Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

NTT has unveiled its plan to integrate ICT subsidiaries under wireless unit DoCoMo and boosted FY23 EPS guidance from ¥320 to ¥370. NTT was already running well-ahead of pace to reach the former but the new target is 6% above consensus forecasts as cost reductions/synergies from the DoCoMo acquisition are fully factored in. Other notable targets include a 25% increase in enterprise revenue from ¥1,600bn to ¥2,000bn ($18bn) over five years which seems achievable considering double-digit sector growth reported by competitors.  NTT trades at a discount to peers despite setting growth targets that are more than 2x higher. We remain at Buy.

NTT has unveiled its plan to integrate ICT subsidiaries under wireless unit DoCoMo and boosted FY23 EPS guidance from ¥320 to ¥370. NTT was already running well-ahead of pace to reach the former but the new target is 6% above consensus forecasts as cost reductions/synergies from the DoCoMo acquisition are fully factored in. Other notable targets include a 25% increase in enterprise revenue from ¥1,600bn to ¥2,000bn ($18bn) over five years which seems achievable considering double-digit sector growth reported by competitors.  NTT trades at a discount to peers despite setting growth targets that are more than 2x higher. We remain at Buy. 

NTT (Buy) - Mid-Term EPS Guidance Boost as a Fully Integrated DoCoMo Drives Growth

Thematic (Sector/Industry)

The Nikkei reports the Ministry of Industry Affairs and Communications (MIC, the regulator) will not allow NTT’s local exchange companies to give a wholly owned DoCoMo preferential treatment. This is not surprising and whilst it may modestly impact sentiment in the near-term, the real issue is competition in selling integrated fixed-wireless services to corporate users and that will develop no matter how NTT is regulated.  Meanwhile, a shift in political and regulatory focus away from mobile pricing is good news for everyone and we remain overweight with NTT as our top pick.

The Nikkei reports the Ministry of Industry Affairs and Communications (MIC, the regulator) will not allow NTT’s local exchange companies to give a wholly owned DoCoMo preferential treatment. This is not surprising and whilst it may modestly impact sentiment in the near-term, the real issue is competition in selling integrated fixed-wireless services to corporate users and that will develop no matter how NTT is regulated.  Meanwhile, a shift in political and regulatory focus away from mobile pricing is good news for everyone and we remain overweight with NTT as our top pick.

Japan Telecom Sector - Regulator to Signal Level Playing Field for DoCoMo

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

Over 50% of allocations are in the US with the bulk of the remainder split between Japan, China &amp; HK and the major European nations.  The EMEA overweight is comprised mainly of the UK, Netherlands, France and Germany, with active managers running underweights in the US, China &amp; HK, Australia and Japan.UK allocations hover around their lowest levels in history, though managers remain stubbornly overweight compared to the MSCI AC World index.  A total of 62% of managers are overweight the UK at an average +1.88% above benchmark.  Global Value investors are approaching their largest ever overweight in UK stocks of 3.64% above benchmark.Another month, another slump in Japan exposure.  Average weights in Japan stand at an all-time low of 5.06% with 85.5% of funds exposed (another low). <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony Corp (6758 JP)</a> and <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> are the most widely held stocks, with 23% and 21% of funds holding a position.Tech exposure is at record highs, though this is matched by a record underweight of -0.47%.  Indeed, the percentage of funds who are overweight technology has fallen to below 50% for the first time since the end of 2018, a sign that Global managers are tilting their portfolios away from Tech.German Industrials allocations have hit a 4-year high as more Global investors add exposure to the sector. <a href="https://www.smartkarma.com/entities/deutsche-post-ag" target="_blank" data-smartkarma-citation="entities:21608:1" rel="noopener">Deutsche Post AG (DPW GR)</a> and <a href="https://www.smartkarma.com/entities/siemens-ag" target="_blank" data-smartkarma-citation="entities:21713:1" rel="noopener">Siemens AG (SIE GR)</a> were the key stocks behind the move, with 4.2% and 2.4% of funds adding exposure over the last 6-months.Alibaba has seen closures by some of the larger holders in our analysis, led by American Funds Capital World Fund (-$1.1bn) and New Economy Fund (-$451m).  Though closures have dominated, selected funds have opened exposure during this period of volatility, including Invesco's Global Focus Fund and Liontrust's Global Income Fund.

