Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Having twice had to issue profit warnings within just three months in FY3/2019 because of mounting losses on a synthetic hedge, <a href="https://www.smartkarma.com/entities/michinoku-bank-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:6599:1">Michinoku Bank (8350 JP)</a> has now excelled itself by abruptly slashing both its interim and its full-year earnings guidance from modest profits to heavy losses.  Rising credit costs, further losses in the securities portfolio and unbudgeted branch restructuring/closure costs are apparently to blame.  Astonishingly, foreign investors actually increased their aggregate holdings in this small, struggling bank in FY3/2019.  They may well regret that investment decision when Tokyo markets reopen on Tuesday November 5 following the observation of Culture Day on Monday.  Caveat emptor!  (May the buyer beware!)

Having twice had to issue profit warnings within just three months in FY3/2019 because of mounting losses on a synthetic hedge, Michinoku Bank (8350 JP) has now excelled itself by abruptly slashing both its interim and its full-year earnings guidance from modest profits to heavy losses.  Rising credit costs, further losses in the securities portfolio and unbudgeted branch restructuring/closure costs are apparently to blame.  Astonishingly, foreign investors actually increased their aggregate holdings in this small, struggling bank in FY3/2019.  They may well regret that investment decision when Tokyo markets reopen on Tuesday November 5 following the observation of Culture Day on Monday.  Caveat emptor!  (May the buyer beware!)

Michinoku Bank  (8350 JP):  A Distant Sound of Shoes Dropping

'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. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/001/original/2019-07-13_16-16-31.png?1563002212" class="editor-image img-responsive" data-smartkarma-image-id="93001"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/005/original/2019-07-13_16-25-24.png?1563002742" class="editor-image img-responsive" data-smartkarma-image-id="93005"></figure>Source: Japan Analytics
</div>MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/020/original/2019-07-14_06-28-16.png?1563053334" class="editor-image img-responsive" data-smartkarma-image-id="93020"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/024/original/2019-07-14_06-45-29.png?1563054338" class="editor-image img-responsive" data-smartkarma-image-id="93024"></figure> Source: Japan Analytics</div>VALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/025/original/2019-07-14_06-47-40.png?1563054585" class="editor-image img-responsive" data-smartkarma-image-id="93025"></figure> Source: Japan Analytics</div>TORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/026/original/2019-07-14_06-54-51.png?1563054906" class="editor-image img-responsive" data-smartkarma-image-id="93026"></figure> Source: Japan Analytics</div>VOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/028/original/2019-07-14_07-31-40.png?1563057109" class="editor-image img-responsive" data-smartkarma-image-id="93028"></figure> Source: Japan Analytics</div>3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha (3391 JP), </a><a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a><a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">, and </a><a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson (2651 JP)</a>. Electrical Equipment has suffered from weakness in component stocks <a href="https://www.smartkarma.com/entities/alps-alpine-co-ltd" target="_blank" data-smartkarma-citation="entities:12001:1" rel="noopener">Alps Alpine (6770 JP)</a> (-38% over one year), <a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata (6981 JP)</a> (see <a href="https://www.smartkarma.com/profiles/scott-foster" target="_blank" data-smartkarma-citation="accounts:1134" rel="noopener">Scott Foster</a>'s <a href="https://www.smartkarma.com/insights/murata-mfg-6981-jp-buy-on-decline-for-the-long-term" target="_blank" data-smartkarma-citation="insights:30919" rel="noopener">(Buy on Decline for the Long Term</a>), and <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" data-smartkarma-citation="entities:9924:1" rel="noopener">Taiyo Yuden (6976 JP)</a>, while <a href="https://www.smartkarma.com/entities/smc-corp" target="_blank" data-smartkarma-citation="entities:20866:1" rel="noopener">SMC (6273 JP)</a>, <a href="https://www.smartkarma.com/entities/fanuc-corp" target="_blank" data-smartkarma-citation="entities:752:1" rel="noopener">Fanuc (6954 JP)</a>, and <a href="https://www.smartkarma.com/entities/komatsu-ltd" target="_blank" data-smartkarma-citation="entities:8416:1" rel="noopener">Komatsu (6301 JP)</a> have weighed on the Machinery Sector.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/031/original/2019-07-14_07-44-47.png?1563057897" class="editor-image img-responsive" data-smartkarma-image-id="93031"></figure></figure> Source: Japan Analytics</div>SECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (<a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">OBIC (4684 JP)</a>, Other Commerical Products (<a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya Corp (7741 JP)</a>, and Commercial Services (<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit 6098 JP).</a> We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (<a href="https://www.smartkarma.com/entities/nippon-steel-sumitomo-metal-corp" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel &amp; Sumitomo Metal (5401 JP)</a>) <div class="content-highlight">In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a>, <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP), </a><a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" data-smartkarma-citation="entities:2458:1" rel="noopener">Yaskawa Electric (6506 JP), </a><a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis (4927 JP)</a>, <a href="https://www.smartkarma.com/entities/sekisui-house-ltd" target="_blank" data-smartkarma-citation="entities:4508:1" rel="noopener">Sekisui House (1928 JP)</a>, <a href="https://www.smartkarma.com/entities/keyence-corp" target="_blank" data-smartkarma-citation="entities:3077:1" rel="noopener">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a>, and <a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">Obic (4684 JP)</a>.</div>


