Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p><br/> In our view, Softbank Group's (SBG) Q2/21-22 results were weak due to the sell-off in Chinese tech stocks. The group's new share buyback programme will likely weaken the credit further. LTV is increasing, but remains below the company’s 25% threshold. SBG has assets yet to be monetised, including the remaining Alibaba and T-Mobile stakes (c. JPY 1,700 bn), the winding down of SB Northstar, and the sale of Arm Ltd to Nvidia Corp. Thus, liquidity should suffice to service the group's debt and fund the share buyback programme.<br/></p>

  In our view, Softbank Group's (SBG) Q2/21-22 results were weak due to the sell-off in Chinese tech stocks. The group's new share buyback programme will likely weaken the credit further. LTV is increasing, but remains below the company’s 25% threshold. SBG has assets yet to be monetised, including the remaining Alibaba and T-Mobile stakes (c. JPY 1,700 bn), the winding down of SB Northstar, and the sale of Arm Ltd to Nvidia Corp. Thus, liquidity should suffice to service the group's debt and fund the share buyback programme. 

Softbank Group - Earnings Flash - Q2 FY 2021-22 Results - Lucror Analytics

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Today with its earnings report (<a href="https://group.softbank/system/files/pdf/ir/financials/financial_reports/financial-report_q2fy2021_01_en.pdf" target="_blank" rel="noopener">report</a>, and 49MB pdf <a href="https://group.softbank/system/files/pdf/ir/presentations/2021/earnings-presentation_q2fy2021_01_en.pdf" target="_blank" rel="noopener">presentation</a>), <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a><a href="https://group.softbank/system/files/news/press/2021/20211108/pdf/20211108_en.pdf" target="_blank" rel="noopener">announced a buyback</a>. It is ¥1 trillion or <em>nine billlyun dollars.</em> </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/432/original/billiondollarsdrevilgif.gif?1636379447" class="editor-image img-responsive" data-smartkarma-image-id="240432"></figure><p></p></section><p>I will let <a href="https://www.smartkarma.com/profiles/kirk-boodry" target="_blank" data-smartkarma-citation="accounts:1920" rel="noopener">Kirk Boodry</a> comment on earnings after the press conference. He has written in <a href="https://www.smartkarma.com/insights/softbank-group-q2-21-results-reaction-softbank-may-intend-to-use-arm-proceeds-for-buyback" target="_blank" data-smartkarma-citation="insights:60343" rel="noopener"><em>Softbank Group Q2 21 Results Reaction: Softbank May Intend to Use ARM Proceeds for Buyback</em></a>.  I urge you to check his piece both for a comment on Q2 earnings - much of which he has already previewed in discussion comments* - and for an updated look at the Discount to NAV calculations (I have my own which at this point exactly matches his, but his chart is much prettier).</p><div class="content-remarks"><p>* Yeah, those are really useful on occasion, and I urge Smartkarma readers to tailor their watchlists (people, tickers, and "verticals" to follow) and to use the appreciate button on insights you find valuable (which will get you a notification when the author adds a discussion comment to the bottom of the insight).</p></div><h3>The Buyback</h3><p>The buyback programme as announced is to spend up to ¥1 trillion buying back up to 250,000,000 shares. Whichever limit is reached first is the limit for the programme. Of course, Softbank has a history of announcing new programmes before the old one is even finished if it has not had the appropriate effect. </p><p>In this case, the appropriate effect would be a narrowing of the Discount to NAV. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/412/original/Screenshot+2021-11-08+at+7.50.26+PM.png?1636372255" class="editor-image img-responsive" data-smartkarma-image-id="240412"></figure></section><p>The buybacks in summer and winter of 2020 saw ¥500bn bought in a quarter where this one suggests a ¥1 trillion buyback could take a year. </p><p>There are reasons for that. Some obvious, some less so.</p><p>And it is important to look at the modalities. </p>

Today with its earnings report (report, and 49MB pdf presentation), Softbank Group (9984 JP)announced a buyback. It is ¥1 trillion or nine billlyun dollars. I will let Kirk Boodry comment on earnings after the press conference. He has written in Softbank Group Q2 21 Results Reaction: Softbank May Intend to Use ARM Proceeds for Buyback.  I urge you to check his piece both for a comment on Q2 earnings - much of which he has already previewed in discussion comments* - and for an updated look at the Discount to NAV calculations (I have my own which at this point exactly matches his, but his chart is much prettier).* Yeah, those are really useful on occasion, and I urge Smartkarma readers to tailor their watchlists (people, tickers, and "verticals" to follow) and to use the appreciate button on insights you find valuable (which will get you a notification when the author adds a discussion comment to the bottom of the insight).The BuybackThe buyback programme as announced is to spend up to ¥1 trillion buying back up to 250,000,000 shares. Whichever limit is reached first is the limit for the programme. Of course, Softbank has a history of announcing new programmes before the old one is even finished if it has not had the appropriate effect. In this case, the appropriate effect would be a narrowing of the Discount to NAV. The buybacks in summer and winter of 2020 saw ¥500bn bought in a quarter where this one suggests a ¥1 trillion buyback could take a year. There are reasons for that. Some obvious, some less so.And it is important to look at the modalities. 

