Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Today, <a href="https://www.smartkarma.com/entities/hitachi-maxell-ltd" target="_blank" data-smartkarma-citation="entities:2484:1" rel="noopener">Maxell Ltd (6810 JP)</a> announced its new MTMP "MEX26 - Commit to Value (CorporateValue,ProfitGrowth)" with lots of consultant-speak and corporate homily.</li>
<li>But they present a capital investment plan, and a capital return plan. These may interest investors. The buyback is the same size as 2019 and 2022. They popped and faded.</li>
<li>Todays tidbits were all announced during the lunch break today, and the stock popped 6% in the PM session on the news.</li>
</ul>


Today, Maxell Ltd (6810 JP) announced its new MTMP "MEX26 - Commit to Value (CorporateValue,ProfitGrowth)" with lots of consultant-speak and corporate homily.
But they present a capital investment plan, and a capital return plan. These may interest investors. The buyback is the same size as 2019 and 2022. They popped and faded.
Todays tidbits were all announced during the lunch break today, and the stock popped 6% in the PM session on the news.


Maxell (6810) Launches New MTMP, A "TSE 'ATIMAoCoC&SP'" Notice, And A Buyback

David Blennerhassett

<ul>
<li>A new tool highlights which TSE companies have disclosed a policy/consideration; sometimes referred to as the "name and shame" list. In practice, more "name" than "shame". </li>
<li>
<a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a> is trading rich to its NAV. And the simple ratio (JCNC/<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a>) is the highest level outside the 2008 GFC. </li>
<li>This is a rubbish Offer for <a href="https://www.smartkarma.com/entities/asia-cement-china-holdings" target="_blank" data-smartkarma-citation="entities:3374:1" rel="noopener">Asia Cement China (743 HK)</a>. Given how shareholders voted at last year's AGM, expect this Scheme to be voted down. Avoid.</li>
</ul>


A new tool highlights which TSE companies have disclosed a policy/consideration; sometimes referred to as the "name and shame" list. In practice, more "name" than "shame". 

Jardine Cycle &amp; Carriage (JCNC SP) is trading rich to its NAV. And the simple ratio (JCNC/Astra International (ASII IJ)) is the highest level outside the 2008 GFC. 
This is a rubbish Offer for Asia Cement China (743 HK). Given how shareholders voted at last year's AGM, expect this Scheme to be voted down. Avoid.


Last Week in Event SPACE: Jardine Cycle & Carriage, "Name & Shame", Asia Cement, Northern Minerals

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hitachi-maxell-ltd" target="_blank" data-smartkarma-citation="entities:2484:1" rel="noopener">Maxell Ltd (6810 JP)</a> has been restructuring itself and the cost-cutting and rationalising of sales efforts and regions has led to post-relisting record OP.</li>
<li>But another (non-cash) write-off this past year has led to the third year of net losses in a row.</li>
<li>The company has, however, taken its actual cashflows and turned them into a large buyback</li>
</ul>



Maxell Ltd (6810 JP) has been restructuring itself and the cost-cutting and rationalising of sales efforts and regions has led to post-relisting record OP.
But another (non-cash) write-off this past year has led to the third year of net losses in a row.
The company has, however, taken its actual cashflows and turned them into a large buyback


Hitachi Maxell (6810 JP) - Very Big On-Market Buyback

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>Maxell (6810) was one of the first companies to dissolve its parent-subsidiary listing, and one of the few listed companies that have dissolved the parent-subsidiary listing issue twice.</li>
<li>After its re-listing, Maxell shifted to a strategy of aggressively investing in growth businesses and not having excessive cash, but it still has a ways to go.</li>
<li>I think that either leadership and an effective management system that unites each business must be established, or resources must be focused on specific businesses and invested in.</li>
</ul>


Maxell (6810) was one of the first companies to dissolve its parent-subsidiary listing, and one of the few listed companies that have dissolved the parent-subsidiary listing issue twice.
After its re-listing, Maxell shifted to a strategy of aggressively investing in growth businesses and not having excessive cash, but it still has a ways to go.
I think that either leadership and an effective management system that unites each business must be established, or resources must be focused on specific businesses and invested in.


Japan's Governance: After the Dissolution of the Parent-Subsidiary Listing: Maxell (6810)