Source: Japan Analytics
MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.
 Source: Japan AnalyticsVALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. 
 Source: Japan AnalyticsTORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  
 Source: Japan AnalyticsVOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.
 Source: Japan Analytics3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores Welcia (3141 JP) and Tsuruha (3391 JP), Fast Retailing (9983 JP), and Lawson (2651 JP). Electrical Equipment has suffered from weakness in component stocks Alps Alpine (6770 JP) (-38% over one year), Murata (6981 JP) (see Scott Foster's (Buy on Decline for the Long Term), and Taiyo Yuden (6976 JP), while SMC (6273 JP), Fanuc (6954 JP), and Komatsu (6301 JP) have weighed on the Machinery Sector.
 Source: Japan AnalyticsSECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (OBIC (4684 JP), Other Commerical Products (Hoya Corp (7741 JP), and Commercial Services (Recruit 6098 JP). We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (Nippon Steel &amp; Sumitomo Metal (5401 JP)) In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on Welcia (3141 JP), Daiseki (9793 JP), Yaskawa Electric (6506 JP), Pola Orbis (4927 JP), Sekisui House (1928 JP), Keyence (6861 JP), Japan Post Insurance (7181 JP), and Obic (4684 JP).

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

The Japanese government's plans to selldown US$12bn worth of <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a>, in relation to which, in my Apr 2019 insight, <a href="https://www.smartkarma.com/insights/japan-post-holdings-and-japan-post-bank-early-thoughts-on-a-choice-of-two-trades" target="_blank" rel="noopener">Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades,</a> I had highlighted the possibility that JPH could sell some of its holding in JPB and use the proceeds to conduct a bigger buyback as and when the government sells down its shares in JPH. 
In yesterday's insight, <a href="https://www.smartkarma.com/insights/japan-post-holdings-and-japan-post-bank-might-be-time-to-switch-part-i" target="_blank" rel="noopener"> Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part I</a>, I looked at how that trade has played out and whether it still made sense. I concluded that it might be better to be short JPH while waiting for the actual selldown. This is the second part of the same series, in which I will take a quick look at the valuation angle.
<hr>
For people interested in reading more about the history and background, I've covered the IPO and JPH and JPI sell downs in the below series of insights:
<ul>
<li>All three IPOs: <a href="https://www.smartkarma.com/insights/when-the-bank-is-cheap-and-holdco-discount-makes-the-mothership-cheaper-then-who-needs-insurance" target="_blank" rel="noopener">When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?</a>
</li>
<li>JPH IPO: <a href="https://www.smartkarma.com/insights/final-call-to-board-the-mothership-they-don-t-come-much-cheaper-than-this" target="_blank" rel="noopener">Final call to board the mothership. They don’t come much cheaper than this</a>
</li>
<li>JPH Placement: <a href="https://www.smartkarma.com/insights/japan-post-holdings-placement-similar-reasons-similar-price-will-probably-yield-similar-returns" target="_blank" rel="noopener">Japan Post Holdings Placement - Similar Reasons, Similar Price Will Probably Yield Similar Returns</a>
</li>
<li>JPH and JPB possible trade: <a href="https://www.smartkarma.com/insights/japan-post-holdings-and-japan-post-bank-early-thoughts-on-a-choice-of-two-trades" target="_blank" rel="noopener">Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades</a>
</li>
<li>Part I of the JPH short trade:<a href="https://www.smartkarma.com/insights/japan-post-holdings-and-japan-post-bank-might-be-time-to-switch-part-i" target="_blank" rel="noopener"> Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part I</a>
</li>
</ul>
<hr>
<ul>
<li>JPI IPO: <a href="https://www.smartkarma.com/insights/three-s-a-crowd-a-minnow-amongst-giants-risks-getting-lost-in-the-chatter" target="_blank" rel="noopener">Three’s a crowd - A minnow amongst giants risks getting lost in the chatter</a>
</li>
<li>JPI Placement: <a href="https://www.smartkarma.com/insights/japan-post-insurance-placement-3x-the-ipo-size-basics-and-index-impact" target="_blank" rel="noopener">Japan Post Insurance Placement - 3x the IPO Size - Basics and Index Impact</a>
</li>
<li>JPI Placement: <a href="https://www.smartkarma.com/insights/japan-post-insurance-placement-performance-of-other-big-deals-indicates-a-need-for-correction" target="_blank" rel="noopener">Japan Post Insurance Placement - Performance of Other Big Deals Indicates a Need for Correction</a>
</li>
</ul>
<hr>
<ul>
<li>JPB IPO: <a href="https://www.smartkarma.com/insights/dividend-yield-looks-enticing-versus-jgbs-yield-while-risks-are-similar" target="_blank" rel="noopener">Dividend yield looks enticing versus JGBs yield, while risks are similar</a>
</li>
</ul>

