Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

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Equity Capital Markets

Sony is selling half its stake in Olympus in a block trade worth USD612m. We would avoid the deal given:<ul><li>The stock has had a chequered history, having being mired in an accounting scandal a few years ago which resulted in significant write downs</li><li>Sony bought an 11% stake in the company in 2012 for (USD645m, so its doubled its stake), as part of its strategy to move into medical equipment business (Olympus is the world's largest endoscope maker with a 70% market share). With this stake purchase, Sony became the largest shareholder in Olympus. This was meant to be part of a long term &nbsp;partnership, which included forming JVs etc, but Sony seems to have had a change of heart, for reasons not clear to us. Thus, the remaining shares of Sony will continue to be an overhang, with no clarity of if and when the next sale will take place.</li><li>The deal scores poorly on our framework with earnings momentum being weak (analysts having recently revised down their estimates), and the company having underperfomed the index over the past few months. The stock isn't cheap either trading at 33x earnings.</li><li>While the medical business remain stable, however, the imaging business continues to be a drag with the company undertaking further restructuring which is likely to continue being a drag on earnings.</li></ul>On the positive side:<ul><li>The previous deal undertaken by the company has done well</li><li>Since Sony bought its stake the stock has performed well and outperformed the market</li></ul>

Sony is selling half its stake in Olympus in a block trade worth USD612m. We would avoid the deal given:The stock has had a chequered history, having being mired in an accounting scandal a few years ago which resulted in significant write downsSony bought an 11% stake in the company in 2012 for (USD645m, so its doubled its stake), as part of its strategy to move into medical equipment business (Olympus is the world's largest endoscope maker with a 70% market share). With this stake purchase, Sony became the largest shareholder in Olympus. This was meant to be part of a long term &nbsp;partnership, which included forming JVs etc, but Sony seems to have had a change of heart, for reasons not clear to us. Thus, the remaining shares of Sony will continue to be an overhang, with no clarity of if and when the next sale will take place.The deal scores poorly on our framework with earnings momentum being weak (analysts having recently revised down their estimates), and the company having underperfomed the index over the past few months. The stock isn't cheap either trading at 33x earnings.While the medical business remain stable, however, the imaging business continues to be a drag with the company undertaking further restructuring which is likely to continue being a drag on earnings.On the positive side:The previous deal undertaken by the company has done wellSince Sony bought its stake the stock has performed well and outperformed the market

Olympus - Largest shareholder looking to partially exit, avoid the deal

Thematic (Sector/Industry)

We are pleased to announce the roll out of our latest content vertical: Long Term Leaders. Under this category,  we have identified companies that have delivered consistent and quality growth over the past few years and by doing so, have become your core holdings. This short-list will form an exclusive focus list for us to bring you differentiated and meaningful insights and opinions.Going forward we plan to write timely and actionable insights on these companies, which will primarily try to address the perennial question "What's in the price?". By doing so we hope to aid in decision making at times when the stock price is either overbought or oversold, while all the time keeping a keen eye on the longer term potential of the company. We do not attempt to provide "coverage" in the traditional sense, and won't be providing you standardized commentary on everyday events. We are confident that you are already very well covered in this regard.The stocks which make up our shortlist, should continue to deliver consistent returns and, aided by the power of compounding, result in benchmark outperformance over the long term. We think the factors that have made them successful leaders: strong defensible business models, market share, and quality management teams, will continue to see them outrank other companies over time. Our aim is not to suggest a portfolio, but rather to identify those stocks which currently are or in the future are likely to be part of most long term portfolios, and by doing so to write actionable insights which will end up being most relevant to your everyday investment process.

We are pleased to announce the roll out of our latest content vertical: Long Term Leaders. Under this category,  we have identified companies that have delivered consistent and quality growth over the past few years and by doing so, have become your core holdings. This short-list will form an exclusive focus list for us to bring you differentiated and meaningful insights and opinions.Going forward we plan to write timely and actionable insights on these companies, which will primarily try to address the perennial question "What's in the price?". By doing so we hope to aid in decision making at times when the stock price is either overbought or oversold, while all the time keeping a keen eye on the longer term potential of the company. We do not attempt to provide "coverage" in the traditional sense, and won't be providing you standardized commentary on everyday events. We are confident that you are already very well covered in this regard.The stocks which make up our shortlist, should continue to deliver consistent returns and, aided by the power of compounding, result in benchmark outperformance over the long term. We think the factors that have made them successful leaders: strong defensible business models, market share, and quality management teams, will continue to see them outrank other companies over time. Our aim is not to suggest a portfolio, but rather to identify those stocks which currently are or in the future are likely to be part of most long term portfolios, and by doing so to write actionable insights which will end up being most relevant to your everyday investment process. 

Introducing Long Term Leaders - Focussed Insights for your Core Holdings

Japan

OLYMPUS CORPORATION manufactures optoelectronic products.  The Company's products include cameras, video sets, endoscopes for medicine and industrial use, microscopes, analytical equipment, office communication systems, laseroptical scanners, and ionic printers.

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Olympus Corp (7733 JP)

Olympus - Largest shareholder looking to partially exit, avoid the deal

Sony is selling half its stake in Olympus in a block trade worth USD612m. We would avoid the deal given: The stock has had a chequered history,...

Sumeet Singh

Introducing Long Term Leaders - Focussed Insights for your Core Holdings

We are pleased to announce the roll out of our latest content vertical: Long Term Leaders. Under this category, we have identified companies that...

Sumeet Singh

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52-week Range

Market Cap (USDm)

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