Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.</li>
<li>Affiliate and former subsidiary <a href="https://www.smartkarma.com/entities/kioxia" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia (6600 JP)</a> announced it would cut wafer input volume by 30% starting in October, and Toshiba's announcement on the Privatisation process status implied some delay.</li>
<li>Today the shares are getting hit vs Peers. It's still a problem of lots of moving parts. </li>
</ul>


On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba's announcement on the Privatisation process status implied some delay.
Today the shares are getting hit vs Peers. It's still a problem of lots of moving parts. 


<ul>
<li>When the Bidding started, at least 10 parties were in the data room. It ended up with 4 parties moving from Round1 to Round2 where binding bids come.</li>
<li>The Final Four: Brookfield, Bain, JIC+JIP, and CVC. Bidders advancing to Round2 weren't allowed to join together. But JIC+JIP are apparently splitting, and now JIC wants to partner with Bain.</li>
<li>They'd need an exception but this keeps four in the same format. It also likely makes more bids competitive. </li>
</ul>


When the Bidding started, at least 10 parties were in the data room. It ended up with 4 parties moving from Round1 to Round2 where binding bids come.
The Final Four: Brookfield, Bain, JIC+JIP, and CVC. Bidders advancing to Round2 weren't allowed to join together. But JIC+JIP are apparently splitting, and now JIC wants to partner with Bain.
They'd need an exception but this keeps four in the same format. It also likely makes more bids competitive. 


Toshiba Bidders Switching Partners May Be Bullish

<ul>
<li>Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.</li>
<li>If no deal, there's downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.</li>
<li>I don't see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.</li>
</ul>


Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
If no deal, there's downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
I don't see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.


Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News "Leaks" Likely

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

<ul>
<li>Semiconductor revenues continue to fall. which appears to be a repeat of the collapse in 2019</li>
<li>Spot market prices, a leading indicator, are soft for both DRAM and NAND flash</li>
<li>It is likely that semiconductor revenues will end the year by returning to the trendline of their historical growth of 3.9%</li>
</ul>


Semiconductor revenues continue to fall. which appears to be a repeat of the collapse in 2019
Spot market prices, a leading indicator, are soft for both DRAM and NAND flash
It is likely that semiconductor revenues will end the year by returning to the trendline of their historical growth of 3.9%


Semiconductors Just Beginning a Long Slide

<ul>
<li>WSTS June semiconductor revenues indicate the onset of a trend of flat-to-down sales</li>
<li>Recent chip company earnings calls largely project a down market in the current quarter</li>
<li>This is most likely the beginning of a 1½ -year downturn in semiconductors</li>
</ul>


WSTS June semiconductor revenues indicate the onset of a trend of flat-to-down sales
Recent chip company earnings calls largely project a down market in the current quarter
This is most likely the beginning of a 1½ -year downturn in semiconductors


Semiconductors Have Reached Turning Point

Japan

Kioxia Holdings Corporation manufactures semiconductor memory products. The Company develops, produces, and sells flash memory cards, solid state drives, secure digital memory cards, and other products. Kioxia Holdings markets its products worldwide.

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Kioxia Holdings (6600 JP)

Two Bits of Non-Bullish Toshiba News

Toshiba's possible deal timeline extended just as semi sector troubles start to make themselves better-known. Not bullish. But not hugely bearish....

Travis Lundy

Toshiba Bidders Switching Partners May Be Bullish

Toshiba has 4 bidders in the proposal process, one of which WAS a joint domestic bid by JIC+JIP. They appear to be Splitsville and not JIC wants to...

Travis Lundy

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News "Leaks" Likely

Bidders are approaching 2nd Round deadlines, and news/comments are starting to seep out. Expect more. I expect a decision at/after H1 results. If...

Travis Lundy

Semiconductors Just Beginning a Long Slide

The semiconductor market is falling and is likely to continue to drop through the end of the year. This presents an opportunity for shorts.

Jim Handy

Semiconductors Have Reached Turning Point

The semiconductor market is starting to change from unusual growth and record revenues to a downturn that will return it to its long-term trend. ...

Jim Handy

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