it would buy ipet Holdings (7339 JP), of which listed VC/PE/incubator Dream Incubator (4310 JP) owned 55%. DI agreed. 
Dream Incubator's exit is worth ¥21.54bn in cash and ¥18.2bn in extraordinary gains on the consolidated financial statements for March 2023. 
That is nice. They have promised to deliver ¥10bn of proceeds to shareholders and reinvest the other ¥5bn to grow their consulting business. It's a nice little asset.


Dream Incubator (4310 JP) - An Interesting Exit and Attractive Valuation for Future Growth

Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Dentsu’s Q322 results show an organic net revenue decline of 3.7% (-4.7% including Russia), reflecting a particularly tough comparative with Q321 in Japan. This masks continuing good progress in building revenues from Customer Transformation & Technology (CT&T), which grew over 20% and now constitutes 32.6% of group revenues. Alongside the figures, Dentsu announced a further restructuring from 1 January 2023 that removes the distinction between Dentsu Japan Network (DJN) and Dentsu International (DI). The reconfigured global management team will reflect the group’s increasing diversity and includes the first non-Japanese CFO.

Dentsu’s Q322 results show an organic net revenue decline of 3.7% (-4.7% including Russia), reflecting a particularly tough comparative with Q321 in Japan. This masks continuing good progress in building revenues from Customer Transformation & Technology (CT&T), which grew over 20% and now constitutes 32.6% of group revenues. Alongside the figures, Dentsu announced a further restructuring from 1 January 2023 that removes the distinction between Dentsu Japan Network (DJN) and Dentsu International (DI). The reconfigured global management team will reflect the group’s increasing diversity and includes the first non-Japanese CFO.

Dentsu Group - Solid Q3 and new One dentsu group structure

Dentsu has had a strong Q222, reporting organic revenue growth of 8.2% (7.9% including Russia). Customer Transformation & Technology (CT&T) is the main engine of growth and represents 32.3% of group net revenue, up from 31.5% in Q122. We would expect this segment to be more resilient should a deteriorating H222 macro environment stall advertising momentum. Management is now guiding to the top end of the previously cited 4–5% revenue growth range and we have edged our forecasts ahead, with earnings also set to benefit from a lower tax charge than expected. The shares have outperformed the peer set in the year-to-date, narrowing the discount at which they trade to 12% on current year EV/EBITDA.

Dentsu has had a strong Q222, reporting organic revenue growth of 8.2% (7.9% including Russia). Customer Transformation & Technology (CT&T) is the main engine of growth and represents 32.3% of group net revenue, up from 31.5% in Q122. We would expect this segment to be more resilient should a deteriorating H222 macro environment stall advertising momentum. Management is now guiding to the top end of the previously cited 4–5% revenue growth range and we have edged our forecasts ahead, with earnings also set to benefit from a lower tax charge than expected. The shares have outperformed the peer set in the year-to-date, narrowing the discount at which they trade to 12% on current year EV/EBITDA. 

Dentsu Group - Edging forecasts to higher end of range

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Event-Driven

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.</li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-May 2022

Dentsu has edged up its FY22 guidance for organic growth to a range of 4–5%, from 4% previously, following a strong Q122 performance, particularly at Dentsu International (DI). Customer Transformation & Technology (CT&T) continues to build, accounting for 31.5% of group net revenues in the period. Management remains confident of a good runway of growth. Group operating margin rose from 20.2% in Q121 to 21.2%, up 140bps at constant currency. FY22 guidance remains for a 17.7% operating margin, implying some circumspection on costs for the remainder of the year.

Dentsu has edged up its FY22 guidance for organic growth to a range of 4–5%, from 4% previously, following a strong Q122 performance, particularly at Dentsu International (DI). Customer Transformation & Technology (CT&T) continues to build, accounting for 31.5% of group net revenues in the period. Management remains confident of a good runway of growth. Group operating margin rose from 20.2% in Q121 to 21.2%, up 140bps at constant currency. FY22 guidance remains for a 17.7% operating margin, implying some circumspection on costs for the remainder of the year.

Japan

TOHO CO., LTD. produces and distributes motion pictures for cinema, television, and video.  The Company also sells character merchandise based on their media productions, distributes foreign films, operates musical theaters, and produces musical shows. In addition, Toho manages movie theaters in urban areas.

TOKYO BROADCASTING SYSTEM HOLDINGS, INC. is a media company that broadcasts television and radio programs nationally.  The Company offers a variety of TV programs & film production, visual & music software production, and cable television programming.  Tokyo Broadcasting System provides digital satellite broadcasting services and also operates real estate business.

FUJI MEDIA HOLDINGS, INC., a member of the Fuji-Sankei Group, produces and broadcasts a variety of television programs and sells commercial spots through a network system.  The Company is advancing into digital satellite broadcasting.

