Industrials

Today after the close, Benefit One Inc (2412 JP) amended its Tender Offer Target Opinion Statement to note that Dai Ichi Life had made a proposal to acquire 100%.
To allow the Board time to evaluate this proposal, the Company requested a Tender extension. Bidder M3 Inc (2413 JP) was obliged to extend 10 days. They extended 20 days.
This tells us a bunch of things. It is worth thinking about what happened to get here.

Identifying KOSPI Size Migration Candidates & Assessing Proactive Setup Feasibility

By Sanghyun Park

EcoPro Materials and Doosan Robotics, recent IPOs, join the Large category. Their inclusion signals at least two Large stocks, CS Wind Corp and BGF Retail, shifting to Mid.
There’s a chance three Mid-stocks will transition to Large: Ssangyong Cement, Hyundai Electric, and LOTTE Corp. Conversely, LS Corp, Hotel Shilla, and Kepco E&C will move from Large to Mid.
With ample time left in the screening period, cautious monitoring is essential. Still, Large→Mid candidates, with a notable gap from the ₩2.95T cutoff, warrant a focus on proactive setups.

2Q Follow-Up – Will Group (6089 JP)

By Sessa Investment Research

WILL GROUP unveiled its new MTP “WILL-being 2026” this May.
The aim of the previous MTP “WORK SHIFT Strategy” was to boost profit margins by increasing the weight of high-margin permanent placement and temporary staffing in highly specialized fields, and the Company focused on developing strategic investment domains such as nursing care domain support, support for construction management engineers, and HR support for start-up companies.
In the previous MTP, although the profit margin improved, Domestic Working Business stagnated.

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Dec 13

Daily Brief Industrials: Benefit One Inc, CS Wind Corp, Will Group Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Benefit One (2412): M3 Extends For a Full Month
Identifying KOSPI Size Migration Candidates & Assessing Proactive Setup Feasibility
2Q Follow-Up – Will Group (6089 JP)

Benefit One (2412): M3 Extends For a Full Month

Today after the close, Benefit One Inc (2412 JP) amended its Tender Offer Target Opinion Statement to note that Dai Ichi Life had made a proposal to acquire 100%.
To allow the Board time to evaluate this proposal, the Company requested a Tender extension. Bidder M3 Inc (2413 JP) was obliged to extend 10 days. They extended 20 days.
This tells us a bunch of things. It is worth thinking about what happened to get here.

Identifying KOSPI Size Migration Candidates & Assessing Proactive Setup Feasibility

By Sanghyun Park

EcoPro Materials and Doosan Robotics, recent IPOs, join the Large category. Their inclusion signals at least two Large stocks, CS Wind Corp and BGF Retail, shifting to Mid.
There’s a chance three Mid-stocks will transition to Large: Ssangyong Cement, Hyundai Electric, and LOTTE Corp. Conversely, LS Corp, Hotel Shilla, and Kepco E&C will move from Large to Mid.
With ample time left in the screening period, cautious monitoring is essential. Still, Large→Mid candidates, with a notable gap from the ₩2.95T cutoff, warrant a focus on proactive setups.

2Q Follow-Up – Will Group (6089 JP)

By Sessa Investment Research

WILL GROUP unveiled its new MTP “WILL-being 2026” this May.
The aim of the previous MTP “WORK SHIFT Strategy” was to boost profit margins by increasing the weight of high-margin permanent placement and temporary staffing in highly specialized fields, and the Company focused on developing strategic investment domains such as nursing care domain support, support for construction management engineers, and HR support for start-up companies.
In the previous MTP, although the profit margin improved, Domestic Working Business stagnated.

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Dec 12

Daily Brief Industrials: Yamazen Corp, iMotion Automotive Technology, Yunda Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show
Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target

On Monday after the close, trading house Yamazen Corp (8051 JP) announced a secondary offering where five bank shareholders would sell ~6.7mm shares (including greenshoe).
It appears as if most of the banks are selling everything, making it about US$50mm, 50 days of ADV, and about 7% of shares out.
But this should get swallowed pretty easily. The stock is DIRT CHEAP. The caveat? Crossholders and insiders will still own 45-48% post-offer.

IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show

By Ethan Aw

IMotion Automotive Technology (1812706D CH) is looking to raise about US$100m in its upcoming HK IPO, after downsizing from an earlier reported float of US$300m.
The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series.
We had covered the company’s performance and PHIP updates in our earlier notes. In this note, we talk about its refiled PHIP updates.

Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

By Daniel Hellberg

Recently, Yunda Holding has lost volume share to rival STO Express
One reason could be Alibaba’s transfer of its 25% stake in STO to CaiNiao
For Yunda, this dynamic adds to intense near-term pressure on margins

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Dec 12

Daily Brief Industrials: Yamazen Corp, iMotion Automotive Technology, Yunda Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show
Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target

On Monday after the close, trading house Yamazen Corp (8051 JP) announced a secondary offering where five bank shareholders would sell ~6.7mm shares (including greenshoe).
It appears as if most of the banks are selling everything, making it about US$50mm, 50 days of ADV, and about 7% of shares out.
But this should get swallowed pretty easily. The stock is DIRT CHEAP. The caveat? Crossholders and insiders will still own 45-48% post-offer.

IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show

By Ethan Aw

IMotion Automotive Technology (1812706D CH) is looking to raise about US$100m in its upcoming HK IPO, after downsizing from an earlier reported float of US$300m.
The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series.
We had covered the company’s performance and PHIP updates in our earlier notes. In this note, we talk about its refiled PHIP updates.

Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

By Daniel Hellberg

Recently, Yunda Holding has lost volume share to rival STO Express
One reason could be Alibaba’s transfer of its 25% stake in STO to CaiNiao
For Yunda, this dynamic adds to intense near-term pressure on margins

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Dec 11

Daily Brief Industrials: Outsourcing Inc, Visional , Benefit One Inc, ROHM Co Ltd, Japan Airport Terminal Co, Shenzhen International and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755
TOPIX Inclusions: Who Is Ready (Dec 2023)
Merger Arb Mondays (11 Dec) – Benefit One, Outsourcing, Tokyo Rakutenchi, CPMC, Weiqiao Textile
Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low
Rohm (6963 JP): Government Subsidy for Power Device Project with Toshiba
Japan Airport Terminal (9706 JP, SELL, TP: JPY5,364): Weak JPY Can’t Overcome Fundamental Challenges
Shenzhen Intl (152 HK): Another Monetisation

Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755

Outsourcing Inc (2427 JP) has recommended a Bain-backed preconditional MBO tender offer of JPY1,755 per share, a 52.1% premium to the undisturbed (8 December).
The offer is light vs. peer and historical multiples and opportunistically takes advantage of the 20% price fall due to the disclosure of employment adjustment subsidies issues on 1 August.
Based on the irrevocables, the minimum acceptance condition requires a 61.9% minority acceptance rate. The acceptance rate could prove challenging. The tender offer is to start by late January 2024.

TOPIX Inclusions: Who Is Ready (Dec 2023)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
One of our TOPIX Inclusion Pre-event names Visional (4194 JP) confirmed it has received approval to move to the Prime Market in December 2023.
Currently, we are expecting one TOPIX Inclusion at the end of December 2023 and two more at the end of January 2024 (including Visional).

Merger Arb Mondays (11 Dec) – Benefit One, Outsourcing, Tokyo Rakutenchi, CPMC, Weiqiao Textile

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Outsourcing Inc (2427 JP), Healius (HLS AU), Irc Ltd (1029 HK), Orecorp Ltd (ORR AU), Hollysys Automation Technologies (HOLI US), Tokyo Rakutenchi (8842 JP).
Lowest spreads Toyo Construction (1890 JP), IJTT Co., Ltd. (7315 JP), Tietto Minerals Ltd (TIE AU), Azure Minerals (AZS AU), T&K Toka Co Ltd (4636 JP), Benesse Holdings (9783 JP).

Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low

On Friday 8 December, Bain announced an MBO with Outsourcing Inc (2427 JP) Chair Haruhiko Doi to take the company private at a 51% premium. Looks good at first glance.
It is, however, an offer at ~6.6x Management Forecast derived Dec 2024 EBITDA. This for a top player in a fast-growing market where Street/mgmt both see up-and-to-the-right results from here.
This is a delayed start (late-Jan) for regulatory approvals. It is too cheap. It is blockable. But Doi-san is young at 64yrs old and he could come back years later.

Rohm (6963 JP): Government Subsidy for Power Device Project with Toshiba

Rohm’s share price was up 6% on Friday, December 8, on the news that the Japanese government will subsidize its collaboration with Toshiba in power semiconductors.
The subsidy will amount to one-third of the ¥388.3 billion yen the two companies plan to invest in Silicon Carbide and Silicon devices for the electric vehicle and other industries.
Rohm hit bottom on October 31, management cut FY Mar-24 guidance on November 1 and the market is now looking to recovery. Toshiba will be delisted on December 20.

