Japan

In today’s briefing:

Japanese Regional Banks – Three Key Positive Picks
Japan Governance | Will Reforms Unlock Valuations
Shift: Market Overreacts to Temporary Dip in Earnings

Japanese Regional Banks – Three Key Positive Picks

By Victor Galliano

We explore twelve Japanese regional banks to look for key beneficiaries of the improving interest rate outlook, along with valuations, credit quality and capital adequacy
The global interest rate outlook is in some flux, with the Fed’s and ECB’s prospects of near-term easing being tempered; this should support Japanese JGB yields and domestic bank valuations
We are positive on three banks that are big beneficiaries of rising domestic interest rates; top pick Tokyo Kiraboshi Financial, Gunma Bank and higher risk option Suruga Bank

Japan Governance | Will Reforms Unlock Valuations

By Shifara Samsudeen, ACMA, CGMA

Reforms Drive Improvement: Japan’s corporate reforms, catalyzed by governance codes and TSE pressure, are fostering capital efficiency, shareholder value, and long-term equity gains.
“Name and Shame” Initiative Impact: TSE’s disclosure initiative reveals 54% of Topix 500 companies enhancing capital efficiency, with early indications suggesting positive longer-term performance trends.
Future Alpha Opportunities: Expectation of increased disclosure in the coming months, particularly from proactive companies; potential for market surprises from obstructive firms trading below book value.

Shift: Market Overreacts to Temporary Dip in Earnings

Shift Inc (3697 JP) reported 1QFY08/2024 results last week. Revenue and OP increased 29.5% and 0.4% YoY to ¥25.1bn and ¥1.8bn respectively.
Both revenue and OP were below consensus estimates which triggered a more than 25% drop in Shift’s share price over the last 5 days.
We think the weaknesses in the company’s 1Q earnings were temporary and we expect the company’s earnings to show recovery going forward

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Jan 18

Daily Brief Japan: Anycolor , Yamae Group Holdings, TSE Tokyo Price Index TOPIX, Hisamitsu Pharmaceutical Co and more

In today’s briefing:

TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)
Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong
Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital
Hisamitsu Pharmaceutical (4530 JP): OTC Business Is on Strong Footing; FY24 Guidance Raise

TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)

Late last week, the TSE announced the changes in FFW for companies which have FY-end in the calendar Q2. Changes at 30 Jan close also include Phased Weighting Changes.
There are two additions and 61 upweights (including net effect of PWR/PWIs). There are 456 down-weights with two-way flows of about US$1bn. There is a tiny funding trade.
Visional (4194 JP) and Furuya Metal (7826 JP) are the two adds. Other large dollar upweights are Asahi Intecc (7747 JP) and Anycolor (5032 JP).

Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong

By Clarence Chu

Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital

Although there’s range in the cost of capital, a sense of level is shared among investors, so even if a company estimates lower, it will be found to be incorrect.
The essential problem isn’t scrutiny of the cost of capital, but rather that many companies produce low returns. Investors are skeptical that companies produce returns above their cost of capital.
If stock prices do not rise, investors will continue to demand that companies improve their management, attributing this to the negative gap between the cost of capital and return.

Hisamitsu Pharmaceutical (4530 JP): OTC Business Is on Strong Footing; FY24 Guidance Raise

By Tina Banerjee

Hisamitsu Pharmaceutical Co (4530 JP) has reported double-digit revenue and net profit growth in Q3FY24, mainly driven by 21% YoY growth in Salonpas focused OTC pharmaceutical products.
The company attributes OTC product revenue growth to aggressive sales promotion activities in Japan and overseas, recovery of domestic economic activity and inbound demand, and impact of the weaker yen.
Encouraged by Salonpas revenue recovery, Hisamitsu has raised FY24 guidance. The company has revised FY24 revenue guidance upward by 7% to ¥141 billion (up 10% YoY) from ¥132 billion.

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Jan 17

Daily Brief Japan: Benefit One Inc and more

In today’s briefing:

Benefit One (2412): The Plot Thickens
Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

Benefit One (2412): The Plot Thickens

Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February.
The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants.

Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high.