KADOKAWA DWANGO CORP is a holding company established through the merger of DWAN GO and KADOKAWA. The company publishes a variety of books and magazines as well as produces movies and videos.  KADOKAWA DWANGO CORP also develops and makes int ernet communication tools for cellular phones.

CyberAgent, Inc. operates blog media website, Ameba.  The Company also operates internet advertising agency, foreign exchange trading website, and creates PC and mobile contents such as advertisements and games. CyberAgent invests in companies with internet related business.

HAKUHODO DY HOLDINGS INCORPORATED is a holding company established through the merger of Hakuhodo Inc., Daiko Advertising Inc., and Yomiko Advertising Inc. The Company, through its subsidiaries, provides comprehensive advertising services.

TOEI ANIMATION CO., LTD. plans and produces animated cartoon movies.  The Company also grants broadcasting rights and licenses for other companies to produce and sell the animated characters' merchandise.  Toei Animation stages its own promotional shows and events to advertise movies.

Nippon Television Holdings Inc is a commercial television broadcaster which provides programs through a national network system.  The Company is expanding into digital satellite broadcasting. Nippon Television also operates publication and entertainment business such as concerts and exhibitions. The Company is affiliated with Yomiuri Shimbun.

TV Asahi Holdings Corporation produces and broadcasts a variety of television programs mainly in the Tokyo area. The Company sells commercial spots through a network system. TV Asahi also provides patent maintenance for music publication, entertainment planning, sales of broadcasting equipment, and TV shopping.

SKY Perfect JSAT Holdings, Inc. is a holding company, which manages financial operations for its subsidiaries. As a group, the Company provides broadcasting and data transmission services via satellites. SKY Perfect JSAT delivers digital TV programs including movies, music, sports and entertainment to its subscribers.

Pearson plc provides education products and services to institutions, governments and individual learners in over 80 countries. The Company's major revenue markets are North America, 'Core' including the UK, Italy and Australia and 'Growth' including Brazil, China and South Africa. It also owns the Financial Times, 50% of the Economist and 47% of Penguin Random House.

Madison Square Garden Sports Corp. is a professional sports company that owns and operates sports franchises.

Madison Square Garden Sports Corp. (MSGS US)

The New York Times Company operates media businesses.  The Company publishes daily newspapers and operates Internet websites.  The newspapers and websites distribute news and entertainment.

Liberty Global plc owns interests in broadband, distribution, and content companies operating outside the continental United States, principally in Europe, Asia, and Latin America.

Liberty Broadband Corporation invests in communication companies. The Company has principal assets in TruePosition and Time Warner Cable.

Nexstar Broadcasting Group, Inc, is a television broadcasting company focused on the acquisition, development, and operation of television stations in medium using traditional media, e-MEDIA, digital and mobile media platforms. Nexstar Broadcasting Group, Inc offers its services in the central east part of United States.

Nexstar Broadcasting Group, Inc (NXST US)

Compagnie du Cambodge is an investment holding company that invests in companies active in agriculture, industry, real estate and finance.  The Company owns and operates plantations in Malaysia and forests in Cameroon.

JC Decaux SA offers advertising services.  The Company sells advertising on street furniture such as bus shelters, free standing panels, columns, and automatic toilets, billboards, and posters on buses, trains, and subways, and at railroad stations and airports.

CTS Eventim AG & Co. KGaA produces, sells, brokers and distributes entry tickets for concerts, theater productions, artistic, sporting and similar events. The Company operates an online booking system that allows event promoters to sell their tickets over a variety of distribution channels. CTS also sells tickets directly over the Internet and a call center and offers system support services.

ITV plc is a United Kingdom media company covering broadcasting, news, and production.  The Company owns all of the regional Channel 3 licenses in England and Wales.  ITV owns ITV1, a commercial television channel, as well as ITV2, a partial interest in GMTV, and other interests.

DENTSU INC. mainly provides comprehensive advertising services.  The Company also provides marketing and event planning & promotion services.  Dentsu has associated companies in the US, Europe, and Asia.

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Dentsu Inc (4324 JP)

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Dream Incubator has incubated and exited. Now is their biggest, and then they will distribute capital to shareholders. This will be a smaller,...

Travis Lundy

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Dentsu’s Q322 results show an organic net revenue decline of 3.7% (-4.7% including Russia), reflecting a particularly tough comparative with Q321...

Edison Investment Research

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Dentsu has had a strong Q222, reporting organic revenue growth of 8.2% (7.9% including Russia). Customer Transformation & Technology (CT&T)...

Edison Investment Research

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A look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.

Janaghan Jeyakumar, CFA

Dentsu Group - Guidance edged up

Dentsu has edged up its FY22 guidance for organic growth to a range of 4–5%, from 4% previously, following a strong Q122 performance, particularly...

Edison Investment Research

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