Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

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-March 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-March 2022.


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

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Last Friday, mid-cap specialist elevator maker (in the top ten globally) <a href="https://www.smartkarma.com/entities/fujitec-co-ltd" target="_blank" data-smartkarma-citation="entities:11686:1" rel="noopener">Fujitec Co Ltd (6406 JP)</a> announced a <a href="https://www.fujitec.com/common/fjhp/doc/top_global/document/irnews/2139/20201204_Fujitec%20Co.,%20Ltd.%20Announces%20Future%20Strategic%20Direction%20Plan.pdf" target="_blank" rel="noopener">Future Strategy Direction Plan</a> which focused on "priority business areas in the medium-and-long-term, the Company's medium- and long-term strategic targets, and measures aimed at strengthening its governance structure. This sounds kind of jargon-y. Some of it certainly is. But there is actually more than that under the cover, and it is designed to mollify activists who have pursued the company for years. The stock has hardly reacted. Some details clearly kick the can but there is a timer set for summer 2022. More below the fold.

Last Friday, mid-cap specialist elevator maker (in the top ten globally) Fujitec Co Ltd (6406 JP) announced a Future Strategy Direction Plan which focused on "priority business areas in the medium-and-long-term, the Company's medium- and long-term strategic targets, and measures aimed at strengthening its governance structure. This sounds kind of jargon-y. Some of it certainly is. But there is actually more than that under the cover, and it is designed to mollify activists who have pursued the company for years. The stock has hardly reacted. Some details clearly kick the can but there is a timer set for summer 2022. More below the fold. 

Activist Pressure FINALLY Works on Fujitec (6406)- Going Up? (Albeit Slowly)

Japan Specialist

Mark Chadwick

<div>
Corporate governance is hard, messy and often frustrating for everyone. Those frustrations boiled over for shareholders in <a href="https://www.smartkarma.com/entities/fujitec-co-ltd" target="_blank" data-smartkarma-citation="entities:11686:1" rel="noopener">Fujitec Co Ltd (6406 JP)</a> , with two outspoken activist investors going public with their grievances in May this year, ahead of the AGM.  
</div>
<div>
At the AGM, Oasis secured 33% of the votes in favour of its proposals for cancelling the Company’s treasury shares. If it hadn't been for the Coronavirus, the proposals would have been far more intrusive. In the end, there was a dramatic decrease in support for Fujitec’s CEO, Uchiyama-san. If the low level of support for management was a gentle wake-up call, Oasis’ June statement was a ringing alarm clock.   
</div>
<div>
<blockquote>
Oasis will continue its active engagement with the Company and, failing any material change to the situation, will consider a wide variety of options, including calling an EGM later this year, in order to bring about a change of leadership at the Company to ensure that progress is made to improve Fujitec’s corporate value for the medium and long-term, to the benefit of all stakeholders (June 2020) 
</blockquote>
</div>
<div>
 And so here we are today, with grudging consent, Uchiyama-san has <a href="https://www.fujitec.com/common/fjhp/doc/top_global/document/irnews/2139/20201204_Fujitec%20Co.,%20Ltd.%20Announces%20Future%20Strategic%20Direction%20Plan.pdf" target="_blank" rel="noopener">announced a “new” strategic direction</a>. It’s a step in the right direction, but will it be enough to silence the critics?  
</div>


Corporate governance is hard, messy and often frustrating for everyone. Those frustrations boiled over for shareholders in Fujitec Co Ltd (6406 JP) , with two outspoken activist investors going public with their grievances in May this year, ahead of the AGM.  


At the AGM, Oasis secured 33% of the votes in favour of its proposals for cancelling the Company’s treasury shares. If it hadn't been for the Coronavirus, the proposals would have been far more intrusive. In the end, there was a dramatic decrease in support for Fujitec’s CEO, Uchiyama-san. If the low level of support for management was a gentle wake-up call, Oasis’ June statement was a ringing alarm clock.   



Oasis will continue its active engagement with the Company and, failing any material change to the situation, will consider a wide variety of options, including calling an EGM later this year, in order to bring about a change of leadership at the Company to ensure that progress is made to improve Fujitec’s corporate value for the medium and long-term, to the benefit of all stakeholders (June 2020) 



 And so here we are today, with grudging consent, Uchiyama-san has announced a “new” strategic direction. It’s a step in the right direction, but will it be enough to silence the critics?  


Fujitec (6406) - Governance Is Messy – but that Doesn’t Mean It Isn’t Working

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/fujitec-co-ltd" target="_blank" data-smartkarma-citation="entities:11686:1" rel="noopener">Fujitec Co Ltd (6406 JP)</a>  share price has outperformed the broader Japanese machinery sector over the past one year (39% versus 7%). Much of the outperformance was driven by activist interest in the name, with Asset Value Investors (AVI) revealing their aptly titled “Taking Fujitec to the next level” presentation. Another well-known activist, Oasis Investors, took things a step further by adding shareholder proposals to the June AGM agenda. Although shareholders rejected the proposed cancellation of treasury stock, Oasis can feel vindicated by the relatively high 33% of votes in favour of the proposal. Moreover, with a dramatic decrease in support for Fujitec’s CEO, Uchiyama-san, it seems that many minority shareholders are also becoming frustrated with management. With activists publicly calling for change, the stock looks a cheap and low risk play on governance reform.

Fujitec Co Ltd (6406 JP)  share price has outperformed the broader Japanese machinery sector over the past one year (39% versus 7%). Much of the outperformance was driven by activist interest in the name, with Asset Value Investors (AVI) revealing their aptly titled “Taking Fujitec to the next level” presentation. Another well-known activist, Oasis Investors, took things a step further by adding shareholder proposals to the June AGM agenda. Although shareholders rejected the proposed cancellation of treasury stock, Oasis can feel vindicated by the relatively high 33% of votes in favour of the proposal. Moreover, with a dramatic decrease in support for Fujitec’s CEO, Uchiyama-san, it seems that many minority shareholders are also becoming frustrated with management. With activists publicly calling for change, the stock looks a cheap and low risk play on governance reform. 

