Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX +1% as Cyclicals rose on Congress Debt Limit Deal; NFP in focus &amp; implication for Fed June pause; Dollar General -20%..US consumer headwinds; Boeing scraps next-gen aircraft.</li>
<li>JAPAN. NKY Futs +0.8% Cash; Stronger Yen but expect strong equity open on US rally; Foreigners bought Equities for 9th week; Panasonic sees EV battery Sales at 2.5tril by 2030</li>
<li>NUGGET. The 2nd round of Off-shore wind auctions will conclude at the end of June. This will mark the (re) start of Japan's aggressive push for wind.</li>
</ul>


OVERSEAS. SPX +1% as Cyclicals rose on Congress Debt Limit Deal; NFP in focus &amp; implication for Fed June pause; Dollar General -20%..US consumer headwinds; Boeing scraps next-gen aircraft.
JAPAN. NKY Futs +0.8% Cash; Stronger Yen but expect strong equity open on US rally; Foreigners bought Equities for 9th week; Panasonic sees EV battery Sales at 2.5tril by 2030
NUGGET. The 2nd round of Off-shore wind auctions will conclude at the end of June. This will mark the (re) start of Japan's aggressive push for wind.


Ohayo Japan |RALLY PAUSE ?..Not; Debt Deal Spurs Tech Rebound; NUGGET: JP Off-Shore Wind-Set to BLOW

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> reports FY2022 results on 12 May. Since the announcement of Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share, there have been no progress updates. </li>
<li>The spread to the offer is currently 4.2%, suggesting a reasonable probability of success. However, the offer's success ultimately depends on shareholder backing, particularly from the activists on the register.</li>
<li>Shareholder support continues to pose a considerable risk as the peers have re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers.</li>
</ul>



Toshiba Corp (6502 JP) reports FY2022 results on 12 May. Since the announcement of Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share, there have been no progress updates. 
The spread to the offer is currently 4.2%, suggesting a reasonable probability of success. However, the offer's success ultimately depends on shareholder backing, particularly from the activists on the register.
Shareholder support continues to pose a considerable risk as the peers have re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers.


Toshiba (6502 JP): Tender Offer Risk/Reward

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.</li>
<li>A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.</li>
<li>South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. </li>
</ul>


According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.
A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.
South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. 


<ul>
<li>
<a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> announced a pre-conditional tender offer by Japan Industrial Partners (JIP), the preferred bidder at JPY4,620 per share, a 9.7% premium to the last close price.</li>
<li>The special committee opines that the offer is the best price that can be expected today, which sounds like we are recommending the offer as it is the only one.</li>
<li>The offer has several negatives: a 14% price reduction during the process, below the undisturbed price, below the mid-point IFA DCF range and no serious effort on Plan B. </li>
</ul>



Toshiba Corp (6502 JP) announced a pre-conditional tender offer by Japan Industrial Partners (JIP), the preferred bidder at JPY4,620 per share, a 9.7% premium to the last close price.
The special committee opines that the offer is the best price that can be expected today, which sounds like we are recommending the offer as it is the only one.
The offer has several negatives: a 14% price reduction during the process, below the undisturbed price, below the mid-point IFA DCF range and no serious effort on Plan B. 


Toshiba (6502 JP): JIP’s JPY4,620 Tender Offer, Now for the Really Hard Part

<ul>
<li>OVERSEAS. Crisis Over !Bailouts from US to Europe, Stocks rally as Contagion fears wane; Major Banks rescue First Republic Bank; Swiss Central Bank protects Credit Suisse; ECB raises by 50bps</li>
<li>JAPAN. NKY Futs flat vs Cash; USDJPY 133.8; Expect Japan Equities to start the road to recovery with macro fears subsiding;  Japan-Korea move fwd on trade/security. </li>
<li>NUGGET. Orix - one of the Biggest Renewables Plays in Japan. Riding the Decarbonization MegaTrend</li>
</ul>


OVERSEAS. Crisis Over !Bailouts from US to Europe, Stocks rally as Contagion fears wane; Major Banks rescue First Republic Bank; Swiss Central Bank protects Credit Suisse; ECB raises by 50bps
JAPAN. NKY Futs flat vs Cash; USDJPY 133.8; Expect Japan Equities to start the road to recovery with macro fears subsiding;  Japan-Korea move fwd on trade/security. 
NUGGET. Orix - one of the Biggest Renewables Plays in Japan. Riding the Decarbonization MegaTrend


Good Morning Japan |VICTORY Declared as Bailouts Rule; NUGGET: ORIX-Riding the Zero-Carbon MegaTrend

Japan

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders.  The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

KUBOTA CORPORATION manufactures industrial machinery, farm machinery, and fluid piping systems.  The Company's products include ductile iron pipes, engines, tractors, combine harvesters, reaper binders, rice planters, and excavators.  Kubota also produces forged iron products, housing equipment, and environmental control plants.

SMC CORPORATION manufactures directional control devices such as power, hand, and air valves.  The Company also produces air filters, cylinders, and actuators along with other pneumatic equipment.  SMC seeks to become a comprehensive maker of automated equipment through the market demand of information and communications products.

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders. The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

KUBOTA CORPORATION manufactures industrial machinery, farm machinery, and fluid piping systems. The Company's products include ductile iron pipes, engines, tractors, combine harvesters, reaper binders, rice planters, and excavators. Kubota also produces forged iron products, housing equipment, and environmental control plants.

