Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>
Market Wrap: Japanese equities edged higher. Easing inflation, BoJ's dovish stance and Wall Street optimism influenced the market. Industrials and basic materials best sectors. </li>
<li>
Major Movers: Shipping disruptions benefit container plays; Shiseido plans reforms to cut ¥40 billion; China's gaming crackdown hits Tencent, NetEase, triggering concerns for Nexon.</li>
<li>
Activist Watch: No new activist holdings to report. However, several funds continue to build stakes in existing holdings. 3D Investment Partners drinks up some more Sapporo shares</li>
</ul>



Market Wrap: Japanese equities edged higher. Easing inflation, BoJ's dovish stance and Wall Street optimism influenced the market. Industrials and basic materials best sectors. 

Major Movers: Shipping disruptions benefit container plays; Shiseido plans reforms to cut ¥40 billion; China's gaming crackdown hits Tencent, NetEase, triggering concerns for Nexon.

Activist Watch: No new activist holdings to report. However, several funds continue to build stakes in existing holdings. 3D Investment Partners drinks up some more Sapporo shares


Japan Weekly | Shippers, Shiseido, Nexon, Sapporo, Glosel

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life (8750 JP)</a>'s proposal suggests more upside to <a href="https://www.smartkarma.com/entities/benefit-one-inc" target="_blank" data-smartkarma-citation="entities:14502:1" rel="noopener">Benefit One (2412 JP)</a>'s minorities than originally thought, and less upside (but still a chunk) to <a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona Group (2168 JP)</a>.</li>
<li>It's all over for <a href="https://www.smartkarma.com/entities/eoflow-co-ltd" target="_blank" data-smartkarma-citation="entities:36100:1" rel="noopener">EOFlow (294090 KS)</a>, as <a href="https://www.smartkarma.com/entities/medtronic-plc" target="_blank" data-smartkarma-citation="entities:14982:1" rel="noopener">Medtronic Plc (MDT US)</a> folds it tent. </li>
<li>Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of <a href="https://www.smartkarma.com/entities/hankook-company-co-ltd" target="_blank" data-smartkarma-citation="entities:19369:1" rel="noopener">Hankook &amp; Company (000240 KS)</a> has joined MBK Partners in making a partial Tender Offer for Hankook &amp; Co.</li>
</ul>



Dai Ichi Life (8750 JP)'s proposal suggests more upside to Benefit One (2412 JP)'s minorities than originally thought, and less upside (but still a chunk) to Pasona Group (2168 JP).
It's all over for EOFlow (294090 KS), as Medtronic Plc (MDT US) folds it tent. 
Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of Hankook &amp; Company (000240 KS) has joined MBK Partners in making a partial Tender Offer for Hankook &amp; Co.


Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic figures. </li>
<li>Despite the global toys markets going into destocking cycle, the company has generated significant growth in operating profit in the past year driven by strong demand for plush stuffed toys.</li>
<li>If we assume a moderate 20% YoY increase in dividends in 2023, this would imply DPS of HKD 0.48 and this would suggest a dividend yield of 12.7% current prices. </li>
</ul>


Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic figures. 
Despite the global toys markets going into destocking cycle, the company has generated significant growth in operating profit in the past year driven by strong demand for plush stuffed toys.
If we assume a moderate 20% YoY increase in dividends in 2023, this would imply DPS of HKD 0.48 and this would suggest a dividend yield of 12.7% current prices. 


<ul>
<li>OVERSEAS.  US Major Equity Indices fall over night with Tech leading the sell off; Oil prices (and Stocks) in the other direction; Negative China CPI-Deflation confirmed. </li>
<li>JAPAN.  NKY Futures -0.2% vs Cash; USDJPY 143.7;  China to allow Group Tours to Japan; EARNINGS: Positive Inpex and Nexon: Strong earnings and Buyback; Sony  earnings down on M&amp;A hangover</li>
<li>NUGGET. Yesterday's CPI print confirmed that China in Deflation. Looking for more aggressive stimulus. Monetary unlikely to work. Looking for A BIG FISCAL STIMULUS(at some point). Remain cautious China related. </li>
</ul>


