Category

Japan

Daily Brief Japan: Japan Post Bank, CELSYS, Money Forward , Hisamitsu Pharmaceutical Co, TSE Tokyo Price Index TOPIX and more

By | Daily Briefs, Japan

In today’s briefing:

  • October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie
  • TOPIX Inclusions: Who Is Ready (Oct 2023)
  • Money Forward (3994) | Show Me the Money
  • Hisamitsu Pharmaceutical (4530 JP): Mixed Q2FY24 Result- Some Points Worth of Paying Attention
  • Manager’s Real Intent to Prevent Further Increase in Ratio of Independent Directors Is Revealed


October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie

By Travis Lundy

  • The TOPIX October Free Float Weight Review details are out. This is the biggest FFW review of the year. This year, it’s $11.3bn a side. 
  • As discussed in Japan Post Bank (7182) – The October TOPIX FFW Adjustment, JPB is the big buy. $2bn/23d of ADV. There is $2bn to buy of trading cos too.
  • There are lots of large names to trade in both directions. If you have interests to sell the buys and vice versa, it is good to know the flows.

TOPIX Inclusions: Who Is Ready (Oct 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.
  • Since my last insight, CellSource (4880 JP) and Kasumigaseki Capital (3498 JP) have confirmed they will move to TSE Prime which means they will be included in TOPIX at end-November.
  • FP Partner (7388 JP) and I-NE (4933 JP) will get included in TOPIX at the end of October.

Money Forward (3994) | Show Me the Money

By Mark Chadwick

  • Money Forward’s share price dipped 20% post-Q2 results, but strong operational performance and upward sales revisions make it appealing.
  • We expect 42% YoY sales growth in Q3 and believe long-term growth prospects remain exceptional against the market size.
  • Management to deliver profitability next FY, meeting investor demands to “show me the money” – we remain bullish

Hisamitsu Pharmaceutical (4530 JP): Mixed Q2FY24 Result- Some Points Worth of Paying Attention

By Tina Banerjee

  • Hisamitsu Pharmaceutical Co (4530 JP) announced mixed Q2FY24 result, with single-digit revenue growth and bottom-line decline. Revenue grew 5% YoY to ¥34.9B, while operating profit declined 8% YoY to ¥4B.
  • Salonpas line of OTC pain relieving patches have become major growth driver of the company. In Q2FY24, Salonpas revenue increased 14% YoY, lowest growth rate reported in last five quarters.
  • Despite 70%+ progress of operating and net profits, Hisamitsu reiterated FY24 guidance. Declining margins, anticipated increase in SG&A expenses, and high base call for massive fall in profit in H2FY24.

Manager’s Real Intent to Prevent Further Increase in Ratio of Independent Directors Is Revealed

By Aki Matsumoto

  • The Kankeiren intends to prevent further increases in the ratio of independent directors because of the small number of candidates for outside directors.
  • One reason why the substance of the Corporate Governance Code has not improved is that independent directors are a minority on the board.
  • The company is also responsible for not developing female internal executive director candidates, relying on outside directors for female directors, and not appointing foreign talent to the board.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: NTT (Nippon Telegraph & Telephone), Kokusai Electric , TSE Tokyo Price Index TOPIX and more

By | Daily Briefs, Japan

In today’s briefing:

  • Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex
  • ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu
  • Issues with Content of Disclosures, Not Keyword Searches in TCFD


Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex

By David Blennerhassett

  • Monex (8698 JP) and Docomo announced an agreement. It is not clear ANY of this has to happen at prices favourable to minorities. But equally, it won’t be egregiously bad.
  • People’s Insurance (PICC) (1339 HK)‘s implied stub is at a lifetime low. The market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.
  • JMDC (4483 JP) is a growth stock, growing organically. It is a rare enough thing. If you want to buy the back end, wait until it gets here.

ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu

By Sumeet Singh


Issues with Content of Disclosures, Not Keyword Searches in TCFD

By Aki Matsumoto

  • Japan has the largest number of TCFD endorsing institutions in the world, and the number of listed companies endorsing the TCFD has increased by 350 since last year.
  • It’s hoped that more companies will follow the example of those that disclosed specific climate change impact estimates under certain conditions, and that other companies will attempt to do so.
  • There are many companies that have endorsed TCFD, but have only endorsed it and not disclosed it, so the issue isn’t about endorsing TCFD, but about the content of disclosure.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: Inageya Co Ltd and more

By | Daily Briefs, Japan

In today’s briefing:

  • Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
  • Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer


Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year

By Travis Lundy

  • Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
  • They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
  • There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.

Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer

By Arun George

  • Aeon Co Ltd (8267 JP) has announced a partial tender offer for Inageya Co Ltd (8182 JP) to make it a consolidated subsidiary. Aeon flagged this intention on 25 April.
  • The tender offer is for a maximum of 15.7 million shares (33.78% ownership ratio) at JPY1,610, a 23.2% premium to the undisturbed price. There is no minimum acceptance condition. 
  • The offer price is reasonable. Longer-term, Aeon aims to make Inageya a wholly-owned subsidiary of United Super Markets (3222 JP) by November 2024.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: Fast Retailing, TSE Tokyo Price Index TOPIX, SBI Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • FAST RETAIL (9983) | 3 Reasons Why Guidance Could Miss
  • Policy Shareholdings, if Reduced, Should Be Used for Profitable Investments
  • SBI Holdings – Pages of Affiliates | Strong Securities | Banks Doing Well | Accelerating Profit


FAST RETAIL (9983) | 3 Reasons Why Guidance Could Miss

By Mark Chadwick

  • Fast Retail Full-Year Expectations: Anticipate strong FY results, but potential FY8/24 guidance headwinds include weather impacts and yen weakness.
  • Management Guidance Risks: The key risk would seem to be China outlook; Japan/Europe’s heatwave impact on fall season; potential for gross margin pressures.
  • Valuation: Despite growth prospects, concerns over cyclicality and valuation relative to peers persist.

Policy Shareholdings, if Reduced, Should Be Used for Profitable Investments

By Aki Matsumoto

  • TSE market reorganization triggered the reduction of policy shareholdings, and now the test will be whether policy shareholdings can be reduced in order to raise ROE, which is sluggishly growing.
  • Companies that maintain excessive policy shareholdings should provide a rational explanation of their holding policies and the reasons for each shareholding in their corporate governance reports and annual securities reports.
  • Improving OP Margin, which is highly correlated with ROE, is a shortcut to raising ROE. Policy shareholdings, should not be accumulated in cash on hand, but used for profitable investments.

SBI Holdings – Pages of Affiliates | Strong Securities | Banks Doing Well | Accelerating Profit

By Daniel Tabbush

  • SBI Holdings (8473 JP) may not be the easiest company to analyze with its many pages of affiliates, but at the least, it’s profit momentum is strong.
  • Securities Group profit is key to the company where growth is excellent in earnings and in the number of new accounts, across many businesses.
  • Its two banks in Japan are doing well, growing faster than others, but still SBI Holdings (8473 JP) is more of an alternative financial company to a traditional bank.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: JMDC , Monex Group Inc, Kokusai Electric , Rakuten Group and more

By | Daily Briefs, Japan

In today’s briefing:

  • JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)
  • NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet
  • Kokusai Electric IPO: Valuation Insights
  • Kokusai Electric Pre-IPO – Thoughts on Valuation
  • Rakuten Mobile Could Be Churning Profits Next Year


JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)

By Travis Lundy

  • When this was launched, it traded more a fair bit on the first day, but then more volume traded than I expected. This could mean a couple of things.
  • Re-Reading the original doc leaves nuances. The change in management responsibilities this past summer make some holders less certain. It’s complicated. 
  • There have been several blocks traded, and a large short instantiated. And if one has a more conservative estimate at a higher top-end participation, the back end gets uglier.

NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet

By Travis Lundy

  • Today, Monex Group Inc (8698 JP) and NTT (Nippon Telegraph & Telephone) (9432 JP)‘s NTT Docomo announced a Capital and Business Alliance Agreement. It is a complicated deal.
  • Monex GROUP will create a holdco which owns Monex Inc (the broker) and sell 51% to Docomo. Docomo will consolidate. Monex Group will own 49% as an equity method affiliate.
  • Monex GROUP will then double its dividend, maybe buy back shares, and expects to grow as Docomo pushes and Monex invests. But what remains is a mixed bag.

Kokusai Electric IPO: Valuation Insights

By Arun George


Kokusai Electric Pre-IPO – Thoughts on Valuation

By Sumeet Singh

  • KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In our previous notes we have looked at the company’s past performance and undertaken a peer comparison. In this note, we talk about valuations.

Rakuten Mobile Could Be Churning Profits Next Year

By Oshadhi Kumarasiri

  • Rakuten Group (4755 JP)‘s shares plummeted 80% in 8 years, reaching ¥500 in June 2023 due to ¥1.3 trillion mobile business losses.
  • Expecting a positive shift as Rakuten Mobile approaches platinum band access and subscribers poised for exponential growth following the KDDI agreement.
  • We are expecting Rakuten Mobile to turn profitable next year, while the consensus is projecting an operating loss of around ¥200bn for the business.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: Japan Rental Housing Investment, Kasumigaseki Capital, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All
  • UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise
  • Gap in Response to Disclosures in English Compared to the Growing Presence of Overseas Investors


Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

By Janaghan Jeyakumar, CFA

  • Midsize residential JREIT Daiwa Securities Living (8986 JP) (“DSLIC“) launched a follow-on equity offering to partially fund their recently-announced acquisitions.
  • The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.
  • In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC’s previous follow-on equity offerings.

UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise

By Travis Lundy

  • Over the weekend I wrote about Kasumigaseki Capital (3498 JP)‘s move to TSE Prime and then move to TOPIX. I noted earnings would be out 3 October.  
  • I talked about the possibility of a surprise. They had revised full-year to end-Sep to ¥2bn. They got ¥2.05bn. 
  • But after growing revenue 79% last year, and growing net profit 101%, this year they expect revs +60% and Net Profit +144%. 

Gap in Response to Disclosures in English Compared to the Growing Presence of Overseas Investors

By Aki Matsumoto

  • Overseas investors feel that the disclosure of English documents by Japanese companies is slow-paced and the majority of overseas investors are not satisfied with the English disclosure.
  • Without sufficient disclosures in English, it is impossible to conduct a detailed analysis of the portfolio company. This also casts a shadow over engagement.
  • Given the narrowing coverage of sell-side analysts, companies should proactively disclose English-language materials at the earliest possible time. For long-term investors, English-language disclosures such as annual securities reports are also useful.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: Kokusai Electric and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kokusai Electric Pre-IPO – Peer Comparison


Kokusai Electric Pre-IPO – Peer Comparison

By Sumeet Singh

  • KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In our previous notes we have looked at the company’s past performance. In this note, we will undertake a peer comparison.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: Kokusai Electric , Japan Airlines, Tokyo Stock Exchange Tokyo Price Index Topix, Daiichi Sankyo, PAL GROUP Holdings Co., Ltd., Seibu Giken and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kokusai Electric IPO: The Bear Case
  • APAC Airline Sector – Cost Inflation Management Differentials Crucial as Cargo Yields Normalise
  • Too Many Portfolio Companies Is One of the Reasons for Not Enough Engagement
  • Daiichi Sankyo (4568 JP): Strong Start of FY24; Partnered Oncology Drug Candidate Hits First Goal
  • Pal Group’s 3Coins: Coining It
  • Seibu Giken IPO Trading – Still Not Particularly Enticing


Kokusai Electric IPO: The Bear Case

By Arun George

  • Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR & (KKR US) seeks to raise about US$750 million through listing Kokusai.
  • In Kokusai Electric IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend, increasing inventory days and deteriorating FCF.