The Japanese government's plans to selldown US$12bn worth of Japan Post Holdings (6178 JP), in relation to which, in my Apr 2019 insight, Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades, I had highlighted the possibility that JPH could sell some of its holding in JPB and use the proceeds to conduct a bigger buyback as and when the government sells down its shares in JPH. 
In yesterday's insight,  Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part I, I looked at how that trade has played out and whether it still made sense. I concluded that it might be better to be short JPH while waiting for the actual selldown. This is the second part of the same series, in which I will take a quick look at the valuation angle.

For people interested in reading more about the history and background, I've covered the IPO and JPH and JPI sell downs in the below series of insights:

All three IPOs: When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?

JPH IPO: Final call to board the mothership. They don’t come much cheaper than this

JPH Placement: Japan Post Holdings Placement - Similar Reasons, Similar Price Will Probably Yield Similar Returns

JPH and JPB possible trade: Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades

Part I of the JPH short trade: Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part I




JPI IPO: Three’s a crowd - A minnow amongst giants risks getting lost in the chatter

JPI Placement: Japan Post Insurance Placement - 3x the IPO Size - Basics and Index Impact

JPI Placement: Japan Post Insurance Placement - Performance of Other Big Deals Indicates a Need for Correction




JPB IPO: Dividend yield looks enticing versus JGBs yield, while risks are similar



Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part II

‘Rising Innovation 2022’ is the latest 3-Year Business Plan for <a href="https://www.smartkarma.com/entities/tsukuba-bank-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:16705:1">Tsukuba Bank (8338 JP)</a>, a small and constantly-struggling regional bank from Ibaraki Prefecture, to the northeast of Tokyo.  The bank missed all but one of its key objectives in its previous Business Plan, but there were no consequences for senior management.  No demotions or bonus cuts, no acceptance of responsibility.  Just business as usual.  Regardless of the optimistic forecasts in the new Business Plan, growth in recent years has been virtually non-existent, FY3/2019 results missed guidance by a country mile, the bank’s stock price remains close to a 52-week low, and current guidance calls for further declines in reported profits in FY3/2020.  Yet foreign investors in aggregate own around 14% of the stock.  We fail to understand why.  Caveat emptor!  (May the buyer beware!)

‘Rising Innovation 2022’ is the latest 3-Year Business Plan for Tsukuba Bank (8338 JP), a small and constantly-struggling regional bank from Ibaraki Prefecture, to the northeast of Tokyo.  The bank missed all but one of its key objectives in its previous Business Plan, but there were no consequences for senior management.  No demotions or bonus cuts, no acceptance of responsibility.  Just business as usual.  Regardless of the optimistic forecasts in the new Business Plan, growth in recent years has been virtually non-existent, FY3/2019 results missed guidance by a country mile, the bank’s stock price remains close to a 52-week low, and current guidance calls for further declines in reported profits in FY3/2020.  Yet foreign investors in aggregate own around 14% of the stock.  We fail to understand why.  Caveat emptor!  (May the buyer beware!)    

Tsukuba Bank (8338.JP): Rising Innovation, Falling Momentum: Plus Ça Change...