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Jan 16

Daily Brief Japan: Japan Exchange Group, Seven & I Holdings, TRYT , ASICS Corp, Nippon Sanso Holdings, Softbank Group and more

In today’s briefing:

Japan Governance | The TSE Naughty List
Seven & I Spends Another $950mn on Acquisitions, A Possible Defense Against Investor Activism
TRYT Lock-Up – 60% of Outstanding to Be Released, Baring Would Have to Exit Sooner or Later
Asics: Aiming for No. 1
Ownership of Company Stock Is a Key in Managing the Company with the Same Goals as Shareholders
Aequitas 2024 Asia IPO Pipeline – Japan & Korea

Japan Governance | The TSE Naughty List

The TSE’s new efforts to encourage companies to disclose measures to improve their capital efficiency and stock prices correlate closely with general indicators of good governance.
Over 60% of companies that we classify as “Proactive” have already disclosed their status, while only around one third of “Obstructive” companies have done so.
Companies with higher levels of Board Independence and that are more aligned with shareholders are more likely to be better allocators of capital for long-term growth.

Seven & I Spends Another $950mn on Acquisitions, A Possible Defense Against Investor Activism

By Oshadhi Kumarasiri

Alongside results broadly aligning with consensus expectations, Seven & I Holdings (3382 JP) announced yet another major acquisition.
The company has agreed to acquire 204 convenience stores in the US for an acquisition price of $950m.
It seems that through aggressive overseas expansion and share buybacks, Seven & I is aiming to retain its overseas investors and simultaneously ward off potential investor activism.

TRYT Lock-Up – 60% of Outstanding to Be Released, Baring Would Have to Exit Sooner or Later

By Clarence Chu

TRYT (9164 JP) was listed on the TSE on 22nd July 2023. The IPO had been a 100% secondary offering.
TRYT offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
Coming up for six-month lockup is the sole pre-IPO investor who had sold some of its stake earlier in the IPO.

Asics: Aiming for No. 1

By Michael Causton

After forecasting record sales for this year, Asics now wants to become the leading performance running brand in Japan, Europe and the US by 2026.
To achieve this, Asics has invested in buying up many of the leading race platforms around the world to harvest data and link its brand to serious running events.
The sports firm could also see significant growth for the Onitsuka Tiger brand, particularly across Asia.

Ownership of Company Stock Is a Key in Managing the Company with the Same Goals as Shareholders

Wouldn’t the shareholders of Mitsubishi Chemical want to either TOB for the growth of the subsidiary or invest the cash from the sale of shares in a value-generating business?
It’s difficult to exclude the influence of the parent company in business decisions that impact significantly on the parent’s earnings and shareholding. Is continued parent-subsidiary listing desirable for subsidiary’s shareholders?
The management of Nippon Sanso wants to continue the parent-subsidiary listing, but their small shareholding may make it difficult to manage the company from the same perspective as the shareholders.

Aequitas 2024 Asia IPO Pipeline – Japan & Korea

By Sumeet Singh

In this note, we will look at the Asia Pacific IPO pipeline for 2024, following up with Japan & Korea, after having looked at Hong Kong and India earlier.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

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Jan 15

Daily Brief Japan: Fuji Soft Inc, Open House, Shinko Electric Industries, Saizeriya, Sumitomo Pharma and more

In today’s briefing:

Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far
Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light
Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao
Saizeriya (7581 JP): Asia Business Slightly Beat While Japan Operating Profit Missed
Sumitomo Pharma (4506 JP): FY24 Guidance Seems to Be Aggressive; Downtrend Will Likely To Continue

Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far

After 3D Investment Partners bought a large slug of Fuji Soft Inc (9749 JP) in early 2022, the company started a review of governance and capital allocation.
The company updated investors in August, and bought in 4 listed subs in November-December 2023. The August update suggested a Q1 2024 decision on use/ownership of real estate.
The Final Report is due in a month. In the meantime, the stock rallied Friday off a news article suggesting the Board was reviewing take-private proposals. Yes, but…

Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light

By Brian Freitas

Some stocks have continued to underperform the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios next month.
Stocks that were expected to be deleted (but could now be safe) have outperformed the Nikkei 225 (NKY INDEX) over the last couple of weeks.
There has been two-way flow in a lot of stocks with market participants increasing and covering short positions as the stock prices have moved around.

Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao

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 – Hollysys Automation Technologies (HOLI US), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), Probiotec Ltd (PBP AU), Irc Ltd (1029 HK), Orecorp Ltd (ORR AU).
Lowest spreads – Tietto Minerals Ltd (TIE AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Benesse Holdings (9783 JP), Taisho Pharmaceutical Holdin (4581 JP).

Saizeriya (7581 JP): Asia Business Slightly Beat While Japan Operating Profit Missed

By Steve Zhou, CFA

Saizeriya (7581 JP) reported FY1Q24 results (September to November) last week. Sales grew 22% yoy, and was 2% higher than company guidance. Operating profit grew 104%.
Operating profit for the Asia business, the key growth driver of the company, was Y3.3bn, up 56% yoy and above management guidance.
Overall thesis remains intact, as the Asia business performed slightly better than expectations.

