Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Equity Bottom-Up

<ul>
<li>Toshiba’s 2Q results were not pretty with OP of just ¥7.5bn despite strong revenues of ¥855bn, weak orders and a downward revision to guidance as we predicted. </li>
<li>While we expected weakness, every downside risk we flagged came through and in greater force than we had predicted. </li>
<li>It is almost as if some divine force completely unrelated to management is hinting that you should go for the JIP bid if and when it comes through.</li>
</ul>


Toshiba’s 2Q results were not pretty with OP of just ¥7.5bn despite strong revenues of ¥855bn, weak orders and a downward revision to guidance as we predicted. 
While we expected weakness, every downside risk we flagged came through and in greater force than we had predicted. 
It is almost as if some divine force completely unrelated to management is hinting that you should go for the JIP bid if and when it comes through.


Event-Driven

<ul>
<li>The Nikkei reported on Monday that JIP’s bid values Toshiba at roughly ¥2.2trn. </li>
<li>The stock has dropped to a level just below this valuation suggesting some anticipation of a Bain/JIC bid above that valuation. </li>
<li>While that is plausible, the cautiousness of JIP’s bid highlights the fundamental downside risk here in our view.</li>
</ul>


The Nikkei reported on Monday that JIP’s bid values Toshiba at roughly ¥2.2trn. 
The stock has dropped to a level just below this valuation suggesting some anticipation of a Bain/JIC bid above that valuation. 
While that is plausible, the cautiousness of JIP’s bid highlights the fundamental downside risk here in our view.


Toshiba – Realistic Valuation Disappoints Markets

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Media reported last night that JIP would bid ¥2.2trln for Toshiba. That's about ¥5,000-5,100/share. </li>
<li>This morning, there is a bit more clarification. Funnily, that means there is less info here than people think.</li>
<li>But it is not a great look for either JIP or Toshiba at this point.</li>
</ul>


Media reported last night that JIP would bid ¥2.2trln for Toshiba. That's about ¥5,000-5,100/share. 
This morning, there is a bit more clarification. Funnily, that means there is less info here than people think.
But it is not a great look for either JIP or Toshiba at this point.


Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Good Morning Japan: A detailed look at the overnight news and market moves that will impact the trading day in Japan</li>
<li>Broad based rally ahead of US mid terms as market downplays risks with the inflation numbers on tap this week</li>
<li>Japan: Earnings showing 25% of firms reporting record profits so far for 1H. In contrast, over 40% showing profits down or  losses on cost inflation. Focus today: Daikin, Sumco, Pan-Pacific,etc</li>
</ul>


Good Morning Japan: A detailed look at the overnight news and market moves that will impact the trading day in Japan
Broad based rally ahead of US mid terms as market downplays risks with the inflation numbers on tap this week
Japan: Earnings showing 25% of firms reporting record profits so far for 1H. In contrast, over 40% showing profits down or  losses on cost inflation. Focus today: Daikin, Sumco, Pan-Pacific,etc


Good Morning Japan - November 8, 2022(Tue)

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.

<ul>
<li>The <a href="https://asia.nikkei.com/Spotlight/Toshiba-in-turmoil/Toshiba-buyout-Japanese-fund-submits-15bn-proposal" target="_blank" rel="noopener">Nikkei Asia</a> reports that JIP has submitted a formal proposal to privatise <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> for about JPY2.2 trillion (US$15 billion) based on “Toshiba's current share price.” </li>
<li>JIP’s offer is below expectations of around a JPY6,000 bid which is likely driven by the inability to secure sufficient debt financing. JIP remains in negotiations with banks. </li>
<li>While there is a risk that JIP will be unable to improve its offer to secure Board approval, the downside is low as Toshiba/peers' current price ratio is attractive. </li>
</ul>


The Nikkei Asia reports that JIP has submitted a formal proposal to privatise Toshiba Corp (6502 JP) for about JPY2.2 trillion (US$15 billion) based on “Toshiba's current share price.” 
JIP’s offer is below expectations of around a JPY6,000 bid which is likely driven by the inability to secure sufficient debt financing. JIP remains in negotiations with banks. 
While there is a risk that JIP will be unable to improve its offer to secure Board approval, the downside is low as Toshiba/peers' current price ratio is attractive. 


Toshiba (6502 JP): JIP Lobs a Lower-Than-Expected Offer

Japan

Toshiba Corporation manufactures and markets electrical and electronic products. The Company's products include digital products such as PCs and televisions, NAND flash memories, and system LSIs (large-scale integrated), as well as social infrastructures such as power generators, medical equipment, and home appliances.

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Toshiba Corp (6502 JP)

Toshiba – Worse Than Even We Thought

Toshiba 2Q results were not pretty with significant profitability issues and a significant downgrade to the full year outlook.

Mio Kato

Toshiba – Realistic Valuation Disappoints Markets

JIP's bid for Toshiba was disappointing to markets but a realistic assessment of Toshiba's potential given current market conditions in our view.

Mio Kato

Toshiba (6502 JP) - Weak Sauce from JIP

JIP was reported last night to have put in their bid by the deadline. ¥2.2trln. That's the current price. But it turns out it wasn't actually...

Travis Lundy

Good Morning Japan - November 8, 2022(Tue)

Good Morning Japan: A detailed look at the overnight news and market moves that will impact the trading day in Japan. We highlight small to big...

Mark Chadwick

Toshiba (6502 JP): JIP Lobs a Lower-Than-Expected Offer

While there is a risk that JIP will be unable to improve its offer to secure Board approval, the downside is low as Toshiba/peers' current price...

Arun George

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