Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS: SPX rebounded on Monday with 9/11 Sectors positive; Tesla up 10% on upgrade from Morgan Stanley; Tech strong ahead of Apple's Event - expectations high; China stablilizing. </li>
<li>JAPAN: NKY Futs -0.1% vs Cash; USDJPY 146.6; JP yields rise; yen strengthens and Banks Rally as Ueda hints at normalization; This time is different:  WSJ on Japan </li>
<li>JAPAN X: Japan Equities: Is This Rally Different? We generally worry when the FT, WSJ jump on the Japan bandwagon - generally the top. However, the hard data is supportive..</li>
</ul>


OVERSEAS: SPX rebounded on Monday with 9/11 Sectors positive; Tesla up 10% on upgrade from Morgan Stanley; Tech strong ahead of Apple's Event - expectations high; China stablilizing. 
JAPAN: NKY Futs -0.1% vs Cash; USDJPY 146.6; JP yields rise; yen strengthens and Banks Rally as Ueda hints at normalization; This time is different:  WSJ on Japan 
JAPAN X: Japan Equities: Is This Rally Different? We generally worry when the FT, WSJ jump on the Japan bandwagon - generally the top. However, the hard data is supportive..


Ohayo Japan:  SPX Rebounds - Tesla Leads; JAPAN X: Japan Equities: Is This Rally Different?

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.

Event-Driven

<ul>
<li>Japan Industrial Partners (JIP) will launch the <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> tender offer of JPY4,620 per share from 8 August to 20 September.</li>
<li>The Board has reaffirmed its recommendation to accept the offer. JIP’s inability to raise its bid is used as an excuse to ignore the material peer rerating and unattractive terms.</li>
<li>The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior alternative, increasing deal risks. </li>
</ul>


Japan Industrial Partners (JIP) will launch the Toshiba Corp (6502 JP) tender offer of JPY4,620 per share from 8 August to 20 September.
The Board has reaffirmed its recommendation to accept the offer. JIP’s inability to raise its bid is used as an excuse to ignore the material peer rerating and unattractive terms.
The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior alternative, increasing deal risks. 


Toshiba (6502 JP): Tender Offer Launches, 1Q Results Increase Deal Risks

<ul>
<li>OVERSEAS.  SPX500 fell on Friday, and closed -2.3%WoW;  July jobs report showed cooling in the labor market;  Apple -4.8% weighed on market sentiment; Reports that Buffet buying short dated UST.</li>
<li>JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Investors favor Japan&gt;  China;  Oasis's Fischer says still more to be done with Governance.</li>
<li>NUGGET. Honda is ahead of their motorcycle electrification strategy vs Japanese competitors.  With the #1 global share and 2.7 trillion yen in sales, they CANNOT afford to be left behind.</li>
</ul>


OVERSEAS.  SPX500 fell on Friday, and closed -2.3%WoW;  July jobs report showed cooling in the labor market;  Apple -4.8% weighed on market sentiment; Reports that Buffet buying short dated UST.
JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Investors favor Japan&gt;  China;  Oasis's Fischer says still more to be done with Governance.
NUGGET. Honda is ahead of their motorcycle electrification strategy vs Japanese competitors.  With the #1 global share and 2.7 trillion yen in sales, they CANNOT afford to be left behind.


Ohayo Japan| SPX -2.3%WoW; Buffett Buying UST; NUGGET:Motorcycle Electrification - Honda Roars Ahead

<ul>
<li>On 28 July, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> disclosed that JIP delayed the tender start to “<em>sometime in August 2023</em>” vs the target “<em>in the last ten days of July 2023.</em>”</li>
<li>Toshiba reports 1Q results on 7 August. A solid 1Q will undermine the Board’s recommendation of the offer in part on the premise that the IFA’s DCF valuation is unrealistic.</li>
<li>The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip away at the offer’s attractiveness. </li>
</ul>


On 28 July, Toshiba Corp (6502 JP) disclosed that JIP delayed the tender start to “sometime in August 2023” vs the target “in the last ten days of July 2023.”
Toshiba reports 1Q results on 7 August. A solid 1Q will undermine the Board’s recommendation of the offer in part on the premise that the IFA’s DCF valuation is unrealistic.
The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip away at the offer’s attractiveness. 


Toshiba (6502 JP): Risk/Reward as 1Q Results and Tender Start Approach

<ul>
<li>OVERSEAS. Fed Lifts rates +25bps as expected; No longer sees recession emerging; Equities - Mixed as Industrials Rally, Tech Sells off; Meta Beats on Rev/EPS; Boeing Surges on Outloook</li>
<li>JAPAN. Nikkei Futures -0.4% vs Cash; USDJPY 140.4; Fed Move Done, but for BOJ - Potential for a Surprise Move ? Advantest Miss-back to reality ?  Earnings in Full Swing. </li>
<li>NUGGET. Japanese Executives Not Properly Incentivized; Shareholders need to take a different tact in addressing corporate performance. </li>
</ul>


OVERSEAS. Fed Lifts rates +25bps as expected; No longer sees recession emerging; Equities - Mixed as Industrials Rally, Tech Sells off; Meta Beats on Rev/EPS; Boeing Surges on Outloook
JAPAN. Nikkei Futures -0.4% vs Cash; USDJPY 140.4; Fed Move Done, but for BOJ - Potential for a Surprise Move ? Advantest Miss-back to reality ?  Earnings in Full Swing. 
NUGGET. Japanese Executives Not Properly Incentivized; Shareholders need to take a different tact in addressing corporate performance. 


Ohayo Japan| Fed Watch: Now for Hawkish Hold; Advantest Miss; NUGGET: JP Executives Not Incentivized

Japan

IHI Corporation manufactures heavy machinery. The Company produces aircraft jet engines, rocket propulsion systems, and ships for military and commercial use. Ishikawajima-Harima also constructs petroleum refineries and nuclear power plants.

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IHI Corp (7013 JP)

Ohayo Japan: SPX Rebounds - Tesla Leads; JAPAN X: Japan Equities: Is This Rally Different?

SPX rebounds with Tesla leading; NKY Futs -0.1% vs Cash; USDJPY 146.6; JP yields rise; yen strengthens and Banks Rally as Ueda hints at...

Mark Chadwick

Toshiba (6502 JP): Tender Offer Launches, 1Q Results Increase Deal Risks

The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior...

Arun George

Ohayo Japan| SPX -2.3%WoW; Buffett Buying UST; NUGGET:Motorcycle Electrification - Honda Roars Ahead

JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Global Investors favor Japan over China; Oasis's...

Mark Chadwick

Toshiba (6502 JP): Risk/Reward as 1Q Results and Tender Start Approach

The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip...

Arun George

Ohayo Japan| Fed Watch: Now for Hawkish Hold; Advantest Miss; NUGGET: JP Executives Not Incentivized

Now for a Hawkish Hold from the Fed; Nikkei Futures -0.4% vs Cash; USDJPY 140.4; Fed Move Down, but for BOJ - Potential for a Surprise Move ?...

Mark Chadwick

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