Sumitomo Pharma (4506 JP): FY24 Guidance Seems to Be Aggressive; Downtrend Will Likely To Continue

By Tina Banerjee

Sumitomo Pharma (4506 JP) still expects FY24 revenue of ¥362 billion (down 35% YoY). This implies H2FY24 revenue of ¥209.4 billion, up 37% compared with H1FY24.
To achieve this target, North America needs to perform strongly. H1FY24 revenue from North America has shown a progress rate of just 35% against full-year FY24 revenue guidance.
With the absence of any strong catalyst, we expect recent rally in Sumitomo shares fueled by encouraging clinical trial result and new drug approval in China, will be short-lived.

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Jan 14

Daily Brief Japan: Fuji Soft Inc, Taisho Pharmaceutical Holdin, T&K Toka Co Ltd, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
(Mostly) Asia-Pac Weekly Risk Arb Wrap: TDCX, Orecorp, T&K Toka, Taisho Pharma, Benesse, IJTT
Weekly Deals Digest (14 Jan) – T&K Toka, Fuji Soft, Taisho, Benefit One, IRC, Weiqiao, Amer, Ola
TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges

Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds.
A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022.
A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: TDCX, Orecorp, T&K Toka, Taisho Pharma, Benesse, IJTT

By David Blennerhassett

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal discussed this week on Smartkarma: TDCX (TDCX US)‘s MBO.
Key updates took place on: Orecorp Ltd (ORR AU), T&K Toka Co Ltd (4636 JP), Taisho Pharmaceutical Holdin (4581 JP), Benesse Holdings (9783 JP), and IJTT Co., Ltd. (7315 JP).

Weekly Deals Digest (14 Jan) – T&K Toka, Fuji Soft, Taisho, Benefit One, IRC, Weiqiao, Amer, Ola

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Amer Sports (AS US), Ola Electric (1700674D IN) and Mixue Group (MIX HK) IPOs.
Event-Driven developments – Fuji Soft Inc (9749 JP), T&K Toka Co Ltd (4636 JP), Taisho Pharmaceutical Holdin (4581 JP), Irc Ltd (1029 HK), Weiqiao Textile Co (2698 HK).

TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

Parent-Subsidiary listings present several problems: the disadvantages to parent company’s shareholders that drain subsidiary’s profits, the distortion of market capitalization between subsidiary and parent company, and independence of subsidiary’s management.
While it’s an improvement for TSE to ask companies to disclose their purpose and policy of listing subsidiaries and affiliates, it doesn’t ensure the complete independence of subsidiaries and affiliates.
More than 30% of listed companies are listed subsidiaries or affiliates. Investors are forced to look for investment targets while worrying about management independence in 70% of the companies.

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Jan 13

Daily Brief Japan: Benesse Holdings, Money Forward , Asahi Broadcasting, Nikkei 225, Honda Motor Co Ltd (Adr), Sony Corp and more

In today’s briefing:

Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches
Money Forward (3994) | Best Quarter Ever
2Q Follow-Up – Asahi Broadcasting Group Holdings Corporation (9405 JP)
EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?
Honda Motor Co.: Wage Hike Considerations & Global Economic Context – Major Drivers
Sony Group Corporation: Revolutionizing Content Production With NTT Collaboration – Major Drivers

Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches

When the announcement for an MBO for Benesse Holdings (9783 JP) was made in November, they suggested it would take 3 months for approvals to launch. SAMR announced approval Wednesday.
Japan approval should be (or have been) easy. One might expect this deal to launch prior to “early February”. The stock is trading through terms…. but…
A reminder that this stock is TOO CHEAP. Bad management means low expectations means a decent premium still ends up at too low a price vs management’s own forecasts.

Money Forward (3994) | Best Quarter Ever

Results flash: Q4 sales +42%; Adjusted EBITDA at record high of 1.2 billion yen
Key focus remains Business SaaS where sales rose +52% YoY to 5.5 billion
Business earnings driven by acquisition of medium-sized corporates (+40% YoY) and higher ARPU (+22% YoY)

2Q Follow-Up – Asahi Broadcasting Group Holdings Corporation (9405 JP)

By Sessa Investment Research

1H headline numbers were net sales +1.6% YoY, operating expenses +4.8% YoY, with OP turning to loss from ¥293mn → (¥992mn).
As can be seen from the table on P2, net sales increased by ¥675mn, mainly driven by the ¥1,961mn (+24.6% YoY) increase in priority Content business (revival of events, etc. post COVID-19) offsetting the ¥917mn (-3.5% YoY) decline in Broadcasting due to the harsh environment for TV spot advertising revenues and the ¥275mn (-18.7% YoY) decline in At-home shopping due to special demand associated with COVID-19 subsiding, as well as delays in rolling out new e-commerce initiatives.
ABC TV’s strategic deployment of programming expenses (¥8,278mn, +5.3% YoY) to strengthen Content-related business also weighed on profits.

EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?

By Nico Rosti

The Nikkei 225 INDEX experienced a 1-week explosive rally, last week, reaching nearly +6.6% higher than the previous week’s Close.
The index is now very overbought, can it continue to rise next week? and and how much higher can it go?
Go SHORT in the 36000-38350 price area, but the trade is not without risk.

Honda Motor Co.: Wage Hike Considerations & Global Economic Context – Major Drivers

By Baptista Research

Honda Motor delivered a disappointing set of results as it was unable to meet the revenue and earnings expectations of Wall Street.
The motorcycle businesses experienced high profits, while the automotive sector saw improved profitability, particularly in North America.
In the United States, Honda experienced solid demand with a secured semiconductor supply, leading to higher year-on-year results.

Sony Group Corporation: Revolutionizing Content Production With NTT Collaboration – Major Drivers

By Baptista Research

Sony Group Corporation delivered disappointing results as the company was unable to meet Wall Street’s revenue and earnings expectations.
However, consolidated operating income witnessed a substantial year-on-year decline of JPY 106.4 billion, reaching JPY 263.0 billion.
Operating income increased by JPY 6.8 billion to JPY 48.9 billion, primarily driven by increased sales of PlayStation 5 hardware.

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Jan 12

Daily Brief Japan: IJTT Co., Ltd., Taisho Pharmaceutical Holdin, Fast Retailing, Fujitsu Ltd, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer
Taisho Pharmaceutical (4581 JP): Calm as Offer Heads for the 15 January Close
Fast Retailing: 1QFY24 Earnings
Fast Retailing (9983) | Another Stylish Quarter
Fujitsu (6702 JP): Horizon Scandal Blows Up
If Multi-Stakeholder Is Equally Important, a Company Should Make Sufficient Profit First

IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer

In IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book I laid it out like it was. It needed a bump.
It got a bump (IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively) to ¥850/share. From 0.46x PBR it got bumped to 0.48x PBR. For a cash-rich company.
Taking out net cash and securities, paying off deferred tax assets and UPBOs the deal is at 0.41x operating asset book for minorities. Still offensive. Beyond negligent.

Taisho Pharmaceutical (4581 JP): Calm as Offer Heads for the 15 January Close

Taisho Pharmaceutical Holdin (4581 JP)’s MBO JPY8,620 offer closes on 15 January. Since announcing the offer, the shares have traded above terms for 21 out of the 30 trading days.
Japan Catalyst has called the offer’s P/B of 0.85x too low. While shares trading above terms does not guarantee that the tender fails, it does increase the risk of failure.
The offeror has no compelling reason to bump as other activists have not publicly supported Japan Catalyst, the high 55.5% premium to undisturbed price and an achievable minority acceptance rate.

Fast Retailing: 1QFY24 Earnings

By Oshadhi Kumarasiri

Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.

Fast Retailing (9983) | Another Stylish Quarter

We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin.
Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.
Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.

Fujitsu (6702 JP): Horizon Scandal Blows Up

By Scott Foster

The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.

If Multi-Stakeholder Is Equally Important, a Company Should Make Sufficient Profit First

It is desirable for stakeholders other than shareholders for the company to be profitable. The problem lies in holding excess cash without making sufficient returns from the business.
Cash flow should be used for reinvestment and shareholder returns, but in fact many companies didn’t grow their allocations to investment and shareholder returns, but instead accumulated cash on hand.
There is a big difference in corporate value between a company with growing cash flow and increasing shareholder returns and a company with stagnant cash flow but raising shareholder returns.

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Jan 11

Daily Brief Japan: Taisho Pharmaceutical Holdin, Lasertec Corp, Arara , Bank Of Japan, Micoworks and more

In today’s briefing:

Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped
Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up
Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market
Initiation – Arara (4015 JP)
Aequitas Japan IPOs + Placements Broker Performance 2023
Micoworks scores US$24.5M to expand its marketing platforms into SEA | e27

Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped

Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That’s low – comps are 2+x book and twice the EV/EBITDA ratio.
But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.

Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market

By Clarence Chu

MUFG Bank and Mitsubishi UFJ Trust and Banking are looking to raise around US$425m from selling their respective stakes in Lasertec Corp (6920 JP).
Given the strong momentum on the stock, combined with the wave of shareholders ending their cross-shareholdings in Japan, we would argue that the deal is somewhat expected.
Despite the remaining overhang on the stock, the deal would be easily digested by the market as well, representing just 0.14 days of the firm’s three month ADV.