The Japanese government's plans to sell down US$12bn worth of <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> ​seem to be progressing well. Banks have been appointed ahead of the likely timeline of Sep 2019. 
In my earlier insight in Apr 2019, <a href="https://www.smartkarma.com/insights/japan-post-holdings-and-japan-post-bank-early-thoughts-on-a-choice-of-two-trades" target="_blank" rel="noopener">Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades,</a> I had highlighted the possibility that JPH could sell some of its holding in JPB and use the proceeds to conduct a bigger buyback as and when the government sells down its shares in JPH. If one did put on that trade they would made 8% odd over the past two months or so.  However, in my view, the window for JPH to sell down JPB shares ahead of its own placement is now rapidly closing. 
Since the possibility of the progressive selldown and buyback (JPB selldown by JPH and the large JPH buyback into the JPH government selldown) not materializing increases with every passing day, in this insight, I'll instead look at the possibilities of setting up a trade around the government selldown of JPH, without the JPB stake sale.
<hr>
For people interested in reading more about the history and background, I've covered the IPO and JPH and JPI sell downs in the below series of insights:
<ul>
<li>All three IPOs: <a href="https://www.smartkarma.com/insights/when-the-bank-is-cheap-and-holdco-discount-makes-the-mothership-cheaper-then-who-needs-insurance" target="_blank" rel="noopener">When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?</a>
</li>
<li>JPH IPO: <a href="https://www.smartkarma.com/insights/final-call-to-board-the-mothership-they-don-t-come-much-cheaper-than-this" target="_blank" rel="noopener">Final call to board the mothership. They don’t come much cheaper than this</a>
</li>
<li>JPH Placement: <a href="https://www.smartkarma.com/insights/japan-post-holdings-placement-similar-reasons-similar-price-will-probably-yield-similar-returns" target="_blank" rel="noopener">Japan Post Holdings Placement - Similar Reasons, Similar Price Will Probably Yield Similar Returns</a>
</li>
<li>JPH and JPB possible trade: <a href="https://www.smartkarma.com/insights/japan-post-holdings-and-japan-post-bank-early-thoughts-on-a-choice-of-two-trades" target="_blank" rel="noopener">Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades</a>
</li>
</ul>
<hr>
<ul>
<li>JPI IPO: <a href="https://www.smartkarma.com/insights/three-s-a-crowd-a-minnow-amongst-giants-risks-getting-lost-in-the-chatter" target="_blank" rel="noopener">Three’s a crowd - A minnow amongst giants risks getting lost in the chatter</a>
</li>
<li>JPI Placement: <a href="https://www.smartkarma.com/insights/japan-post-insurance-placement-3x-the-ipo-size-basics-and-index-impact" target="_blank" rel="noopener">Japan Post Insurance Placement - 3x the IPO Size - Basics and Index Impact</a>
</li>
<li>JPI Placement: <a href="https://www.smartkarma.com/insights/japan-post-insurance-placement-performance-of-other-big-deals-indicates-a-need-for-correction" target="_blank" rel="noopener">Japan Post Insurance Placement - Performance of Other Big Deals Indicates a Need for Correction</a>
</li>
</ul>
<hr>
<ul>
<li>JPB IPO: <a href="https://www.smartkarma.com/insights/dividend-yield-looks-enticing-versus-jgbs-yield-while-risks-are-similar" target="_blank" rel="noopener">Dividend yield looks enticing versus JGBs yield, while risks are similar</a>
</li>
</ul>

The Japanese government's plans to sell down US$12bn worth of Japan Post Holdings (6178 JP) ​seem to be progressing well. Banks have been appointed ahead of the likely timeline of Sep 2019. 
In my earlier insight in Apr 2019, Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades, I had highlighted the possibility that JPH could sell some of its holding in JPB and use the proceeds to conduct a bigger buyback as and when the government sells down its shares in JPH. If one did put on that trade they would made 8% odd over the past two months or so.  However, in my view, the window for JPH to sell down JPB shares ahead of its own placement is now rapidly closing. 
Since the possibility of the progressive selldown and buyback (JPB selldown by JPH and the large JPH buyback into the JPH government selldown) not materializing increases with every passing day, in this insight, I'll instead look at the possibilities of setting up a trade around the government selldown of JPH, without the JPB stake sale.

For people interested in reading more about the history and background, I've covered the IPO and JPH and JPI sell downs in the below series of insights:

All three IPOs: When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?

JPH IPO: Final call to board the mothership. They don’t come much cheaper than this

JPH Placement: Japan Post Holdings Placement - Similar Reasons, Similar Price Will Probably Yield Similar Returns

JPH and JPB possible trade: Japan Post Holdings and Japan Post Bank - Early Thoughts on a Choice of Two Trades




JPI IPO: Three’s a crowd - A minnow amongst giants risks getting lost in the chatter

JPI Placement: Japan Post Insurance Placement - 3x the IPO Size - Basics and Index Impact

JPI Placement: Japan Post Insurance Placement - Performance of Other Big Deals Indicates a Need for Correction




JPB IPO: Dividend yield looks enticing versus JGBs yield, while risks are similar



Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part I

Japan

Japan Post Bank Co. Ltd. provides general banking services. The Company offers deposits, savings, loans, currency exchange transactions, investment trusts, national bonds, and other related banking services to individuals and businesses. Japan Post Bank also provides other financial services such as insurance agency and financing service.

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Japan Post Bank (7182 JP)

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Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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Having twice had to issue profit warnings within just three months in FY3/2019 because of mounting losses on a synthetic hedge, Michinoku Bank...

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The Japanese government's plans to sell down US$12bn worth of Japan Post Holdings (6178 JP) ​seem to be progressing well. Banks have been appointed...

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