Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> announced Q2 results today during market hours. The stock had been trading up 1.1% on the day, but fell 1% in 5 minutes.</li>
<li>It then spent the rest of the day grinding higher to end just higher than just before results. </li>
<li>NTT announced another buyback - this one on-market. It is only a little bit of a surprise.</li>
</ul>



NTT (Nippon Telegraph &amp; Telephone) (9432 JP) announced Q2 results today during market hours. The stock had been trading up 1.1% on the day, but fell 1% in 5 minutes.
It then spent the rest of the day grinding higher to end just higher than just before results. 
NTT announced another buyback - this one on-market. It is only a little bit of a surprise.


Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Event-Driven

<ul>
<li>Japan-Based System-On-Chip designer and IP purveyor <a href="https://www.smartkarma.com/entities/socionext-inc" target="_blank" data-smartkarma-citation="entities:36351:1" rel="noopener">Socionext (6526 JP)</a> was listed in the "Prime" section of the Tokyo Stock Exchange (TSE) on 12th October 2022.</li>
<li>When a company gets listed in the Prime section, it subsequently gets included in the TOPIX Index requiring TOPIX-tracking funds to purchase the stock during an Inclusion Event.</li>
<li>Usually, this presents interesting trading opportunities to generate sharp market-neutral returns in the space of few trading days. Below is a look at the details for Socionext's TOPIX Inclusion Event.</li>
</ul>


Japan-Based System-On-Chip designer and IP purveyor Socionext (6526 JP) was listed in the "Prime" section of the Tokyo Stock Exchange (TSE) on 12th October 2022.
When a company gets listed in the Prime section, it subsequently gets included in the TOPIX Index requiring TOPIX-tracking funds to purchase the stock during an Inclusion Event.
Usually, this presents interesting trading opportunities to generate sharp market-neutral returns in the space of few trading days. Below is a look at the details for Socionext's TOPIX Inclusion Event.


TOPIX Inclusion: Socionext (6526 JP) - Momentum Is Fading, Exit Now.

Telco/Internet specialist

Kirk Boodry

Redex Research

Internet Initiative Japan / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/internet-initiative-japan" target="_blank" data-smartkarma-citation="entities:10444:1" rel="noopener">Internet Initiative Japan (3774 JP)</a> posted solid Q2 results with the best quarterly revenue growth since 2016 and a 12th consecutive quarter of margin expansion</li>
<li>Results were driven by growth tailwinds for corporate digitization which was also visible in KDDI/Softbank results as well as a recovery in mobile which was not</li>
<li>The company did not raise its full-year financial guidance despite an H1 beat but forecasts looks increasingly conservative</li>
</ul>



Internet Initiative Japan (3774 JP) posted solid Q2 results with the best quarterly revenue growth since 2016 and a 12th consecutive quarter of margin expansion
Results were driven by growth tailwinds for corporate digitization which was also visible in KDDI/Softbank results as well as a recovery in mobile which was not
The company did not raise its full-year financial guidance despite an H1 beat but forecasts looks increasingly conservative


Internet Initiative Japan (Buy) - Q2 22 Results Reaction: Mobile Recovery Boosts Corporate DX Growth

<ul>
<li>This was a good print with underlying financial/operational results in line with our expectations whilst sector reads on competition (benign) and sales to corporates (positive) matching KDDI's report</li>
<li>The company raised its operating profit forecast by ¥50bn which seems low based on the announced PayPay revaluation gain but could include cover for asset retirement costs</li>
<li>An implied valuation of almost ¥1,000bn for the PayPay business overall will have bankers keen but that seems high versus our valuation and public comparables</li>
</ul>


This was a good print with underlying financial/operational results in line with our expectations whilst sector reads on competition (benign) and sales to corporates (positive) matching KDDI's report
The company raised its operating profit forecast by ¥50bn which seems low based on the announced PayPay revaluation gain but could include cover for asset retirement costs
An implied valuation of almost ¥1,000bn for the PayPay business overall will have bankers keen but that seems high versus our valuation and public comparables


Softbank Corp (Buy) - Q2 22 Results Reaction: PayPay Boost to Guidance and In-Line Results

<ul>
<li>KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins</li>
<li>On balance, the print is positive and management remains confident on full-year targets</li>
<li>There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten's rebound from peak losses is modest</li>
</ul>


KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins
On balance, the print is positive and management remains confident on full-year targets
There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten's rebound from peak losses is modest


KDDI (Buy) - Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate

Japan

Softbank Corporation provides mobile phone telecommunication and networking services. The Company offers mobile communication opening, short messaging function opening, video function opening, and other services. Softbank also provides mobile phones.

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Softbank Corp (9434 JP)

NTT Q2 Results and a New Buyback

NTT reports Q2 results, mostly OK, a little softer than some expected. But they also announce a decent add-on buyback for the last 4+ months of the...

Travis Lundy

TOPIX Inclusion: Socionext (6526 JP) - Momentum Is Fading, Exit Now.

Socionext's TOPIX Inclusion event is on 29th November 2022. There could roughly 3mn shares to buy but the momentum is fading and that might be a...

Janaghan Jeyakumar, CFA

Internet Initiative Japan (Buy) - Q2 22 Results Reaction: Mobile Recovery Boosts Corporate DX Growth

IIJ continues to financially outperform with the best revenue growth since 2016 and a twelfth consecutive quarter of YoY margin expansion. A...

Kirk Boodry

Softbank Corp (Buy) - Q2 22 Results Reaction: PayPay Boost to Guidance and In-Line Results

A guidance upgrade on the back of a robust PayPay valuation will grab most of the attention but we are also pleased with in-line results for the...

Kirk Boodry

KDDI (Buy) - Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate

KDDI results were mostly positive as solid revenue growth offsets a jump in power costs. Growth in corporate sales was particularly robust although...

Kirk Boodry

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