Initiation – Arara (4015 JP)

By Sessa Investment Research

Overview: arara primarily serves retailers such as supermarkets and restaurant chains, offering Dokuji Pay (branded currency payment + marketing) and high-speed e-mail delivery software as a service.
With its Dokuji Pay service, where clients are the issuers, the company has a certain level of distinction from its competitors in this niche field, and is solidifying its market position.
Starting in March 2024, the company plans to integrate its digital signage- related business as well, aiming to quickly accelerate its retail marketing platform strategy to help retail stores strengthen their connection with consumers both inside and outside their stores.

Aequitas Japan IPOs + Placements Broker Performance 2023

By Ethan Aw

In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

Micoworks scores US$24.5M to expand its marketing platforms into SEA | e27

By e27

Micoworks, a marketing company that optimises communication between companies and their customers, has raised JPY 3.5 billion (~US$24.5 million) in a Series B funding round.
Vertex Growth, a growth-stage VC fund anchored by Vertex Holdings, a subsidiary of Temasek, led the round.
Participating investors include JAFCO Group, Mitsubishi UFJ Capital, SMBC Venture Capital, and Mizuho Capital.

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Jan 10

Daily Brief Japan: Visional , T&K Toka Co Ltd, Suruga Bank Ltd, Ana Holdings, Money Forward , TSE Tokyo Price Index TOPIX, ROHM Co Ltd and more

In today’s briefing:

TOPIX Inclusions: Who Is Ready (Jan 2024)
T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain
T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January
Suruga Bank – Only 33% of Buyback Done, Profit Guidance to Rise a Lot, Credit Saison Support Growth
All Nippon Airways: Difficult to Outperform Expectations – In Contrast to JAL
Money Forward (3394) | Looking Forward – Q4 Preview
Interesting that the Buy Parent Company + Sell Subsidiary Trade Does Not Work
Rohm (6963 JP): Quantum Process Optimization

TOPIX Inclusions: Who Is Ready (Jan 2024)

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.
Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
There are couple of other pre-event names that we have been tracking for the past few months.

T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain

In August when Bain announced that it would launch a Tender Offer for T&K Toka Co Ltd (4636 JP) I suggested in my first piece it was the wrong price.
I suggested it needed another ¥1,000 added onto the price. If the ¥1,300 price Dalton initially indicated seemed low to T&K TOKA, another ¥100 doesn’t seem right.
It took time. Now it looks like a tender offer launch is imminent. The stock has traded through terms for almost 5 months, but not by a lot.

T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January

T&K Toka Co Ltd (4636 JP) notes that Bain expects to satisfy the pre-condition and launch the JPY1,400 tender offer by mid-January.
The shares have, on average, traded 1.9% above the offer due to Dalton’s stakebuilding. Bain has three options – unchanged terms, allowing Dalton to roll over its shares, or bumping.
Bain is likely to bump as satisfying the minimum acceptance condition is challenging. A revised offer price of around JPY1,500 is possible.

Suruga Bank – Only 33% of Buyback Done, Profit Guidance to Rise a Lot, Credit Saison Support Growth

By Daniel Tabbush

Only about 1/3 of of the recently announced share buy back is done, the remainder will come from now through end of March 2024.
Earnings are far higher than the bank’s forecast, and there should be a major revision in coming weeks.
Credit Saison collaboration and exiting BOJ negative rate policy, should provide a multitude of positives, for revenue growth.

All Nippon Airways: Difficult to Outperform Expectations – In Contrast to JAL

By Neil Glynn

Our FY24 to March 2024 EBIT forecast for ANA of ¥ 196bn is considerably higher than company guidance of ¥ 140bn, supported by our analysis of historical earnings seasonality.
However, we are only narrowly above consensus of ¥186bn, and narrowly below consensus of ¥204bn, ¥208bn in FY25, FY26.
In contrast, we see considerably greater upside to expectations at JAL, where our FY24 EBIT is 27% above consensus.

Money Forward (3394) | Looking Forward – Q4 Preview

Since releasing Q3 results, Money Forward’s stock price has fallen from 4,800 yen to the present 4,000 yen.
Results on Friday could herald a stronger outlook for the share price. The market is fixated on quarterly earnings and ad spend – these should improve sequentially.
Money Forward will release guidance for the coming fiscal year, which could see the company turn profitable at the EBITDA level.

Interesting that the Buy Parent Company + Sell Subsidiary Trade Does Not Work