Japan Airport Terminal (9706 JP, SELL, TP: JPY5,364): Weak JPY Can’t Overcome Fundamental Challenges

Japan Airport Terminal Co (9706 JP) (JAT) has turnaround and set to resume its earnings growth trajectory thanks to Japan’s brisk air traffic recovery
However, future growth is increasingly challenging as domestic traffic stalls, and international traffic growth relies on inbound tourists. What happens if tourists decide to go elsewhere?
Target price JPY5,364 (18% DOWNSIDE) based on 12.7x FY2024 EV/EBITDA (peer group average). SELL, grossly overvalued, Mexican and Chinese airports are far more attractive

Shenzhen Intl (152 HK): Another Monetisation

By Osbert Tang, CFA

The REIT issuance of the Hangzhou and Guizhou logistics assets of Shenzhen International (152 HK) has entered the final stage, reflecting its ability to realise asset values.
We estimate SZI may book gain of around Rmb300m in 2H23, or more likely 1H24, and this will support good HoH and YoY rebound in its earnings.
These assets only accounted for 8% and 5% of SZI’s total portfolio area and value, respectively, suggesting there is still immense room for capital gain from its remaining assets.

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Dec 11

Daily Brief Industrials: Outsourcing Inc, Visional , Benefit One Inc, ROHM Co Ltd, Japan Airport Terminal Co, Shenzhen International and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755
TOPIX Inclusions: Who Is Ready (Dec 2023)
Merger Arb Mondays (11 Dec) – Benefit One, Outsourcing, Tokyo Rakutenchi, CPMC, Weiqiao Textile
Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low
Rohm (6963 JP): Government Subsidy for Power Device Project with Toshiba
Japan Airport Terminal (9706 JP, SELL, TP: JPY5,364): Weak JPY Can’t Overcome Fundamental Challenges
Shenzhen Intl (152 HK): Another Monetisation

Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755

Outsourcing Inc (2427 JP) has recommended a Bain-backed preconditional MBO tender offer of JPY1,755 per share, a 52.1% premium to the undisturbed (8 December).
The offer is light vs. peer and historical multiples and opportunistically takes advantage of the 20% price fall due to the disclosure of employment adjustment subsidies issues on 1 August.
Based on the irrevocables, the minimum acceptance condition requires a 61.9% minority acceptance rate. The acceptance rate could prove challenging. The tender offer is to start by late January 2024.

TOPIX Inclusions: Who Is Ready (Dec 2023)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
One of our TOPIX Inclusion Pre-event names Visional (4194 JP) confirmed it has received approval to move to the Prime Market in December 2023.
Currently, we are expecting one TOPIX Inclusion at the end of December 2023 and two more at the end of January 2024 (including Visional).

Merger Arb Mondays (11 Dec) – Benefit One, Outsourcing, Tokyo Rakutenchi, CPMC, Weiqiao Textile

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Outsourcing Inc (2427 JP), Healius (HLS AU), Irc Ltd (1029 HK), Orecorp Ltd (ORR AU), Hollysys Automation Technologies (HOLI US), Tokyo Rakutenchi (8842 JP).
Lowest spreads Toyo Construction (1890 JP), IJTT Co., Ltd. (7315 JP), Tietto Minerals Ltd (TIE AU), Azure Minerals (AZS AU), T&K Toka Co Ltd (4636 JP), Benesse Holdings (9783 JP).

Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low

On Friday 8 December, Bain announced an MBO with Outsourcing Inc (2427 JP) Chair Haruhiko Doi to take the company private at a 51% premium. Looks good at first glance.
It is, however, an offer at ~6.6x Management Forecast derived Dec 2024 EBITDA. This for a top player in a fast-growing market where Street/mgmt both see up-and-to-the-right results from here.
This is a delayed start (late-Jan) for regulatory approvals. It is too cheap. It is blockable. But Doi-san is young at 64yrs old and he could come back years later.

Rohm (6963 JP): Government Subsidy for Power Device Project with Toshiba

Rohm’s share price was up 6% on Friday, December 8, on the news that the Japanese government will subsidize its collaboration with Toshiba in power semiconductors.
The subsidy will amount to one-third of the ¥388.3 billion yen the two companies plan to invest in Silicon Carbide and Silicon devices for the electric vehicle and other industries.
Rohm hit bottom on October 31, management cut FY Mar-24 guidance on November 1 and the market is now looking to recovery. Toshiba will be delisted on December 20.