<a href="https://www.smartkarma.com/entities/hitachi-ltd" target="_blank" data-smartkarma-citation="entities:7797:1" rel="noopener">Hitachi Ltd (6501 JP)</a> has, for over a decade, been restructuring itself - selling subsidiaries here and buying them in there. There are two remaining after the recent sale of <a href="https://www.smartkarma.com/entities/hitachi-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:14457:1" rel="noopener">Hitachi Chemical (4217 JP)</a>, de-consolidation of <a href="https://www.smartkarma.com/entities/hitachi-capital-corp" target="_blank" data-smartkarma-citation="entities:14410:1" rel="noopener">Hitachi Capital (8586 JP)</a>, and buy-in of <a href="https://www.smartkarma.com/entities/hitachi-high-tech-corporation" target="_blank" data-smartkarma-citation="entities:7046:1" rel="noopener">Hitachi High-Tech (8036 JP)</a>. The earnings call in May occasioned another presentation - that of the update on <a href="http://www.hitachi.com/New/cnews/month/2020/05/200529a.html" target="_blank" rel="noopener">Progress of the Mid-Term Management Plan</a> (with a webcast and a <a href="http://www.hitachi.com/New/cnews/month/2020/05/200529a/f_200529apre.pdf" target="_blank" rel="noopener">presentation deck</a>), where the CEO responded to a question thusly:<div><blockquote>
QUESTION:  Next question is regarding the, against the backdrop of COVID-19, is this going to have an impact on the reorganisation of the listed subsidiaries?
ANSWER BY CEO HIGASHIHARA:  Regarding the listed subsidiary answer. Hitachi Construction Machinery and Hitachi Metals remain. And what we are telling the top management is that, in the time frame of fiscal year 2021 to 2024, we have to make sure these companies are able to compete globally. They are now evaluating this. It is not just a matter of COVID-19. Mid- to long-term growth strategy will be emphasised so the reorganisation strategy for the listed subsidiaries will not be impacted by COVID-19.
</blockquote></div><div>
FY 2021 to FY 2024 is a three year window starting next April, with FY2021 ending in March 2022 and FY2024 ending in March 2025.
<div>
That was May 29, less than five months ago and the situation was discussed in <a href="https://www.smartkarma.com/insights/hitachi-s-capital-case-liquidating-land-policy-holdings-what-about-the-subs" target="_blank" data-smartkarma-citation="insights:39920" rel="noopener">Hitachi's Capital Case - Liquidating Land &amp; Policy Holdings? What About the Subs?</a>.
Friday saw an article out of the Nikkei suggesting Hitachi might sell half its stake in <a href="https://www.smartkarma.com/entities/hitachi-construction-machinery" target="_blank" data-smartkarma-citation="entities:19433:1" rel="noopener">Hitachi Construction Machinery (6305 JP)</a> ("HCM") to a third party, at a discount, and that it might start a sale process on <a href="https://www.smartkarma.com/entities/hitachi-metals-ltd" target="_blank" data-smartkarma-citation="entities:8561:1" rel="noopener">Hitachi Metals (5486 JP)</a> "this month."
</div>
<div>
It strikes me as unlikely Hitachi would themselves be throwing in the towel 5 months later before the start of the time frame in which top management of the two subsidiaries are supposed to be able to compete globally. All of this is likely getting done with the will and direction of the subsidiaries themselves. This strikes me as some kind of agreement with management of HCM that they would not be averse to receiving expert help from outside while remaining listed. 
This changes things.
Hitachi becomes a different animal. It becomes a non-stub trade (parent vs significant value of listed short-able subs) for the first time in a very long time. And the optics change quite a bit.
</div>
</div>

Hitachi Ltd (6501 JP) has, for over a decade, been restructuring itself - selling subsidiaries here and buying them in there. There are two remaining after the recent sale of Hitachi Chemical (4217 JP), de-consolidation of Hitachi Capital (8586 JP), and buy-in of Hitachi High-Tech (8036 JP). The earnings call in May occasioned another presentation - that of the update on Progress of the Mid-Term Management Plan (with a webcast and a presentation deck), where the CEO responded to a question thusly:
QUESTION:  Next question is regarding the, against the backdrop of COVID-19, is this going to have an impact on the reorganisation of the listed subsidiaries?
ANSWER BY CEO HIGASHIHARA:  Regarding the listed subsidiary answer. Hitachi Construction Machinery and Hitachi Metals remain. And what we are telling the top management is that, in the time frame of fiscal year 2021 to 2024, we have to make sure these companies are able to compete globally. They are now evaluating this. It is not just a matter of COVID-19. Mid- to long-term growth strategy will be emphasised so the reorganisation strategy for the listed subsidiaries will not be impacted by COVID-19.

FY 2021 to FY 2024 is a three year window starting next April, with FY2021 ending in March 2022 and FY2024 ending in March 2025.

That was May 29, less than five months ago and the situation was discussed in Hitachi's Capital Case - Liquidating Land &amp; Policy Holdings? What About the Subs?.
Friday saw an article out of the Nikkei suggesting Hitachi might sell half its stake in Hitachi Construction Machinery (6305 JP) ("HCM") to a third party, at a discount, and that it might start a sale process on Hitachi Metals (5486 JP) "this month."


It strikes me as unlikely Hitachi would themselves be throwing in the towel 5 months later before the start of the time frame in which top management of the two subsidiaries are supposed to be able to compete globally. All of this is likely getting done with the will and direction of the subsidiaries themselves. This strikes me as some kind of agreement with management of HCM that they would not be averse to receiving expert help from outside while remaining listed. 
This changes things.
Hitachi becomes a different animal. It becomes a non-stub trade (parent vs significant value of listed short-able subs) for the first time in a very long time. And the optics change quite a bit.



Japan

Maxell Ltd develops a diverse portfolio of media devices. The Company's products include batteries, DVD's, memory storage, optical lenses, headphones and other accessories.

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Maxell Ltd (6810 JP)

Maxell (6810) Launches New MTMP, A "TSE 'ATIMAoCoC&SP'" Notice, And A Buyback

Maxell (6810) is roughly unchanged since its re-IPO 10yrs ago and since Taiyo Pacific bought 10+% in 2016-2019. The company has now announced a new...

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Last Week in Event SPACE: Jardine Cycle & Carriage, "Name & Shame", Asia Cement, Northern Minerals

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

Hitachi Maxell (6810 JP) - Very Big On-Market Buyback

Maxell (6810) hit post-listing record OP as it recorded its third consecutive net loss but is answering that with an OP forecast increase and a...

Travis Lundy

Japan's Governance: After the Dissolution of the Parent-Subsidiary Listing: Maxell (6810)

The article discusses the background behind the decision to abolish the holding company structure after Maxell was deconsolidated by Hitachi and...

Metrical Inc

The Right Trade May Be Hitachi

Hitachi is getting to the end of its Core vs Non-Core restructuring campaign. Two remaining subs have newsflow, and earnings announcements shortly....

Travis Lundy

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