Telco/Internet specialist

Kirk Boodry

Redex Research

Thematic (Sector/Industry)

<ul>
<li>Within our coverage, NTT and Softbank Group are the main beneficiaries of a stronger dollar. NTT benefits operationally as it generates c. $18-20bn in overseas revenue</li>
<li>Softbank benefits in valuation terms as c. 90% of the portfolio is dollar-linked. The forex move from ¥115 to ¥144 boosts asset value by ¥2.4trn or  ¥1,500/share (net)</li>
<li>ECommerce play Mercari gets 30% of revenue from the US but that segment is losing money and a stronger dollar expands that on a yen P&amp;L</li>
</ul>


Within our coverage, NTT and Softbank Group are the main beneficiaries of a stronger dollar. NTT benefits operationally as it generates c. $18-20bn in overseas revenue
Softbank benefits in valuation terms as c. 90% of the portfolio is dollar-linked. The forex move from ¥115 to ¥144 boosts asset value by ¥2.4trn or  ¥1,500/share (net)
ECommerce play Mercari gets 30% of revenue from the US but that segment is losing money and a stronger dollar expands that on a yen P&amp;L


Japan Telecoms - Strong Dollar a Boon for NTT and Softbank Group, Bad for Mercari

<ul>
<li>The Ministry of Industry Affairs and Communications (MIC) has issued a progress report on its mobile spectrum allocations through 2025</li>
<li>There is no change to previous allocation targets of c. 16 GHz but it is worth highlighting again how huge that is versus current industry holdings of 3 GHz</li>
<li>In general, more spectrum is a positive for Japanese mobile operators, especially as airwaves are allocated not auctioned</li>
</ul>


The Ministry of Industry Affairs and Communications (MIC) has issued a progress report on its mobile spectrum allocations through 2025
There is no change to previous allocation targets of c. 16 GHz but it is worth highlighting again how huge that is versus current industry holdings of 3 GHz
In general, more spectrum is a positive for Japanese mobile operators, especially as airwaves are allocated not auctioned


Japan Telecoms - A Reminder on the Regulator’s Spectrum Plans Through FY25

Equity Bottom-Up

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

<ul>
<li>Q1 revenue growth was the highest since Q3 17, helped by forex tailwinds and stability in the mobile segment</li>
<li>Core telecom results were also positive as mobile erosion was less intensive than peers on better subscriber growth whilst DX demand has kept enterprise sales healthy</li>
<li>Management did not change full-year guidance but this almost never happens with a Q1 report and we expect this report is enough to nudge consensus higher</li>
</ul>


Q1 revenue growth was the highest since Q3 17, helped by forex tailwinds and stability in the mobile segment
Core telecom results were also positive as mobile erosion was less intensive than peers on better subscriber growth whilst DX demand has kept enterprise sales healthy
Management did not change full-year guidance but this almost never happens with a Q1 report and we expect this report is enough to nudge consensus higher


NTT (Buy) - Q1 22 Results Reaction: Forex Gains Flatter Top-Line; Signs of Mobile Stability

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).</li>
<li>
<a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> at the September rebalance.</li>
</ul>


There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).

Oriental Land (4661 JP) is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the Nikkei 225 (NKY INDEX) at the September rebalance.


JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The Ninth Annual JPX Nikkei 400 Index Review was announced on Friday 5 August. There are 36 Inclusions, 34 Deletions. They are mostly in line with <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a>'s predictions.</li>
<li>The "BIG SELL" is <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>. The "BIG BUY" is <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> as he predicted 11 months ago. There are some down-weights from capping.</li>
<li>Oriental Land is also a potential Nikkei 225 Inclusion as discussed in <a href="https://www.smartkarma.com/insights/nikkei-225-sep22-annual-review-data-final-predictions-unch-d-strategy-involved" target="_blank" data-smartkarma-citation="insights:74700" rel="noopener">Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch'd; Strategy Involved</a>. </li>
</ul>


The Ninth Annual JPX Nikkei 400 Index Review was announced on Friday 5 August. There are 36 Inclusions, 34 Deletions. They are mostly in line with Janaghan Jeyakumar, CFA's predictions.
The "BIG SELL" is Oriental Land (4661 JP). The "BIG BUY" is Softbank Corp (9434 JP) as he predicted 11 months ago. There are some down-weights from capping.
Oriental Land is also a potential Nikkei 225 Inclusion as discussed in Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch'd; Strategy Involved. 


2022 JPX Nikkei 400 Rebal - 36 IN, 34 OUT, 4.9% One Way

Japan

Nippon Telegraph and Telephone Corporation provides a variety of telecommunication services, including telephone, telegraph, leased circuits, data communication, terminal equipment sales, and related services. The Company provides both local and long distance telephone services within Japan.

NTT (Nippon Telegraph & Telephone) (9432 JP)

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

NTT (Nippon Telegraph & Telephone) (9432 JP)

Japan Telecoms - Strong Dollar a Boon for NTT and Softbank Group, Bad for Mercari

We have discussed strong dollar beneficiaries before but thought it worth revisiting with the dollar at a 24-year high. In short: better NTT...

Kirk Boodry

Japan Telecoms - A Reminder on the Regulator’s Spectrum Plans Through FY25

The MIC has published a draft report on its progress towards FY25 spectrum allocations. In general, more spectrum is good for the industry...

Kirk Boodry

NTT (Buy) - Q1 22 Results Reaction: Forex Gains Flatter Top-Line; Signs of Mobile Stability

This was a solid report with forex-boosted revenue growth and positive signs for consumer mobile (relative outperformance v peers) and DX-related...

Kirk Boodry

JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks

There are 36 adds & 34 deletes for the JPX Nikkei 400 Index at the August rebalance leading to an estimated one way turnover of 4.75% and a two-way...

Brian Freitas

2022 JPX Nikkei 400 Rebal - 36 IN, 34 OUT, 4.9% One Way

The 2022 JPX Nikkei 400 Index Review. 36 IN, 34 OUT, still a messy index but "only" 4.9% one-way turnover this year. Oriental Land creates a little...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)