Over 50% of allocations are in the US with the bulk of the remainder split between Japan, China &amp; HK and the major European nations.  The EMEA overweight is comprised mainly of the UK, Netherlands, France and Germany, with active managers running underweights in the US, China &amp; HK, Australia and Japan.UK allocations hover around their lowest levels in history, though managers remain stubbornly overweight compared to the MSCI AC World index.  A total of 62% of managers are overweight the UK at an average +1.88% above benchmark.  Global Value investors are approaching their largest ever overweight in UK stocks of 3.64% above benchmark.Another month, another slump in Japan exposure.  Average weights in Japan stand at an all-time low of 5.06% with 85.5% of funds exposed (another low). Sony Corp (6758 JP) and KDDI Corp (9433 JP) are the most widely held stocks, with 23% and 21% of funds holding a position.Tech exposure is at record highs, though this is matched by a record underweight of -0.47%.  Indeed, the percentage of funds who are overweight technology has fallen to below 50% for the first time since the end of 2018, a sign that Global managers are tilting their portfolios away from Tech.German Industrials allocations have hit a 4-year high as more Global investors add exposure to the sector. Deutsche Post AG (DPW GR) and Siemens AG (SIE GR) were the key stocks behind the move, with 4.2% and 2.4% of funds adding exposure over the last 6-months.Alibaba has seen closures by some of the larger holders in our analysis, led by American Funds Capital World Fund (-$1.1bn) and New Economy Fund (-$451m).  Though closures have dominated, selected funds have opened exposure during this period of volatility, including Invesco's Global Focus Fund and Liontrust's Global Income Fund.

Global Fund Positioning Update:  Japan Lows, US Highs, UK Value Rotation, Tencent & Alibaba Exit

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Japan-based food delivery company <a href="https://www.smartkarma.com/entities/demae-can-co-ltd" target="_blank" data-smartkarma-citation="entities:10524:1" rel="noopener">Demae-Can Co., Ltd. (2484 JP)</a> launched a follow-on equity offering after market-close today to raise capital for business expansion. In this offering the company will be issuing 55,436,400 new shares and selling 3,240,000 treasury shares out of which a total of 19,293,900 shares will be allocated to the public and 39,382,500 shares will be allocated for <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a> and South-Korea based <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>. Based on today's closing price, the total size of this equity offering could be around ~¥105bn (US$950mn) and the portion allocated to public shareholders could be around ~¥35bn (US$315mn). However, the official announcement estimates the minimum size of the equity offering to be around ~¥80bn (US$726mn) and the above-mentioned allocation can change slightly depending on share price movement and public investor interest. There is a really interesting event angle here which should pique the interest of investors. More below.

Japan-based food delivery company Demae-Can Co., Ltd. (2484 JP) launched a follow-on equity offering after market-close today to raise capital for business expansion. In this offering the company will be issuing 55,436,400 new shares and selling 3,240,000 treasury shares out of which a total of 19,293,900 shares will be allocated to the public and 39,382,500 shares will be allocated for Z Holdings (4689 JP) and South-Korea based Naver Corp (035420 KS). Based on today's closing price, the total size of this equity offering could be around ~¥105bn (US$950mn) and the portion allocated to public shareholders could be around ~¥35bn (US$315mn). However, the official announcement estimates the minimum size of the equity offering to be around ~¥80bn (US$726mn) and the above-mentioned allocation can change slightly depending on share price movement and public investor interest. There is a really interesting event angle here which should pique the interest of investors. More below.

Demae-Can's Latest Offering Preserves The Potential for TOPIX Inclusion

KDDI's new pricing is the closest that Japan has come to a pre-pay service since Vodafone bought Japan Telecom in 2001 whilst its Starlink announcement gives all four mobile operators a satellite option.

KDDI's new pricing is the closest that Japan has come to a pre-pay service since Vodafone bought Japan Telecom in 2001 whilst its Starlink announcement gives all four mobile operators a satellite option.

Japan Telecom Sector - Read Across from KDDI’s Pricing and Starlink Announcements

Japan

KDDI CORPORATION provides mobile communication services and sells mobile devices.  The Company also is a broadband provider.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

KDDI Corp (9433 JP)

NTT (Buy) - Mid-Term EPS Guidance Boost as a Fully Integrated DoCoMo Drives Growth

NTT management says DoCoMo synergies can drive FY23 EPS to ¥370 (Redex ¥355, consensus ¥348) which implies 19% growth over two years for a stock...

Kirk Boodry

Japan Telecom Sector - Regulator to Signal Level Playing Field for DoCoMo

The regulator will block preferential pricing for DoCoMo within NTT. This is not surprising. The real issue is competition for enterprise users...

Kirk Boodry

Global Fund Positioning Update: Japan Lows, US Highs, UK Value Rotation, Tencent & Alibaba Exit

A detailed look at investor positioning among 380 active Global strategies, covering the major themes in country, sector and stock exposure.

Steven Holden

Demae-Can's Latest Offering Preserves The Potential for TOPIX Inclusion

Japan-based food delivery company Demae-Can announced a large equity offering to boost their marketing expenditure and defend their market share in...

Janaghan Jeyakumar, CFA

Japan Telecom Sector - Read Across from KDDI’s Pricing and Starlink Announcements

KDDI's new pricing is the closest Japan has come to a pre-pay service since Vodafone bought Japan Telecom in 2001 whilst its Starlink announcement...

Kirk Boodry

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)