Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS:  SPX -0.6% as Tech leads Tuesday's decline; Inflation concerns continue to weigh; UAW vs Detroit Big 3 discussion continue - strike deadline draws close; Fund managers avoid China. </li>
<li>JAPAN:  NKY Futs -0.6% Disc vs Cash; USDJPY 1471; Cabinet reshuffle day - changes in Defense and Foreign Affairs; GTX engine issue shocks Japanese partners;  Street upgrade Galore !</li>
<li>JAPAN X: Reports are that SoftBank is Explores New York Listing for PayPay Amid Rising Tech Valuations. With ARM (effectively) done and dusted, Softie likely turns to a PayPay listing</li>
</ul>


OVERSEAS:  SPX -0.6% as Tech leads Tuesday's decline; Inflation concerns continue to weigh; UAW vs Detroit Big 3 discussion continue - strike deadline draws close; Fund managers avoid China. 
JAPAN:  NKY Futs -0.6% Disc vs Cash; USDJPY 1471; Cabinet reshuffle day - changes in Defense and Foreign Affairs; GTX engine issue shocks Japanese partners;  Street upgrade Galore !
JAPAN X: Reports are that SoftBank is Explores New York Listing for PayPay Amid Rising Tech Valuations. With ARM (effectively) done and dusted, Softie likely turns to a PayPay listing


Ohayo Japan: Tech Leads US Equity Decline; JAPAN X: Softbank's ARM Done(Almost), PayPay IPO Next?

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn't. Good. Not great. </li>
<li>But NTT announced a ¥200bn buyback. Again good. Not great. </li>
<li>And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.</li>
</ul>


NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn't. Good. Not great. 
But NTT announced a ¥200bn buyback. Again good. Not great. 
And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.


China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>ZHD reported F1Q/C2Q23 top-line, non-GAAP operating profit and non-GAAP net profit in-line, in-line and (32%) vs. consensus, respectively. Earnings miss was driven by wider tax expense.  </li>
<li>ZHD’s B2C e-commerce platform GMV continued to decline, which we suspect is due to the continued impact of STAT, especially Shein.</li>
<li>We maintain SELL and raise TP to JPY 340 due to improved ads-spending, but we expect the transient ad spend increase to be offset by loss of ecommerce customers. </li>
</ul>


ZHD reported F1Q/C2Q23 top-line, non-GAAP operating profit and non-GAAP net profit in-line, in-line and (32%) vs. consensus, respectively. Earnings miss was driven by wider tax expense.  
ZHD’s B2C e-commerce platform GMV continued to decline, which we suspect is due to the continued impact of STAT, especially Shein.
We maintain SELL and raise TP to JPY 340 due to improved ads-spending, but we expect the transient ad spend increase to be offset by loss of ecommerce customers. 


[Z Holdings (4689 JP, SELL, TP JPY 340) Target Price Change]: Continued Impact of Chinese E-Commerce

<ul>
<li>OVERSEAS.  Ongoing Focus on Rising Yields As Equities fall(again); US10Yr hits 4.19% as US Gov ramps up borrowing; China continues to shore up Economy; Resilient Apple, Amazon Earnings. </li>
<li>JAPAN. Nikkei Futures -0.5% vs Cash; USDJPY 142.5; BOJ Emergency Bond Buying to slow rapid yield rise; Nikkei sheds 1200 points in 2 days in risk off - still+23%YTD. </li>
<li>NUGGET.  Another sign that Japanese investors are not standing still as domestic inflation takes hold - Record purchases of high-yielding (+high risk!) currencies in the first half of the year.  </li>
</ul>


OVERSEAS.  Ongoing Focus on Rising Yields As Equities fall(again); US10Yr hits 4.19% as US Gov ramps up borrowing; China continues to shore up Economy; Resilient Apple, Amazon Earnings. 
JAPAN. Nikkei Futures -0.5% vs Cash; USDJPY 142.5; BOJ Emergency Bond Buying to slow rapid yield rise; Nikkei sheds 1200 points in 2 days in risk off - still+23%YTD. 
NUGGET.  Another sign that Japanese investors are not standing still as domestic inflation takes hold - Record purchases of high-yielding (+high risk!) currencies in the first half of the year.  


Ohayo Japan| Reality Check from Higher Yields; NUGGET: Yield Game - Japanese Investors on the Hunt

<ul>
<li>Six weeks ago, LDP Policy Research Council chairman KAGIUDA led a discussion about full NTT privatisation to fund defence. Today he said serious deliberations begin in August. Shares fell today.</li>
<li>The LDP wants non-tax resources to increase defence/social spending. Selling would require a change in NTT Law, but the argument is that communications have changed/internationalised.</li>
<li>As discussed in <a href="https://www.smartkarma.com/insights/ntt-9432-jp-would-the-govt-sell-all-its-shares-why-how-how-long-overhang" target="_blank" data-smartkarma-citation="insights:104184" rel="noopener">NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?</a>, there are questions on overhang. BUT... presumably there are mitigants. </li>
</ul>


Six weeks ago, LDP Policy Research Council chairman KAGIUDA led a discussion about full NTT privatisation to fund defence. Today he said serious deliberations begin in August. Shares fell today.
The LDP wants non-tax resources to increase defence/social spending. Selling would require a change in NTT Law, but the argument is that communications have changed/internationalised.
As discussed in NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?, there are questions on overhang. BUT... presumably there are mitigants. 


NTT (9432) - LDP Consideration of Full Sale Is Not Necessarily Overhang

Japan

LY Corporation operates as an internet search engine "Yahoo! JAPAN". The Company provides electronic commerce and settlement finance services for small medium enterprises and individuals. LY also operates media business including search linked advertising and display advertising services.

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LY (4689 JP)

Ohayo Japan: Tech Leads US Equity Decline; JAPAN X: Softbank's ARM Done(Almost), PayPay IPO Next?

SPX declines lead by Tech; JAPAN: NKY Futs -0.6% Disc vs Cash; USDJPY 1471; Cabinet reshuffle day - changes in Defense and Foreign Affairs; GTX...

Mark Chadwick

Amari Ni Mo... NTT (9432)

NTT's Q1 is OK, but not fantastic. "In line". But they announced a buyback, and LDP pol Amari's comments Sunday tell you there are more buybacks...

Travis Lundy

[Z Holdings (4689 JP, SELL, TP JPY 340) Target Price Change]: Continued Impact of Chinese E-Commerce

We maintain SELL and raise TP to JPY 340 due to improved ads-spending, but we expect the transient ad spend increase to be offset by loss of...

Blue Lotus Research Institute

Ohayo Japan| Reality Check from Higher Yields; NUGGET: Yield Game - Japanese Investors on the Hunt

US Yields higher; SPX500 falls again; Apple, Amazon beat; Nikkei Futures -0.5% vs Cash; USDJPY 142.5; BOJ Emergency Bond Buying to slow rapid yield...

Mark Chadwick

NTT (9432) - LDP Consideration of Full Sale Is Not Necessarily Overhang

NTT dropped today outright and vs peers on news that the LDP is moving forward with "serious consideration" about a full selldown to fund defence...

Travis Lundy

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