Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Last September in the release of its new Mid-Term Management Plan, Toyota Group member <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> announced a plan to cut cross-holdings to zero. <a href="https://www.smartkarma.com/entities/jtekt-corp" target="_blank" data-smartkarma-citation="entities:12197:1" rel="noopener">JTEKT Corp (6473 JP)</a> followed suit.</li>
<li>It started with a selldown of <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a>, then <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>, now <a href="https://www.smartkarma.com/insights/big-aisin-7259-offering-sets-stage-for-first-toyota-group-full-unwind" target="_blank" rel="noopener">Aisin</a>. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.</li>
<li>Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.</li>
</ul>


Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.


Toyota Group Cross-Holding Structure Primer - Holdings, Unwind Progress, Buyback Policies, Etc

Equity Bottom-Up

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

<ul>
<li>The Kishida administration is looking for funding sources for its two big objectives - 1) raising the birthrate, 2) raising defense spending by 60% in 5yrs to 2% of GDP.</li>
<li>The second is not new. It was in an "order" PM Kishida gave to FinMin Suzuki and MinDef Hamada last November. They need ¥48trln by end 2027. </li>
<li>Yesterday, in an LDP meeting, the idea of changing the NTT Law so the government could sell more NTT shares was mooted. It's worth thinking about.</li>
</ul>


The Kishida administration is looking for funding sources for its two big objectives - 1) raising the birthrate, 2) raising defense spending by 60% in 5yrs to 2% of GDP.
The second is not new. It was in an "order" PM Kishida gave to FinMin Suzuki and MinDef Hamada last November. They need ¥48trln by end 2027. 
Yesterday, in an LDP meeting, the idea of changing the NTT Law so the government could sell more NTT shares was mooted. It's worth thinking about.


NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>With <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota (7203 JP)</a> having sold some of its stake in <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso</a>, <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI</a> and <a href="https://www.smartkarma.com/entities/harmonic-drive-systems-inc" target="_blank" data-smartkarma-citation="entities:10238:1" rel="noopener">Harmonic Drive</a> this year, it has firmly set the ball rolling for unwinding some of its cross-shareholding.</li>
<li>Toyota has a shareholding in around 60 listed companies, with its combined disposable stake worth over US$26bn.</li>
<li>In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.</li>
</ul>


With Toyota (7203 JP) having sold some of its stake in Denso, KDDI and Harmonic Drive this year, it has firmly set the ball rolling for unwinding some of its cross-shareholding.
Toyota has a shareholding in around 60 listed companies, with its combined disposable stake worth over US$26bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.


Toyota Cross-Shareholding - To Say a Whole Lot Is Left Would Be a US$26bn Understatement

<ul>
<li>Today, <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a> and <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a>'s NTT Docomo announced a Capital and Business Alliance Agreement. It is a complicated deal.</li>
<li>Monex GROUP will create a holdco which owns Monex Inc (the broker) and sell 51% to Docomo. Docomo will consolidate. Monex Group will own 49% as an equity method affiliate.</li>
<li>Monex GROUP will then double its dividend, maybe buy back shares, and expects to grow as Docomo pushes and Monex invests. But what remains is a mixed bag.</li>
</ul>


Today, Monex Group Inc (8698 JP) and NTT (Nippon Telegraph &amp; Telephone) (9432 JP)'s NTT Docomo announced a Capital and Business Alliance Agreement. It is a complicated deal.
Monex GROUP will create a holdco which owns Monex Inc (the broker) and sell 51% to Docomo. Docomo will consolidate. Monex Group will own 49% as an equity method affiliate.
Monex GROUP will then double its dividend, maybe buy back shares, and expects to grow as Docomo pushes and Monex invests. But what remains is a mixed bag.


NTT Docomo's Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet

Telco/Internet specialist

Kirk Boodry

Redex Research

Thematic (Sector/Industry)

<ul>
<li>Google will invest $735mn (¥105bn) through 2023 on Japan infrastructure including its first local data center and additional subsea capacity</li>
<li>The Google CEO met with Prime Minister Kishida and the announcement scores political points but it also makes sense with a material JP business and the weak yen</li>
<li>Google is probably Japan's largest Internet advertising company with an estimated ¥685bn in FY21 sales</li>
</ul>


Google will invest $735mn (¥105bn) through 2023 on Japan infrastructure including its first local data center and additional subsea capacity
The Google CEO met with Prime Minister Kishida and the announcement scores political points but it also makes sense with a material JP business and the weak yen
Google is probably Japan's largest Internet advertising company with an estimated ¥685bn in FY21 sales


Google in Japan - Infrastructure Investments Highlight Japan Growth and Forex Shift

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)

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NTT (Nippon Telegraph & Telephone) (9432 JP)

Toyota Group Cross-Holding Structure Primer - Holdings, Unwind Progress, Buyback Policies, Etc

8mos past the first large Toyota Group selldown in Denso (i.e. past lockup). Others have followed since. Toyota Inds and Toyota R.E. have ¥600bn to...

Travis Lundy

NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?

Yesterday saw a curious bit of news. The govt may try to change the NTT Law to enable them to sell NTT shares to raise funds for increased defense...

Travis Lundy

Toyota Cross-Shareholding - To Say a Whole Lot Is Left Would Be a US$26bn Understatement

Toyota, Toyota Industries and Denso are tag teaming to unwind some of their stake in Aisin, in a deal worth over US$1bn. While the timing of the...

Sumeet Singh

NTT Docomo's Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet

NTT Docomo is going to take control of Monex Group's securities business leaving Monex with a 49% interest, some cash, the TradeStation biz,...

Travis Lundy

Google in Japan - Infrastructure Investments Highlight Japan Growth and Forex Shift

Increased investment in Japan makes sense as its business is growing and the dollar has strengthened. In-country facilities should mean better...

Kirk Boodry

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