Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Since Elliott Management emerged as a shareholder in SoftBank group last month, the share price has rallied sharply, largely driven by the further appreciation of the Arm Holding share price</li>
<li>SoftBank management is currently focused on growing its Gen AI investment portfolio and appears to have shelved share buybacks for now, which is likely to disappoint minority shareholders</li>
<li>Despite the above challenges and the risk of de-rating at Arm, we remain positive on Softbank shares as they trade at a historically high 54%+ discount to the estimated NAV</li>
</ul>


Since Elliott Management emerged as a shareholder in SoftBank group last month, the share price has rallied sharply, largely driven by the further appreciation of the Arm Holding share price
SoftBank management is currently focused on growing its Gen AI investment portfolio and appears to have shelved share buybacks for now, which is likely to disappoint minority shareholders
Despite the above challenges and the risk of de-rating at Arm, we remain positive on Softbank shares as they trade at a historically high 54%+ discount to the estimated NAV


Softbank (9984 JP): Arm Headwinds Building, but NAV Discount Is Attractive

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

Softbank Group (SBG) has launched a four-part benchmark-sized bond offering comprising USD and EUR notes. The proceeds will mainly be used for debt repayment, including the redemption of foreign currency-denominated bonds, as well as for general corporate purposes, including the maintenance of a cash position for the redemption of outstanding notes due over the next two years along with new investments. In particular, SBG will redeem its USD 766.8 mn 4.75% 2024 bonds (due September) early at par.

  Softbank Group (SBG) has launched a four-part benchmark-sized bond offering comprising USD and EUR notes. The proceeds will mainly be used for debt repayment, including the redemption of foreign currency-denominated bonds, as well as for general corporate purposes, including the maintenance of a cash position for the redemption of outstanding notes due over the next two years along with new investments. In particular, SBG will redeem its USD 766.8 mn 4.75% 2024 bonds (due September) early at par. 

Softbank Group - Event Flash - Launches Four-Part USD And EUR Bond Offering - Lucror Analytics

Leonard Law, CFA

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-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.Softbank Group

Event-Driven

<ul>
<li>Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders</li>
<li>Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist</li>
<li>Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount</li>
</ul>


Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount


Softbank (9984 JP): This Time, It’s Different

<ul>
<li>Arm’s valuation has driven the group NAV to a new high at fiscal year-end in March; with Arm accounting for 45% of group equity value, NAV downside risk is high</li>
<li>JPY depreciation has been NAV supportive, but this could reverse; SVF2 remains very exposed to financing costs, with 87% of its equity value in private companies</li>
<li>Softbank shares trade at a 57% discount to the estimated NAV; yet the downside risks to Arm’s valuation, along with SVF2 valuation headwinds, should keep the discount wide</li>
</ul>


Arm’s valuation has driven the group NAV to a new high at fiscal year-end in March; with Arm accounting for 45% of group equity value, NAV downside risk is high
JPY depreciation has been NAV supportive, but this could reverse; SVF2 remains very exposed to financing costs, with 87% of its equity value in private companies
Softbank shares trade at a 57% discount to the estimated NAV; yet the downside risks to Arm’s valuation, along with SVF2 valuation headwinds, should keep the discount wide


Softbank (9984 JP): Has Group NAV Peaked?

Japan

KDDI CORPORATION provides mobile communication services and sells mobile devices.  The Company also is a broadband provider.

Softbank Corporation provides mobile phone telecommunication and networking services. The Company offers mobile communication opening, short messaging function opening, video function opening, and other services. Softbank also provides mobile phones.

OKINAWA CELLULAR TELEPHONE COMPANY provides cellular and car phone services in Okinawa Prefecture.  The Company also sells cellular phones and accessories.

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)

Japan Communications Inc. provides telecommunication services to corporate clients.  The Company also provides wireless high-speed internet access mainly to consumers.

Nintendo Co., Ltd. globally develops, manufactures and sells home-use video game hardware and software in home entertainment business.  The company also produces home-game products including cards.

USEN-NEXT HOLDINGS Co.,Ltd. provides network information services. The Company provides video contents distribution, music contents distribution, and other services. USEN-NEXT HOLDINGS also provides internet agency, mobile communication, and other services.

LY Corporation operates as an internet search engine "Yahoo! JAPAN". The Company provides electronic commerce and settlement finance services for small medium enterprises and individuals. LY also operates media business including search linked advertising and display advertising services.

ARTERIA Networks Corporation provides telecommunication services. The Company offers internet connection, virtual private network construction, colocation, mobile connection, mobile device management, optical fiber network construction, and other services.