Softbank Buyback - $9 Biiiilllyun Dollars

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>These are our initial thoughts – we will write more about the quarter later – but we wanted to get our initial thoughts on the buyback out.</p><p>This was a terrible print for <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>  which posted record investment losses for Vision Fund despite some fancy footwork on valuations in the private portfolio. That <em>seems</em> to make the announcement of a ¥1,000bn share buyback less surprising. No doubt it will attract interest as the shares trade near 52-week lows and at the high-end of the holding company discount range but there are some caveats that may temper enthusiasm <strong>whilst the longer-term risk</strong> is that the buyback is tied to completion of the Nvidia/ARM deal, which still faces regulatory scrutiny.   </p>

These are our initial thoughts – we will write more about the quarter later – but we wanted to get our initial thoughts on the buyback out.This was a terrible print for Softbank Group (9984 JP)  which posted record investment losses for Vision Fund despite some fancy footwork on valuations in the private portfolio. That seems to make the announcement of a ¥1,000bn share buyback less surprising. No doubt it will attract interest as the shares trade near 52-week lows and at the high-end of the holding company discount range but there are some caveats that may temper enthusiasm whilst the longer-term risk is that the buyback is tied to completion of the Nvidia/ARM deal, which still faces regulatory scrutiny.   

Softbank Group Q2 21 Results Reaction: Softbank May Intend to Use ARM Proceeds for Buyback

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>Softbank reported an expectedly weak 2Q with an almost ¥400bn net loss and a ¥1.66trn loss on investments partially offset by ¥732bn in derivative gains and ¥329bn in gains on the change in third-party interests in the Vision Funds. They also announced a ¥1trn buyback… sort of.</p>

Softbank reported an expectedly weak 2Q with an almost ¥400bn net loss and a ¥1.66trn loss on investments partially offset by ¥732bn in derivative gains and ¥329bn in gains on the change in third-party interests in the Vision Funds. They also announced a ¥1trn buyback… sort of.

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.

<div>
<p>Kakao Bank's three month lock-up will end on 6th Nov 2021, freeing up another US$1bn worth of shares held by <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and local investors.</p>
<p>We have covered various aspects of the deal in our previous notes:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/kakao-bank-ipo-riding-on-parent-s-network-but-boundaries-with-kakao-pay-remain-unclear" target="_blank" rel="noopener">Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear</a>, </li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-pricey-as-it-should-be" target="_blank" rel="noopener">Kakao Bank IPO - Pricey as It Should Be</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-lack-of-lock-up-and-msci-ftse-index-implications" target="_blank" rel="noopener">Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications, and</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-trading-one-for-instis-closer-look-at-ftse-and-msci-inclusion-remain-buyers" target="_blank" rel="noopener">Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-msci-done-missed-ftse-by-a-whisker" target="_blank" rel="noopener">Kakao Bank - MSCI Done, Missed FTSE by a Whisker</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-placement-its-expensive-but-the-discount-is-enticing" target="_blank" rel="noopener">Kakao Bank Placement - Its Expensive but the Discount Is Enticing</a></li>
</ul>
</div>
<div>
<p>In this note, we will talk about the upcoming lock-up expiry.</p>
</div>


Kakao Bank's three month lock-up will end on 6th Nov 2021, freeing up another US$1bn worth of shares held by Netmarble Corporation (251270 KS), Tencent (700 HK) and local investors.
We have covered various aspects of the deal in our previous notes:




Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear, 
Kakao Bank IPO - Pricey as It Should Be
Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications, and
Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers
Kakao Bank - MSCI Done, Missed FTSE by a Whisker
Kakao Bank Placement - Its Expensive but the Discount Is Enticing



In this note, we will talk about the upcoming lock-up expiry.


Kakao Bank Lock-Up - Watch Out for Netmarble Led Blocks

Japan

SoftBank Group Corp provides telecommunication services.  The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

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Softbank Group (ADR) (SFTBY US)

Softbank Group - Earnings Flash - Q2 FY 2021-22 Results - Lucror Analytics

In our view, Softbank Group's (SBG) Q2/21-22 results were weak due to the sell-off in Chinese tech stocks. The group's new share buyback...

Lucror Analytics

Softbank Buyback - $9 Biiiilllyun Dollars

Nine Biiilllyun Dollars. That is a big buyback. It is smaller than last year's but there is less float to buy back than there was last year. And a...

Travis Lundy

Softbank Group Q2 21 Results Reaction: Softbank May Intend to Use ARM Proceeds for Buyback

Softbank's share buyback may have as much to do with delays to Nvidia/ARM regulatory approval as record losses for Vision Fund in Q2. We look at...

Kirk Boodry

Softbank – What a Curious Buyback

Softbank reported an expectedly weak 2Q with an almost ¥400bn net loss and a ¥1.66trn loss on investments. They also announced a ¥1trn buyback…...

Mio Kato

Kakao Bank Lock-Up - Watch Out for Netmarble Led Blocks

Kakao Bank's three month lock-up will end on 6th Nov 2021, freeing up another US$1bn worth of shares held by Netmarble Corporation (251270 KS),...

Sumeet Singh

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