APAC Airline Sector – Cost Inflation Management Differentials Crucial as Cargo Yields Normalise

By Neil Glynn

  • We publish a detailed update on the APAC airline sector, featuring ANA, Cathay Pacific, JAL, Korean Air, Qantas and Singapore Airlines, addressing cargo yield normalisation, and unit cost inflation.
  • We see 24% upside to consensus EBITDAR for JAL in FY24 to March 2024, and 24% downside risk at Singapore Airlines based on our detailed analysis and quarterly earnings bridges.
  • We expect earnings at most carriers to decline in calendar 2024 versus 2023 as the combination of cargo yield normalisation, fuel price pressure, and further capacity restoration prompt margin declines.

Too Many Portfolio Companies Is One of the Reasons for Not Enough Engagement

By Aki Matsumoto

  • The problem of agenda setting in engagement with investment firms is due to the mismatch that is occurring in each of the listed companies and investors.
  • Meetings without top management present disappoint investors who have prepared thorough analyses of the issues facing the portfolio company. Top management should also avoid listening to template questions at meetings.
  • It’s unrealistic to ask passive funds that cannot devote resources not to ask template questions. Active funds of Japanese investment managers may have too many portfolio companies to engage adequately.

Daiichi Sankyo (4568 JP): Strong Start of FY24; Partnered Oncology Drug Candidate Hits First Goal

By Tina Banerjee

  • Daiichi Sankyo (4568 JP) reported a 25% YoY revenue growth in Q1FY24, mainly driven by oncology drug Enhertu. The company reiterated FY24 guidance, with revenue and operating profit growing double-digit.
  • Daiichi Sankyo’s drug candidate datopotamab deruxtecan demonstrated statistically significant and clinically meaningful progression-free survival benefit in certain types of breast cancer patients in pivotal phase 3 trial.
  • Enhertu is well-positioned for geography and indication expansion as well as market share gain. Strengthening oncology portfolio and rich late-stage pipeline entail significant growth opportunity for the company.

Pal Group’s 3Coins: Coining It

By Michael Causton

  • Pal Group posted record sales in FY2022 partly because fashion retail recovered but mostly because of it has a huge hit on its hands: variety store 3Coins.
  • Cheap variety stores have always been popular and are becoming even more so as prices rise and people spend more on the home.
  • 3Coins has doubled sales in 2 years but expects continued strong growth going forward. With fashion sales also improving, Pal Group is one of few solid bets in lifestyle retailing.

Seibu Giken IPO Trading – Still Not Particularly Enticing

By Sumeet Singh

  • Seibu Giken (6223 JP) (SG) raised around US$93m in its Japan IPO after pricing at the top of its downward revised range.
  • SG sells desiccant dehumidifiers and VOC concentrators in over fifty countries globally. Its two main products accounted for over 90% of its revenue in 2022.
  • In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: SBI Shinsei Bank, Kasumigaseki Capital, JMDC , Toshiba Corp, Toyo Construction and more

By | Daily Briefs, Japan

In today’s briefing:

  • Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout
  • Kasumigaseki Capital (3498) Moving To TOPIX End-November
  • (Mostly) Asia M&A, Sept 2023: JMDC, Pact, Takisawa, Golden Eagle Energy, Dic Corp
  • Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int’l Sec
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: System Info, Keiyo, Invocare, Liontown, ENM, Toyo Const.


Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout

By Travis Lundy

  • The SBI Holdings (8473 JP) takeout of SBI Shinsei Bank (8303 JP) was opportunistic – done at a price SBI Shinsei’s Board considered not reasonable. Until it changed its mind.
  • I had thought appraisal rights a great trade. I also thought it a good trade to own the back end, but that involved one holder putting ¥55bn on the table. 
  • Activist Murakami-san’s S Grant Corporation has done that. It will own one share of 8 post-consolidation on Monday. They are now equal shareholders with the govt entities.  Wow.

Kasumigaseki Capital (3498) Moving To TOPIX End-November

By Travis Lundy

  • Real estate consultant/developer/speculator Kasumigaseki Capital (3498 JP) announced Friday that it would move from TSE Growth to TSE Prime on 6 October. 
  • The stock was on the list of top potential candidates in TOPIX Inclusions: Who Is Ready (Sep 2023) (and has been for nearly a year). It’s a good list.
  • This event leads to a TOPIX inclusion on 29 November. Analysis below.

