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

Eizo Corp develops, designs, manufactures, and markets computer displays and monitors for amusement products.  The Company's products include liquid crystal displays (LCD) and cathode ray tube (CRT) displays.

RISO KAGAKU CORPORATION is a manufacturer of copying and printing machines for office, home, and educational use.  The Company specializes in lithograph printers and also produces software, computer interfaces, and peripherals such as sorters, card counters, and sheet feeders.

Roland DG Corporation manufactures color printers and computer related products. The Company's product lines include color printers, vinyl cutters, 3D machines,  and software.  Roland DG has group companies in North and South America, Oceania, Europe.

MELCO HOLDINGS INC. is a holding company which manages computer peripheral equipment manufacturing subsidiaries.  The Company's subsidiaries develop and produce memory and storage devices and network equipment.

Wacom Co., Ltd. manufactures pen tablets utilizing electronic pen and multitouch technologies. The Company's pen tablets are used in various fields, including film making, industrial  design, medical, education and financials. Wacom also manufactures components for smart phones and tablets.

MIMAKI ENGINEERING CO.,LTD. manufactures and sells industrial printers, cutting plotters and related products.

ELECOM CO., LTD. designs, manufactures, and markets computer peripherals, supplies, and accessories.  The Company offers a diverse range of products including adapters, cables, switches, local area network (LAN) devices, paper, keyboard covers, and chairs.

MCJ Co., Ltd. manufactures and markets personal computers and its related products.  The Company provides desktop and laptop computers, computer memories, printers, and hard drives.

Noritsu Koki Co., Ltd. manufactures various photo processors.  The Company specializes in high-speed mini-photo processing lab systems.  Noritsu Koki also produces OEM (original equipment manufacturer) supply for Kodak and Konica.

MUTOH HOLDINGS CO., LTD. designs, manufactures, and markets drafting equipment, computers, and computer software.  The Company's products include computer-aided design (CAD) systems, pen-based components, large format graphics printers, plotters, and sign cutters.

3D Systems Corporation provides comprehensive 3D products and services. The Company develops, manufactures, and markets 3D printers, print materials, software, haptic devices, scanners, and virtual surgical simulators. 3D Systems operates worldwide.

ADLINK Technology Inc. develops and markets various computer hardware, software, and peripherals.  The Company's products include data acquisition cards, industrial computers, remote measuring and controlling modules, and other related products.

IEI Integration Corp. designs, manufactures, markets, and services a variety of industrial computer systems. The Company, through its worldwide network of distributors and sales representatives, offers products and services to international customers.

Forcecon Tech Co Ltd's designs, develops and manufactures thermal modules and fans for computers.

IBASE Technology Inc. manufactures and markets SBCs (single board computers), embedded boards, compact PCIs (peripheral component interfaces), etc.

Hyundai IBT Co., Ltd. develops and manufactures various monitors. The Company'sproducts include thin film transistor-liquid crystal display (TFT-LCD), plasma display panel (PDP), and color display tubes (CDT) monitors. Imagequest also produces thin client (window based terminal) products and markets notebook computers.

Elitegroup Computer Systems Co., Ltd. designs, manufactures, and markets computer motherboards, pre-systems, interface cards, compact disk read only memories (CD-ROMs), and peripheral equipment.

Darfon Electronics Corporation manufactures telecommunication components and precision devices including: keyboards and other input products, Telecom Components, Coil Components, and Voltage Controlled Oscillators.

Netac Technology Company Ltd. develops and manufactures flash memory and mobile storage hardware.  The Company's products include USB flash disks, external hard drives, and microcontroller units.  NeTac Technology is based in  Shenzhen, China.

Hengbao Co., Ltd. manufactures and markets magnetic cards, IC cards (SIM cards for telecommunications and IC cards for pay phones). and other card  related pro ducts.

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...

Travis Lundy

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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