Japan Airport Terminal (9706 JP, SELL, TP: JPY5,364): Weak JPY Can’t Overcome Fundamental Challenges

Japan Airport Terminal Co (9706 JP) (JAT) has turnaround and set to resume its earnings growth trajectory thanks to Japan’s brisk air traffic recovery
However, future growth is increasingly challenging as domestic traffic stalls, and international traffic growth relies on inbound tourists. What happens if tourists decide to go elsewhere?
Target price JPY5,364 (18% DOWNSIDE) based on 12.7x FY2024 EV/EBITDA (peer group average). SELL, grossly overvalued, Mexican and Chinese airports are far more attractive

Shenzhen Intl (152 HK): Another Monetisation

By Osbert Tang, CFA

The REIT issuance of the Hangzhou and Guizhou logistics assets of Shenzhen International (152 HK) has entered the final stage, reflecting its ability to realise asset values.
We estimate SZI may book gain of around Rmb300m in 2H23, or more likely 1H24, and this will support good HoH and YoY rebound in its earnings.
These assets only accounted for 8% and 5% of SZI’s total portfolio area and value, respectively, suggesting there is still immense room for capital gain from its remaining assets.

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Dec 10

Daily Brief Industrials: Benefit One Inc, Keisei Electric Railway Co and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price
Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction
The Goose that Takes Out the Golden Egg Dies. Manager Should Explain How the Goose Can Grow Bigger

Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price

Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) has a total value of JPY285,733 million (JPY1,800 per share).
The offer structure is that Pasona Group (2168 JP) will receive JPY1,800 less TOB tax benefits. Minorities will receive JPY1,800 plus the proportionate share of Pasona’s TOB tax benefits.
Our estimated minority offer price is JPY2,086 per share, which is 15.9% higher than the JPY1,800 floor price and 9.1% higher than the last close price.

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

Dai Ichi Life (8750 JP)‘s proposal suggests more upside to Benefit One (2412 JP)‘s minorities than originally thought, and less upside (but still a chunk) to Pasona Group (2168 JP).
It’s all over for EOFlow (294090 KS), as Medtronic Plc (MDT US) folds it tent.
Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of Hankook & Company (000240 KS) has joined MBK Partners in making a partial Tender Offer for Hankook & Co.

The Goose that Takes Out the Golden Egg Dies. Manager Should Explain How the Goose Can Grow Bigger

By Aki Matsumoto

In the long run, making Oriental Land, which is more profitable, a consolidated subsidiary through TOB would contribute to expanding Keisei’s corporate value.
Keisei’s foreign shareholder ratio is 27.4%. It seems premature for the rotating president to change at once the company’s tradition of maintaining 40-year relationship with Oriental Land as an affiliate.
Keisei should explain how it will develop its relationship with affiliate to increase corporate value, and what its business strategy would be if it were to sell its shareholding instead.

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Dec 10

Daily Brief Industrials: Benefit One Inc, Keisei Electric Railway Co and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price
Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction
The Goose that Takes Out the Golden Egg Dies. Manager Should Explain How the Goose Can Grow Bigger

Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price

Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) has a total value of JPY285,733 million (JPY1,800 per share).
The offer structure is that Pasona Group (2168 JP) will receive JPY1,800 less TOB tax benefits. Minorities will receive JPY1,800 plus the proportionate share of Pasona’s TOB tax benefits.
Our estimated minority offer price is JPY2,086 per share, which is 15.9% higher than the JPY1,800 floor price and 9.1% higher than the last close price.

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

Dai Ichi Life (8750 JP)‘s proposal suggests more upside to Benefit One (2412 JP)‘s minorities than originally thought, and less upside (but still a chunk) to Pasona Group (2168 JP).
It’s all over for EOFlow (294090 KS), as Medtronic Plc (MDT US) folds it tent.
Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of Hankook & Company (000240 KS) has joined MBK Partners in making a partial Tender Offer for Hankook & Co.

The Goose that Takes Out the Golden Egg Dies. Manager Should Explain How the Goose Can Grow Bigger

By Aki Matsumoto

In the long run, making Oriental Land, which is more profitable, a consolidated subsidiary through TOB would contribute to expanding Keisei’s corporate value.
Keisei’s foreign shareholder ratio is 27.4%. It seems premature for the rotating president to change at once the company’s tradition of maintaining 40-year relationship with Oriental Land as an affiliate.
Keisei should explain how it will develop its relationship with affiliate to increase corporate value, and what its business strategy would be if it were to sell its shareholding instead.