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/740/original/2020-02-07_03-39-22.png?1581019080" class="editor-image img-responsive" data-smartkarma-image-id="116740"></figure><div class="content-caption">Source • Japan Analytics</div>INTO THE 'RED' - As predicted, our Results Score dipped into negative territory yesterday, declining by 56 basis points to -0.21. Of the 65 large-cap results, only ten companies had positive qoq changes in Results Score, while seventeen saw double-digit declines. <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> did well to limit its quarterly year-on-year changes in Revenue and OP to -3%, and they are forecasting similar declines against TTM numbers for the full year. The Forecast/Revision Score added six basis points driven primarily by <a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido (4911 JP)</a> overly optimistic initial forecast for FY2020. 'Mr Market' meanwhile is content to bid up share prices to close to the recent highs, and 8% below the January 2018 peak, when the Results Score was 7.54. <hr>• SECTOR TIMELINE •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/741/original/2020-02-07_03-45-05.png?1581019946" class="editor-image img-responsive" data-smartkarma-image-id="116741"></figure><div class="content-caption">Source • Japan Analytics</div>SECTOR TIMELINE - The majority of Sectors saw lower Results &amp; Revision Scores yesterday, with Food, Beverages &amp; Tobacco being the exception due to <a href="https://www.smartkarma.com/entities/japan-tobacco-inc" target="_blank" data-smartkarma-citation="entities:13498:1" rel="noopener">Japan Tobacco (2914 JP)</a>'s stable topline performance and better-than-expected 2020 forecast. <a href="https://www.smartkarma.com/entities/mitsubishi-heavy-industries" target="_blank" data-smartkarma-citation="entities:13613:1" rel="noopener">Mitsubishi Heavy Industries (7011 JP)</a> decline into the red at the OP level and full-year downward revision took the Machinery Sector lower, while <a href="https://www.smartkarma.com/entities/seibu-holdings-inc" target="_blank" data-smartkarma-citation="entities:458:1" rel="noopener">Seibu (9024 JP)</a> was the negative driver for Multi-Industry. <a href="https://www.smartkarma.com/entities/terumo-corp" target="_blank" data-smartkarma-citation="entities:6708:1" rel="noopener">Terumo (4543 JP)</a> and <a href="https://www.smartkarma.com/entities/olympus-corp" target="_blank" data-smartkarma-citation="entities:356:1" rel="noopener">Olympus (7733 JP)</a> fuelled the decline in Healthcare and <a href="https://www.smartkarma.com/entities/fujifilm-holdings-corp" target="_blank" data-smartkarma-citation="entities:16353:1" rel="noopener">Fujifilm (4901 JP)</a> did the same for Technology Hardware.

Source • Japan AnalyticsINTO THE 'RED' - As predicted, our Results Score dipped into negative territory yesterday, declining by 56 basis points to -0.21. Of the 65 large-cap results, only ten companies had positive qoq changes in Results Score, while seventeen saw double-digit declines. Toyota Motor (7203 JP) did well to limit its quarterly year-on-year changes in Revenue and OP to -3%, and they are forecasting similar declines against TTM numbers for the full year. The Forecast/Revision Score added six basis points driven primarily by Shiseido (4911 JP) overly optimistic initial forecast for FY2020. 'Mr Market' meanwhile is content to bid up share prices to close to the recent highs, and 8% below the January 2018 peak, when the Results Score was 7.54. • SECTOR TIMELINE •Source • Japan AnalyticsSECTOR TIMELINE - The majority of Sectors saw lower Results &amp; Revision Scores yesterday, with Food, Beverages &amp; Tobacco being the exception due to Japan Tobacco (2914 JP)'s stable topline performance and better-than-expected 2020 forecast. Mitsubishi Heavy Industries (7011 JP) decline into the red at the OP level and full-year downward revision took the Machinery Sector lower, while Seibu (9024 JP) was the negative driver for Multi-Industry. Terumo (4543 JP) and Olympus (7733 JP) fuelled the decline in Healthcare and Fujifilm (4901 JP) did the same for Technology Hardware. 

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 6th February ▲ 2914 4911 6406 ▼ 9024 4901 7951

Japan

FUJITEC CO., LTD. mainly manufactures elevators, escalators, and sky-parking systems by the orders from customers.  The Company also provides installation and repair services.  Fujitec has manufacturing bases in overseas including the USA, Singapore, Taiwan, and South Korea.

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Fujitec Co Ltd (6406 JP)

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

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-March 2022.

Janaghan Jeyakumar, CFA

Activist Pressure FINALLY Works on Fujitec (6406)- Going Up? (Albeit Slowly)

Fujitec activist pressure finally seems to have shown results as the company buckles, and undertakes to pursue some activist demands. A small win....

Travis Lundy

Fujitec (6406) - Governance Is Messy – but that Doesn’t Mean It Isn’t Working

Fujitec announced a new strategic plan, trying to fend off further activist encroachment. They addressed operational changes, capital allocation...

Mark Chadwick

Fujitec - Love in an Elevator

Fujitec Co Ltd (6406 JP) share price has outperformed the broader Japanese machinery sector over the past one year (39% versus 7%). Much of the...

Mark Chadwick

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 6th February ▲ 2914 4911 6406 ▼ 9024 4901 7951

INTO THE 'RED' - As predicted, our Results Score dipped into negative territory yesterday, declining by 56 basis points to -0.21. Of the 65...

Campbell Gunn

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