EBARA CORPORATION manufactures pneumatic and hydraulic pumps and related equipment.  The Company's products include fuel, oil, water, and firefighting pumps, as well as steam turbines and boilers.  Ebara Corporation also engineers garbage incinerators, smoke desulfurizers, and other products related to environmental technology.

Minebea Mitsumi manufactures and markets miniature and instrument ball bearings.  The Company also makes DC motors, servo motors, stepping motors, spindle motors, pivot assemblies, rod-end and spherical bearings, fasteners, and computer keyboards. Minebea Mitsumi has production facilities in Thailand and Singapore.

Kawasaki Heavy Industries, Ltd. designs, develops, and manufactures transport equipment and industrial heavy machinery for military and commercial use.  The Company produces ships, railroad cars, aircraft engines and parts, hydraulic and gas turbines, submarine engines, boilers, and industrial robots.  Kawasaki Heavy Industries offers engineering and construction services to industrial plants.

DAIFUKU CO., LTD. designs, manufactures, and sells material handling equipment such as automated storage systems, conveyors, and automatic sorters.  The Company's products are used for automation in manufacturing and distribution businesses.

CRRC Corporation Limited manufactures rolling stock products. The Company produces locomotives, passenger carriages, freight wagons, vehicles key components, and other products. CRRC also provides vehicle repairing, investment management, and other services.

Stanley Black & Decker Inc. is a diversified global provider of hand tools, power tools and related accessories, mechanical access and electronic security solutions, healthcare solutions, engineered fastening systems, and more.

Graco Inc. supplies technology for the management of fluids in both industrial and commercial applications.  The Company designs, manufactures, and markets systems to move, measure, control, dispense, and apply fluid materials.  Graco's products are used for applying paints and coatings, high-pressure cleaning of equipment, and lubricating and maintaining vehicles and other equipment.

China CSSC Holdings Ltd. offers shipbuilding, ship components, ship repairing and diesel engines manufacturing. The Company distributes its products within the domestic market and to overseas markets.

Nordson Corporation designs, manufactures, and markets systems that apply adhesives, sealants, and coatings to consumer and industrial products during manufacturing operations.  The Company's products include customized electronic controls for the precise application and curing of materials to meet customers' requirements.  Nordson operates around the world.

China Shipbuilding Industry Company Limited designs, manufactures, sells and leases ship parts.  The Company's products include engines and parts, auxiliay engines and transportation equipment.

Parker-Hannifin Corporation manufactures motion control products, including fluid power systems, electromechanical controls, and related components.  The Company also produces fluid purification, fluid flow, process instrumentation, air conditioning, refrigeration, and electromagnetic shielding and thermal management products.

Cummins India Limited manufactures internal combustion engines, including diesel, reciprocating piston, gas turbine and gasoline engines. The Company also manufactures generating sets and public transport-type passenger motor vehicles, including luxury coaches and air-field buses.  In addition, Cummins India Ltd. operates a computerized and fully-equipped research and development facility.

IDEX Corporation designs, manufactures, and markets a variety of pump products, dispensing equipment, and other engineered products.  The Company's products include industrial pumps, lubrication systems, banding and clamping devices, and rescue tools.  IDEX markets its products to customers in the United States and overseas.

Xylem, Inc. is a designer, manufacturer, equipment and service provider for water and wastewater applications addressing the full-cycle of water from collection, distribution, and use to the return of water to the environment. The Company's products include water and wastewater pumps, treatment and testing equipment, industrial pumps, valves, heat exchangers, and dispensing equipment.

Mitsubishi Heavy Industries, Ltd. is a comprehensive heavy machinery maker. The Company manufactures machinery, ships, turbines and engines, prime movers, aircrafts, and machine parts for military and commercial use.  Mitsubishi Heavy Industries also researches and develops nuclear power plants.

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Mitsubishi Heavy Industries (7011 JP)

Ohayo Japan |RALLY PAUSE ?..Not; Debt Deal Spurs Tech Rebound; NUGGET: JP Off-Shore Wind-Set to BLOW

Debt Deal drives SPX higher ahead of NFP. NKY Futs +0.8% Cash; Foreigners bought Equities for 9th week; Panasonic sees EV battery Sales at 2.5tril...

Mark Chadwick

Toshiba (6502 JP): Tender Offer Risk/Reward

Shareholder support continues to pose a considerable risk as the peers have re-rated, the offer’s price ratio remains unattractive and the...

Arun George

Asian Defence Contractors: Up In Arms

Defence spending beneficiaries include Hyundai Rotem (064350 KS) and Aerospace Industrial Development (2634 TT). For relval, short Poongsan Corp...

David Blennerhassett

Toshiba (6502 JP): JIP’s JPY4,620 Tender Offer, Now for the Really Hard Part

The shares will react positively initially. However, it should start drifting again once it becomes apparent that there is a considerable risk that...

Arun George

Good Morning Japan |VICTORY Declared as Bailouts Rule; NUGGET: ORIX-Riding the Zero-Carbon MegaTrend

Expect Japan Equities to start the road to recovery with macro fears subsiding; Japan-Korea move fwd on trade/security. NUGGET: Orix - as a...

Mark Chadwick

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