OVERSEAS.  US Major Equity Indices fall over night with Tech leading the sell off; Oil prices (and Stocks) in the other direction; Negative China CPI-Deflation confirmed. 
JAPAN.  NKY Futures -0.2% vs Cash; USDJPY 143.7;  China to allow Group Tours to Japan; EARNINGS: Positive Inpex and Nexon: Strong earnings and Buyback; Sony  earnings down on M&amp;A hangover
NUGGET. Yesterday's CPI print confirmed that China in Deflation. Looking for more aggressive stimulus. Monetary unlikely to work. Looking for A BIG FISCAL STIMULUS(at some point). Remain cautious China related. 


Ohayo Japan| SPX Sell-Off Led by Tech/Discretionary Stocks; NUGGET: China-Double Whammy on Deflation

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>We expect that Tencent's 2Q23’s rev./non-IFRS net income to be 0.2%/5.2% vs cons. </li>
<li>We raise Tencent's ads growth in 2Q23 from 18.2% to 28.4% YoY per our recent checks with ads agencies. </li>
<li>There is an increasing possibility that "DNF Mobile" could be launched in the next several quarters. We raise the TP to $450, which implies 20.1X PE in 2023.</li>
</ul>


We expect that Tencent's 2Q23’s rev./non-IFRS net income to be 0.2%/5.2% vs cons. 
We raise Tencent's ads growth in 2Q23 from 18.2% to 28.4% YoY per our recent checks with ads agencies. 
There is an increasing possibility that "DNF Mobile" could be launched in the next several quarters. We raise the TP to $450, which implies 20.1X PE in 2023.


[Tencent (700 HK, BUY, TP HK$450) TP Change]: "DNF Mobile" And Strong Ads Are Two Catalysts

Japan

CAPCOM CO., LTD. develops consumer video game software.  The Company also develops, manufactures, markets, and leases arcade game machines.  Capcom also operates amusement facilities.

Konami Holdings Corporation provides digital entertainment, health and fitness and gaming products. The Company develops and sells video games, mobile games and computer games, gaming machines, pachislot and pachinko machines, and fitness machines as well as operates health and fitness clubs.

ORACLE CORPORATION JAPAN sells a variety of software, including database management system software, application development tools, decision-making support tools, and business related applications.  The Company also provides support services for users.

Trend Micro Incorporated develops and markets anti-virus computer software and internet security software.  The Company also sells its products in the United States, Europe, and Asia.

SQUARE ENIX HOLDINGS CO., LTD. develops and sells entertainment software for home video game consoles including Dragon Quest and Final Fantasy series. The Company also publishes books such as informational guide books for its game software, and comic magazines and books.  Additionally, Square Enix sells character goods and stationery items from its software products.

OBIC Business Consultants Co.,Ltd. develops and markets business solution packaged software. The Company's products include software for accounting, banking, wage calculation, sales management, inventory control, and tax calculation. OBIC Business Consultants Co Ltd. also provides support and training services.

FUJI SOFT INCORPORATED is an independent software developer, specializing in communications and machine control software, business application software for bank and insurance companies, and operating system software.  Fuji Soft also installs, manages, and maintains computer systems.  The Company develops and sells word processing packaged software and also provides internet service.

Koei Tecmo Holdings Co.,Ltd. is a holding company which was established through the merger of Koei Co., Ltd. and Tecmo Ltd. The Company develops and distributes video game software for personal computers and home video game consoles. The Company also operates other media business such as marketing of books and CDs and amusement facility operation.

NSD CO., LTD is an independent computer software development company. The Company's products include operating systems, business software for financial industry, and process control systems.  NSD also provides computer services including managing computer systems and data entry. The Company also sells computers and its peripheral equipment.

Justsystems Corporation develops and sells computer application software. The Company's products include Ichitaro, a Japanese language word processing program.  Justsystems also develops network software.

Xero Limited offers an online accounting system.  The software features bank transaction importing, a cashbook, a general ledger, invoicing, accounts receivable, accounts payable, financial reporting, and management of expense claims.