WirelessGate, Inc. provides wireless communication services including Wi-Fi, WiMAX, and LTE for end users at train stations, airports, retail outlets, restaurants and other locations. It provides broadband services through agreements with public LAN, Wifi hotspots and other third-party networks, and its application allows users to access Wifi hotspots from multiple providers.

Bharti Airtel Limited, a part of Bharti Enterprises, provides telecommunications services throughout India. The Company provides GSM Mobile Services, broadband, fixed line telephone services, long distance services (international & national) and enterprise services.

America Movil SAB de C.V. provides wireless communications in 18 countries across Latin America, the Caribbean and the U.S. The company also offers fixed-line phone, Internet and pay-TV services in most parts of the region.

America Movil SAB de C.V. provides telecommunications services. The Company offers wireless and fixed voice services, including airtime, local, domestic, international long-distance, and broadband services. America Movil serves customers worldwide.

Vodafone Group PLC is a mobile telecommunications company providing a range of services, including voice and data communications.  The Company operates in Continental Europe, the United Kingdom, the United States, Asia Pacific, Africa and the Middle East through its subsidiaries, associates, and investments.

Advanced Info Service Public Company Limited is granted a 25-year concession expiring the year 2015 by the Telephone Organization of Thailand to provide cellular phone services.  The Company provides analog mobile phone services through the Nordic Mobile Telephone (NMT900) network, and digital phone services through the Global Systems for Mobile Communication (GSM) network.

China United Network Communications Limited provides a variety of telecommunication services, including GSM and CDMA wireless telecommunication services, international and domestic long distance communication services, data communication and Internet services, as well as paging services.

Rogers Communications, Inc. is a diversified Canadian communications and media company. The Company's activities include wireless voice and data communications services over its national GSM, HSPA and LTE networks; cable television, telephony and high speed Internet access services over its broadband networks; and radio and TV broadcasting, televised shopping, magazines, and sports.

Vodacom Group Limited operates a cellular telephone network in South Africa. The Company has mobile operations in Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo.

SK Telecom Co., Ltd. is a Korean mobile and telecommunications operator. The Company provides cellular voice, wireless data, and wireless internet services. SK Telecom also offers fixed line services and platform services.

CelcomDigi Berhad is a mobile network operator. The Company offers Internet and wireless telecommunication products and services through the global system for mobile telecommunications (GSM) network. CelcomDigi serves customers in Malaysia.

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 (9984 JP)

Softbank (9984 JP): Arm Headwinds Building, but NAV Discount Is Attractive

Elliott's stake in SoftBank has boosted the share price; focus on Gen AI portfolio over buybacks may disappoint minority shareholders short term,...

Victor Galliano

Softbank Group - Event Flash - Launches Four-Part USD And EUR Bond Offering - Lucror Analytics

Softbank Group (SBG) has launched a four-part benchmark-sized bond offering comprising USD and EUR notes. The proceeds will mainly be used for...

Lucror Analytics

Morning Views Asia: Softbank Group

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

Lucror Analytics

Softbank (9984 JP): This Time, It’s Different

We believe that Elliott's push for share buybacks and other strategic reforms at SoftBank should be a game changer for minorities, and this should...

Victor Galliano

Softbank (9984 JP): Has Group NAV Peaked?

Softbank's NAV has risen to a new peak driven by Arm's market valuation and helped by JPY weakness; yet Arm's super premium valuation poses...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Softbank (9984 JP): Arm Headwinds Building, but NAV Discount Is Attractive

​Elliott's stake in SoftBank has boosted the share price; focus on Gen AI portfolio over buybacks may disappoint minority shareholders short term,...

Victor Galliano

Softbank Group - Event Flash - Launches Four-Part USD And EUR Bond Offering - Lucror Analytics

Softbank Group (SBG) has launched a four-part benchmark-sized bond offering comprising USD and EUR notes. The proceeds will mainly be used for...

Lucror Analytics

Morning Views Asia: Softbank Group

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

Lucror Analytics

Softbank (9984 JP): This Time, It’s Different

We believe that ​Elliott's push for share buybacks and other strategic reforms at SoftBank should be a game changer for minorities, and this should...

Victor Galliano

Softbank (9984 JP): Has Group NAV Peaked?

​Softbank's NAV has risen to a new peak driven by Arm's market valuation and helped by JPY weakness; yet Arm's super premium valuation poses...

Victor Galliano

Elliott's stake in SoftBank has boosted the share price; focus on Gen AI portfolio over buybacks may disappoint minority shareholders short term,...

We believe that Elliott's push for share buybacks and other strategic reforms at SoftBank should be a game changer for minorities, and this should...

Softbank's NAV has risen to a new peak driven by Arm's market valuation and helped by JPY weakness; yet Arm's super premium valuation poses...