Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Two weeks ago, <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> released a new Mid-Term Management Plan with a new investment plan, and a new capital plan (100% payout, ¥50/share minimum div til Mar-2026).</li>
<li>Obvious goal: get the stock above ¥1,000/share so YFO's ¥1,000 bid looks unattractive. Then they attacked on a FEFTA basis, saying YFO's foreign entities need permission to go over 10%.</li>
<li>Now Toyo has released a March 2024 forecast, with a ¥63/share dividend and 105% guided payout. The stock popped. LOTS of shares trading. Now only up small. </li>
</ul>


Two weeks ago, Toyo Construction (1890 JP) released a new Mid-Term Management Plan with a new investment plan, and a new capital plan (100% payout, ¥50/share minimum div til Mar-2026).
Obvious goal: get the stock above ¥1,000/share so YFO's ¥1,000 bid looks unattractive. Then they attacked on a FEFTA basis, saying YFO's foreign entities need permission to go over 10%.
Now Toyo has released a March 2024 forecast, with a ¥63/share dividend and 105% guided payout. The stock popped. LOTS of shares trading. Now only up small. 


Toyo Construction FY23 Profit Forecast - 105% Payout = 6.5%, Lots of Shares Changing Hands

<ul>
<li>YFO continues its fight on Board governance. Toyo Construction has shifted so the Board and a Special Committee will now examine the input Toyo says YFO has not provided. </li>
<li>Toyo also objected because it said YFO's bid could not be sustained based on Toyo's economics. Toyo's fight should have been offence. With a new Medium-Term Management Plan, it is.</li>
<li>Toyo now promises strong revenue and double digit OP growth, and a ¥50/share (5.3%) dividend. Toyo is trying to pay off shareholders to support it against YFO. That's fair/good.</li>
</ul>


YFO continues its fight on Board governance. Toyo Construction has shifted so the Board and a Special Committee will now examine the input Toyo says YFO has not provided. 
Toyo also objected because it said YFO's bid could not be sustained based on Toyo's economics. Toyo's fight should have been offence. With a new Medium-Term Management Plan, it is.
Toyo now promises strong revenue and double digit OP growth, and a ¥50/share (5.3%) dividend. Toyo is trying to pay off shareholders to support it against YFO. That's fair/good.


Toyo Construction (1890) Plays Offence - A New Mid-Term Mgmt Plan with High Shareholder Payout

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

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<ul>
<li>
<a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> will set up a special committee to evaluate YFO’s JPY1,100 offer. The Board will decide “<em>after respecting the content of the decision of the special committee.</em>”</li>
<li>YFO rightly points out the special committee is a ruse and is an attempt by the Board to demonstrate 'a fair process' for the predictable decision to reject its proposal.</li>
<li>The Board’s anxious move shows that protracted conflict is shifting in favour of YFO. At the last close, the gross spread to the tender offer is 10.3%.  </li>
</ul>



Toyo Construction (1890 JP) will set up a special committee to evaluate YFO’s JPY1,100 offer. The Board will decide “after respecting the content of the decision of the special committee.”
YFO rightly points out the special committee is a ruse and is an attempt by the Board to demonstrate 'a fair process' for the predictable decision to reject its proposal.
The Board’s anxious move shows that protracted conflict is shifting in favour of YFO. At the last close, the gross spread to the tender offer is 10.3%.  


Toyo Construction (1890 JP): The Board Uses the Smokescreen of a Special Committee

<ul>
<li>YFO’s <a href="https://prtimes.jp/main/html/rd/p/000000028.000071768.html" target="_blank" rel="noopener">latest press release</a> outlines the key objectives of a revamped <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> Board, should its recommended directors get elected at the June AGM.</li>
<li>YFO’s strategy is to revamp the Board, which should pave the way for its tender offer. YFO’s standstill agreement expires on 24 May and the tender offer starts in late-September.</li>
<li>The Board could allege that YFO has breached its NDA agreement and re-introduce a poison pill. The Board could look to garner enough support to block YFO’s nominations. </li>
</ul>


YFO’s latest press release outlines the key objectives of a revamped Toyo Construction (1890 JP) Board, should its recommended directors get elected at the June AGM.
YFO’s strategy is to revamp the Board, which should pave the way for its tender offer. YFO’s standstill agreement expires on 24 May and the tender offer starts in late-September.
The Board could allege that YFO has breached its NDA agreement and re-introduce a poison pill. The Board could look to garner enough support to block YFO’s nominations. 


Toyo Construction (1890 JP): YFO and the Board Trading Half-Truths

<ul>
<li>YFO offered another <a href="https://prtimes.jp/main/html/rd/p/000000022.000071768.html" target="_blank" rel="noopener">Press Release</a> yesterday. This one outlines what they see as Corporate Governance failures and offers a NEW POLICY.</li>
<li>The Corporate Governance failures are indeed, failures. Toyo's Board has failed to be transparent with shareholders, and in not at least addressing the takeover proposal, has failed its duties.</li>
<li>NEW POLICY? Elect new independent directors <em>"capable of improving the long-term corporate value and maximizing the interests of the general shareholders."  </em>Soft war starts now.</li>
</ul>


YFO offered another Press Release yesterday. This one outlines what they see as Corporate Governance failures and offers a NEW POLICY.
The Corporate Governance failures are indeed, failures. Toyo's Board has failed to be transparent with shareholders, and in not at least addressing the takeover proposal, has failed its duties.
NEW POLICY? Elect new independent directors "capable of improving the long-term corporate value and maximizing the interests of the general shareholders."  Soft war starts now.


YFO To Take the Fight To Toyo Construction's Board

Japan

INFRONEER Holdings Inc. offers infrastructure construction services. The Company provides energy construction, road construction, airport construction, exhibition hall construction, and more. INFRONEER Holdings also produces construction equipment.

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INFRONEER Holdings (5076 JP)

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