Aspen Technology, Inc. provides software solutions. The Company offers asset optimization software that optimizes asset design, operations, and maintenance in complex, industrial environments to enable organizations to meet their business goals for sustainability and profitability. Aspen Technology serves customers worldwide.

Paycom Software Inc provides cloud-based HCM software solution delivered as Software-as-a-Service.  The Company provides functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement.

Check Point Software Technologies Ltd. develops, markets and supports a range of software and hardware products and services for information technology (IT) security and offers its customers a network and gateway security solutions, data and endpoint security solutions and management solutions.

SS&C Technologies Holdings, Inc. develops and markets computer software for financial services providers.  The software enables trading and modeling, portfolio management and reporting, accounting, performance measurement, reconciliation, reporting, processing, and clearing.

Manhattan Associates, Inc. provides information technology solutions for distribution centers.  The solutions are designed to enable the efficient movement of goods through the supply chain.  The Company's solutions optimize the receipt, storage, and distribution of inventory, as well as manage equipment and personnel within a distribution center.

HubSpot, Inc. provides a cloud-based marketing and sales software platform. The Company offers integrated applications that helps in lead generation and social marketing.

Oracle Financial Services Software Ltd. provides comprehensive information technology solutions to the financial services industry worldwide. The Company provides transaction processing and accounting software for banks, investment managers and mutual funds. Oracle Financial also provides internet delivery of financial services as well as business intelligence and analytical applications.

PTC Inc. develops and delivers technology solutions, comprised of software and services. The Company's technology is primarily used by discrete manufacturers to design, operate and maintain complex products. PTC's technology is also used to connect products to the Internet for purposes of capturing and analyzing information from them.

Tyler Technologies, Inc. provides end-to-end information management solutions and services for local governments. The Company's client base includes local government offices throughout the United States, Canada, Puerto Rico, and the United Kingdom.

Nexon Co., Ltd. mainly develops and services, online games for PC and mobile devices. The company also offers consulting services related to online-games. Nexon operates in Japan.

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Nexon (3659 JP)

Japan Weekly | Shippers, Shiseido, Nexon, Sapporo, Glosel

Japanese equities rise as easing inflation, BoJ's dovish stance, and Wall Street optimism influence the market. Shipping disruptions benefit...

Mark Chadwick

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Asian Dividend Gems: Dream International

Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic...

Douglas Kim

Ohayo Japan| SPX Sell-Off Led by Tech/Discretionary Stocks; NUGGET: China-Double Whammy on Deflation

US Equities sell off lead by Tech; NKY Futures -0.2% vs Cash; USDJPY 143.7; China to allow Group Tours to Japan; EARNINGS: Positive Inpex and...

Mark Chadwick

[Tencent (700 HK, BUY, TP HK$450) TP Change]: "DNF Mobile" And Strong Ads Are Two Catalysts

We expect that Tencent's 2Q23’s rev./non-IFRS net income to be 0.2%/5.2% vs cons. We raise the TP to $450, which implies 20.1X PE in 2023.

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Weekly | Shippers, Shiseido, Nexon, Sapporo, Glosel

​Japanese equities rise as easing inflation, BoJ's dovish stance, and Wall Street optimism influence the market. Shipping disruptions benefit...

Mark Chadwick

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Asian Dividend Gems: Dream International

Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic...

Douglas Kim

Ohayo Japan| SPX Sell-Off Led by Tech/Discretionary Stocks; NUGGET: China-Double Whammy on Deflation

US Equities sell off lead by Tech; NKY Futures -0.2% vs Cash; USDJPY 143.7; China to allow Group Tours to Japan; EARNINGS: Positive Inpex and...

Mark Chadwick

[Tencent (700 HK, BUY, TP HK$450) TP Change]: "DNF Mobile" And Strong Ads Are Two Catalysts

We expect that Tencent's 2Q23’s rev./non-IFRS net income to be 0.2%/5.2% vs cons. We raise the TP to $450, which implies 20.1X PE in 2023.

Blue Lotus Research Institute

Japanese equities rise as easing inflation, BoJ's dovish stance, and Wall Street optimism influence the market. Shipping disruptions benefit...