Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Z Holdings has closed its long-awaited merger with LINE and will now step up to battle global Internet challengers. The new company will invest c. $5bn over five years to boost its AI heft to expand its market share in Japan as well as leverage LINE’s overseas footprint. Investors hoping for an upgrade to profitability targets may be disappointed as the FY23 operating income target is unchanged but the top-line targets are aggressive enough and an accelerated investment program is a compelling story.  That is good for Z Holdings and parent Softbank Corp but less so for its main domestic challenger Rakuten as the cost of business in Japan keeps going up.

Z Holdings has closed its long-awaited merger with LINE and will now step up to battle global Internet challengers. The new company will invest c. $5bn over five years to boost its AI heft to expand its market share in Japan as well as leverage LINE’s overseas footprint. Investors hoping for an upgrade to profitability targets may be disappointed as the FY23 operating income target is unchanged but the top-line targets are aggressive enough and an accelerated investment program is a compelling story.  That is good for Z Holdings and parent Softbank Corp but less so for its main domestic challenger Rakuten as the cost of business in Japan keeps going up.  

Z Holdings -  With Merger Close, Investment Will Accelerate

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

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

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-18054'>China Fortune Land</a></li><li><a href='#lucror-entity-14882'>Seazen (Formerly Future Land)</a></li><li><a href='#lucror-entity-315'>Softbank Group</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.China Fortune LandSeazen (Formerly Future Land)Softbank Group

Morning Views Asia: China Fortune Land, Seazen (Formerly Future Land), Softbank Group

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Beijing Jingneng, Maeda Road, Justbon, Tencent, Intouch, JCCC/​Astra

The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

  The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Book - February 2021 - Lucror Analytics

Trung Nguyen

Softbank Group's (SBG) tender offer and consent solicitation are a surprise move. In our view, it is not a prudent use of capital to buy back debt at such low yields and high prices. With regard to the proposed indenture amendments, we believe that it is sensible for SBG to replace the leverage test as the group is now an investment holdco, for which LTV is the best leverage metric. However, this also means that SBG would be able to make large restricted payments. We recommend that Noteholders tender their bonds, given that: [1] there is limited upside as the Notes are yielding very low (c. 1-2%); [2] there is the possibility of a better than market price; [3] they can receive consent fees and exit; and [4] the credit profile may deteriorate due to possible large restricted payments.

  Softbank Group's (SBG) tender offer and consent solicitation are a surprise move. In our view, it is not a prudent use of capital to buy back debt at such low yields and high prices. With regard to the proposed indenture amendments, we believe that it is sensible for SBG to replace the leverage test as the group is now an investment holdco, for which LTV is the best leverage metric. However, this also means that SBG would be able to make large restricted payments.   We recommend that Noteholders tender their bonds, given that: [1] there is limited upside as the Notes are yielding very low (c. 1-2%); [2] there is the possibility of a better than market price; [3] they can receive consent fees and exit; and [4] the credit profile may deteriorate due to possible large restricted payments. 

Softbank Group - Event Flash - Tender Offer And Consent Solicitation - Lucror Analytics

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)

Z Holdings - With Merger Close, Investment Will Accelerate

The biggest takeaway from the merger close is the ¥500bn investment program. If it fuels stronger revenue growth then profits should follow over...

Kirk Boodry

Morning Views Asia: China Fortune Land, Seazen (Formerly Future Land), Softbank Group

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Last Week in Event SPACE: Beijing Jingneng, Maeda Road, Justbon, Tencent, Intouch, JCCC/Astra

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Asia HY Trade Book - February 2021 - Lucror Analytics

The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also...

Lucror Analytics

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Z Holdings - With Merger Close, Investment Will Accelerate

The biggest takeaway from the merger close is the ¥500bn investment program. If it fuels stronger revenue growth then profits should follow over...

Kirk Boodry

Morning Views Asia: China Fortune Land, Seazen (Formerly Future Land), Softbank Group

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Last Week in Event SPACE: Beijing Jingneng, Maeda Road, Justbon, Tencent, Intouch, JCCC/​Astra

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Asia HY Trade Book - February 2021 - Lucror Analytics

The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also...

Lucror Analytics

Softbank Group - Event Flash - Tender Offer And Consent Solicitation - Lucror Analytics

Softbank Group's (SBG) tender offer and consent solicitation are a surprise move. In our view, it is not a prudent use of capital to buy back...

Lucror Analytics

Last Week in Event SPACE: Beijing Jingneng, Maeda Road, Justbon, Tencent, Intouch, JCCC/Astra