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Dec 09

Daily Brief Industrials: Pasona Group, Kosaido, Hamamatsu Photonics Kk, AerCap Holdings NV and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Pasona Is Up Bigly. More To Come
KOSAIDO Holdings (7868) – Showcasing Growth Through Competitive Advantage
Hamamatsu Photonics (6965 JP): Buy into Current Weakness
Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

Pasona Is Up Bigly. More To Come

After M3 Inc (2413 JP) announced an intention to buy 51.16%-55.00% of Benefit One Inc (2412 JP) via a partial Tender Offer at ¥1,600, Pasona Group (2168 JP) took off.
Now Dai Ichi Life Insurance (8750 JP) has countered with an unsolicited ¥1,800/share Offer of Equity Value; TOB followed by a Benefit One buyback to mop up Pasona’s stake.
The big news is how tax would be applied under Dai Ichi’s deal structure, which should see Pasona’s net proceeds significantly exceed those under M3’s Offer.

KOSAIDO Holdings (7868) – Showcasing Growth Through Competitive Advantage

By Astris Advisory Japan

Capitalizing on growth opportunities – Q1-2 FY3/2024 results were ahead of company guidance, driven by the Funeral Services segment, as attendee numbers and refreshment sales grew, and new funeral hall openings saw higher than expected utilization rates.
We believe this indicates the strong competitive positioning the company has as the market-leading funeral services operator in the Tokyo metropolitan area.
With effective cost control in the Information and HR segments, the company has high earnings visibility and raised FY3/2024 company guidance, as well as increasing the planned dividend payout ratio to 32.5% from 30%.

Hamamatsu Photonics (6965 JP): Buy into Current Weakness

The shares are down 27% from their May high, largely discounting excessive inventory and a decline in profits that is likely to continue through next March or June.
Inventory adjustment, the revival of semiconductor, factory automation and medical related demand, plus the leveling off of depreciation, should enable a return to growth after that.
Projected valuations are at the low end of their 10-year ranges. Buy into the current weakness, keeping in mind that 1Q results are likely to be weak.

Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

IBA (leading airline intelligence and appraisers) analysis suggests aircraft shortage will persist over the mid-term, pushing rates for newbuilds and especially mid-life assets much higher
Our TP of US$81.45 is premised on 0.94x 2024 P/BV, but it is evident that accounting book value is significantly below current market values, implying a higher fair value
Stay invested, the upcoming 4Q23 results will uncover earnings boost from off-hire aircraft extension at premium rates, elevating Aercap’s attractiveness

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Dec 09

Daily Brief Industrials: Pasona Group, Kosaido, Hamamatsu Photonics Kk, AerCap Holdings NV and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Pasona Is Up Bigly. More To Come
KOSAIDO Holdings (7868) – Showcasing Growth Through Competitive Advantage
Hamamatsu Photonics (6965 JP): Buy into Current Weakness
Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

Pasona Is Up Bigly. More To Come

After M3 Inc (2413 JP) announced an intention to buy 51.16%-55.00% of Benefit One Inc (2412 JP) via a partial Tender Offer at ¥1,600, Pasona Group (2168 JP) took off.
Now Dai Ichi Life Insurance (8750 JP) has countered with an unsolicited ¥1,800/share Offer of Equity Value; TOB followed by a Benefit One buyback to mop up Pasona’s stake.
The big news is how tax would be applied under Dai Ichi’s deal structure, which should see Pasona’s net proceeds significantly exceed those under M3’s Offer.

KOSAIDO Holdings (7868) – Showcasing Growth Through Competitive Advantage

By Astris Advisory Japan

Capitalizing on growth opportunities – Q1-2 FY3/2024 results were ahead of company guidance, driven by the Funeral Services segment, as attendee numbers and refreshment sales grew, and new funeral hall openings saw higher than expected utilization rates.
We believe this indicates the strong competitive positioning the company has as the market-leading funeral services operator in the Tokyo metropolitan area.
With effective cost control in the Information and HR segments, the company has high earnings visibility and raised FY3/2024 company guidance, as well as increasing the planned dividend payout ratio to 32.5% from 30%.

Hamamatsu Photonics (6965 JP): Buy into Current Weakness

The shares are down 27% from their May high, largely discounting excessive inventory and a decline in profits that is likely to continue through next March or June.
Inventory adjustment, the revival of semiconductor, factory automation and medical related demand, plus the leveling off of depreciation, should enable a return to growth after that.
Projected valuations are at the low end of their 10-year ranges. Buy into the current weakness, keeping in mind that 1Q results are likely to be weak.

Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value