(Mostly) Asia M&A, Sept 2023: JMDC, Pact, Takisawa, Golden Eagle Energy, Dic Corp

By David Blennerhassett

  • For the month of September 2023, 8 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$2bn.
  • The average premium for the new deals announced (or first discussed) in September was 37%. The average YTD is 35%.
  • This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int’l Sec

By David Blennerhassett


(Mostly) Asia-Pac Weekly Risk Arb Wrap: System Info, Keiyo, Invocare, Liontown, ENM, Toyo Const.

By David Blennerhassett


💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Japan: Keiyo Co Ltd, Tokyo Stock Exchange Tokyo Price Index Topix, EURO STOXX 50 Price EUR, Nikkei 225 and more

By | Daily Briefs, Japan

In today’s briefing:

  • DCM Takeover for Keiyo (8168) – Pretty Easy Deal
  • Disclosure of Management Strategies with Cost of Capital and Stock Price in Mind Is Still Limited
  • Keiyo (8168 JP): DCM’s JPY1,300 Tender Offer
  • Supports Starting to Break; Upgrading Non-U.S. Small-Caps to Overweight; Transports/Comm/HC Buys
  • EQD | Nikkei 225 (NKY) Forecast for October: Not So Good…


DCM Takeover for Keiyo (8168) – Pretty Easy Deal

By Travis Lundy

  • Today after the close, DCM Holdings (3050 JP) announced it would launch a friendly takeover by Tender Offer for Keiyo Co Ltd (8168 JP) 
  • This is totally not a surprise. They signed a Business and Capital Alliance in 2017. DCM bought more at a premium last autumn. This takeover was obvious in the long-term.
  • There are enough friendly holders to get this done. Activism would be hard unless it was really cheap, which it does not seem to be, but process wasn’t great. 

Disclosure of Management Strategies with Cost of Capital and Stock Price in Mind Is Still Limited

By Aki Matsumoto

  • Regardless of “TSE request,” only 31% of prime market listed companies disclosed “measures to realize management with awareness of cost of capital and stock price” in their corporate governance reports.
  • The lack of ready disclosure measures on companies’ side seems to be the reason why few companies disclosed information, but many of those that did are also poor in content.
  • For companies with large shareholders and low P/B, the parent company has not yet TOB or sold the company, which may be the reason for the delay in disclosure.

Keiyo (8168 JP): DCM’s JPY1,300 Tender Offer

By Arun George

  • Keiyo Co Ltd (8168 JP) has recommended DCM Holdings (3050 JP)’s tender offer of JPY1,300 per share, a 58.3% premium to the undisturbed price (29 September).
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 35.68% ownership ratio.
  • Irrevocables represent a 0.88% ownership ratio. The minimum acceptance condition (lower limit) requires a 50.4% minority acceptance rate, which is achievable as the offer price represents a ten-year high.

Supports Starting to Break; Upgrading Non-U.S. Small-Caps to Overweight; Transports/Comm/HC Buys

By Joe Jasper

  • Key support levels on global equity indexes (EURO STOXX 50, $ACWX, $EFA) are beginning to break as the U.S. dollar (DXY) and 10-year Treasury yield break above $105.70 and 4.35%.
  • This significantly increases the odds of a break below major $92-$93 support on $ACWI, and we would shift to a more cautious outlook only on a break below $92.
  • We shifted to overweight value within non-U.S. equities last week, and we are now also shifting to overweight small-caps within non-U.S. equities as well. Buys in Transportation, Communications, and HealthCare

EQD | Nikkei 225 (NKY) Forecast for October: Not So Good…

By Nico Rosti

  • The Nikkei 225 INDEX closed September down at 31857.62, CC=-3 (3 months down). Did not double-bottom at August’s lows (31674), but is starting to be OVERSOLD MONTHLY (time perspective).
  • A new Market Reversal Matrix Seasonality model is hinting that October 2023 probably will not see a rally/reversal, but just below-average gains (if any).
  • One possible scenario (due to concomitant WEEKLY OVERSOLD conditions) is to see the Nikkei up early in October, then down again, closing the month with small gains or a loss.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars