Japan

In today’s briefing:

KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)
Kirin: Another Beat Could Turn Consensus from Pessimism into Optimism
Disco (6146 JP): Not Immune to a Downturn
Softbank Corp (Buy) – Q2 22 Results Reaction: PayPay Boost to Guidance and In-Line Results

KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)

By Travis Lundy

Strong but slightly disappointing Q2 earnings from Kawasaki Kisen Kaisha (9107 JP), and full-year forecasts are higher, but not as high as consensus.
The company has announced a buyback, to be executed on ToSTNeT-3. Effissimo and Mizuho Bank will participate. Other crossholders could too.
Strategy depends on whether you think they will. If they do not, post-buyback float drops sharply.

Kirin: Another Beat Could Turn Consensus from Pessimism into Optimism

Consensus has dismissed Kirin Holdings (2503 JP)’s revised revenue and OP guidance by maintaining consensus 2022 revenue and OP estimates at ¥1,970bn and ¥149.8bn respectively.
With the yen depreciating by an additional 5-15%, domestic business outperforming expectations and raw material prices falling, we expect another raise to Kirin’s annual guidance in 3Q22.
We think a second upgrade to 2022 guidance can turn consensus from pessimism to optimism.

Disco (6146 JP): Not Immune to a Downturn

By Scott Foster

The share price is at the top of its trading range, but management sees YoY sales and profit growth dropping to single digits this quarter.
On a QoQ basis, guidance is for double-digit declines, but that is partly seasonal.
The shares have been in a trading range for almost two years. As interest rates rise, economies slow and the semiconductor down-cycle continues, watch out.

Softbank Corp (Buy) – Q2 22 Results Reaction: PayPay Boost to Guidance and In-Line Results

This was a good print with underlying financial/operational results in line with our expectations whilst sector reads on competition (benign) and sales to corporates (positive) matching KDDI’s report
The company raised its operating profit forecast by ¥50bn which seems low based on the announced PayPay revaluation gain but could include cover for asset retirement costs
An implied valuation of almost ¥1,000bn for the PayPay business overall will have bankers keen but that seems high versus our valuation and public comparables

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Nov 04

Daily Brief Japan: ROHM Co Ltd, Panasonic Corp, M3 Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Rohm (6963): Costs Up, FX Gains Up More, Small Buyback, Cheap (And N225 Inclusion In the Distance)
Panasonic (6752) | Following the Yellow Brick Road to Battery Profits
M3: Covid Related Trials and Yen Depreciation Support Earnings Beat
Reason Behind the Difference in Management Between Family Companies and Others Is the Shareholding

Rohm (6963): Costs Up, FX Gains Up More, Small Buyback, Cheap (And N225 Inclusion In the Distance)

By Travis Lundy

ROHM Co Ltd (6963 JP) announced salutary H1 results on Nov 1. The numbers were good, the innards suggested cost pressures. The revised forecasts suggested conservativeness, or risk of weakness.
The company also announced a stock buyback. It’s only about 2% of shares out, which is 5-10% of Real World Float, but the stock has a low-beta risk character.
And it is quite cheap on a capital construct basis. EV/EBITDA to Mar23 on conservative guidance is 4.6x. Adj EV/EBITDA Mar23e deducing securities and net receivables? 3.7x.

Panasonic (6752) | Following the Yellow Brick Road to Battery Profits

By Shifara Samsudeen, ACMA, CGMA

The US Inflation Reduction Act will have a massively positive impact on Panasonic’s battery earnings for a decade
Panasonic has just broken ground on a new battery plant in Kansas – the yellow brick road to further profitability
We see a further 25% upside to the share price from the IRA impact on current battery capacity and even more on Kansas

M3: Covid Related Trials and Yen Depreciation Support Earnings Beat

M3 Inc (2413 JP) reported 2QFY03/2023 results yesterday. Revenue grew 10.6% YoY to JPY56.7bn (vs consensus JPY54.7bn) while OP increased 31.5% YoY to JPY17.9bn (vs consensus JPY17.0bn).
The company’s earnings were mainly driven by Covid-19 related trials and a weaker Yen which mainly helped the overseas business post strong results.
M3’s growth prospects remain stagnant and the company’s valuation multiple is still expensive as earnings expectation has started to decline.

Reason Behind the Difference in Management Between Family Companies and Others Is the Shareholding

Correlation analysis of the major shareholder factor with ROE, ROA, and Tobin’s Q shows that founding family companies tend to have relatively high profitability (ROA) and high stock price valuations.
On board practices, companies with more than 50% ownership are generally less concerned about improving their practices, because they don’t have to worry as much about voices of minority shareholders.
With regard to key actions, companies with shareholders holding more than 50% interest are presumed to be proactive in growth investments.

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Nov 03

Daily Brief Japan: Z Holdings, Mitsubishi Heavy Industries, KDDI Corp, SanBio Co Ltd, Kose Corp and more

In today’s briefing:

Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
MHI (7011) | The Time to Act on Energy Transition
KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate
SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily
Japanese Cosmetics: Trading Around Q3 Earnings

Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up

Ad sales were weaker than we expected and the company has revised full-year guidance for that business down. That is not surprising in light of the macro environment
But it also implies potential ad revenue erosion YoY in H2 which we have never seen before. Even at the worst of the Covid crisis, ad revenue growth was positive
Management appears more confident in hitting FY22 EBITDA targets as it has room to maneuver on the timing of investment spending but we think FY23 targets are looking tougher

MHI (7011) | The Time to Act on Energy Transition

It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize

KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate

KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins
On balance, the print is positive and management remains confident on full-year targets
There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten’s rebound from peak losses is modest

SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily

By Tina Banerjee

In March, SanBio Co Ltd (4592 JP) completed the application filing for approval for its investigational product SB623, as a treatment for chronic motor deficit from traumatic brain injury.
With a priority review designation, SB623 approval was expected in September. SanBio is expecting a delay in the approval. SB623 is now expected to be approved next year.
For FY23, the company is now expecting operating expenses of ¥8.1 billion, which exceeds the earlier expectations by ¥2.2 billion due to an anticipated increase in manufacturing-related expenses.

Japanese Cosmetics: Trading Around Q3 Earnings

A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses
Kao Corp (4452 JP) fell 8.5% today following a 40% OP miss while Pola Orbis Holdings (4927 JP) was flat after a narrow miss of 2% from a relatively low consensus estimate.
If the two reports released this week are something to go by, we could expect large misses, for Fancl Corp (4921 JP) and Kose Corp (4922 JP) next week.

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Nov 02

Daily Brief Japan: Toyota Motor, Sony Corp, Komatsu Ltd, Japan Tobacco, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Toyota’s Q2 Is a Huge Miss; EV Strategy in Flux
SONY (6758) | Q2 Earnings Beat, Guidance Raise
Komatsu(6301) | Post 2Q Earnings – BACKTEST STILL Says over 45% Upside
Japan Tobacco: Revised Guidance & Growth in the US With Altria JV Could Get The Shares Moving Again
Changes in Voting Practices of Japan’s Major Investment Managements Will Take Time to Take Hold

Toyota’s Q2 Is a Huge Miss; EV Strategy in Flux

By SC Capital

Toyota’s Q2 EPS undershot estimates by 28%. FY3/23 guidance was kept flat, but given a more favorable assumption for forex tailwinds, Toyota effectively lowered FY3/23 EPS by 7%.
Management partially admitted to parts of recent media reports that Toyota was overhauling its EV strategy. Targets of 3.5m BEVs by 2030 are unchanged, but the ramp may be slower.
Toyota’s 2H FY3/23 hurdles are low and its auto division’s operating profits appear to be bottoming. Stock may still be a laggard, but we’re bullish on a 12-month basis.

SONY (6758) | Q2 Earnings Beat, Guidance Raise

Q2 OP rises +8% to Y344 billion on strong growth in Music and Image Sensors, despite 49% profit fall in Games segment.
SONY sold 3.3 million PS5 units in the quarter, the same figure as a year ago. Managment remains confident of hitting 18m units by the end of the fiscal year
Sony’s stock is down -30% YTD. We think the Q2 results/guidance lift should help put a floor under the stock. We would be buyers below 15x earnings

Komatsu(6301) | Post 2Q Earnings – BACKTEST STILL Says over 45% Upside

Komatsu reported above Consensus 2Q OP; lifted OP guidance; and raised dividends. Outlook for next FY3/24 looks bright
Share price is pricing in a severe recession. A PBR of 1.1x is implies a significant OP decline. We see no evidence of an earnings contraction next year
We expect the share price to re-rate as the market prices in resilient earnings outlook. Our back test still suggests over 45% upside

Japan Tobacco: Revised Guidance & Growth in the US With Altria JV Could Get The Shares Moving Again

Japan Tobacco (2914 JP)’s 3Q22 was stronger than expected with revenue and OP surpassing consensus by 9.2% and 8.8% respectively through better than expected performance in almost all the markets.
Just as we predicted in our previous insights, JT upgraded its revenue, OP, FCF and DPS guidance by ¥182bn, ¥100bn, ¥77bn and ¥38 respectively sighting stronger volumes and favorable pricing.
We believe this earnings upgrade and a JV with Altria to expand Ploom in the US should get the share price going again after being held back by Russia fears.

Changes in Voting Practices of Japan’s Major Investment Managements Will Take Time to Take Hold

Because there’s nothing about addressing environmental issues that the company itself opposes because they are global issues, it’s relatively easy to vote in favor of shareholder proposals on environmental issues.
Governance proposal is the most sensitive because it’s directly related to election of directors. It’s challenging for domestic investment managers to vote in favor of shareholder proposals during proxy fights.
FSA’s tightening of oversight of ESG investment trusts has triggered shift by major Japanese investment managers toward establishing ESG-related-voting policies and exercising their voting rights in accordance with these policies.

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Nov 01

Daily Brief Japan: Toshiba Corp, Oriental Land, Mercari Inc, Takeda Pharmaceutical, Asahi Intecc, SoftBank Robotics and more

In today’s briefing:

Toshiba – How Much Risk Is There On A Deal Break?
Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent
Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise
Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals
Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23
SoftBank Robotics: Robotics Arm of Japanese Conglomerate SoftBank

Toshiba – How Much Risk Is There On A Deal Break?

By Mio Kato

With Toshiba giving up its deal premium on news that the JIP consortium was struggling to secure financing it is worth assessing how much downside risk there is.
Prospects are deteriorating rapidly and we believe valuations for Kioxia and the HDD business are likely to lead the way down.
We estimate that there is still a premium of about 20-25% being assessed for the possibility of a deal but that there is fundamental risk beyond this.

Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent

Oriental Land (4661 JP) raised its FY23 revenue and OP guidance by 8.4% and 59.4% respectively last week sighting a recovery in demand for leisure during the second-half of the year.
The modest price reaction to upgraded guidance could be an indication that a breakdown is imminent.
Cost overruns of ¥70bn and a delay to the scheduled opening of Fantasy Springs from FY23 to FY24, could force investors to second guess consensus medium-term expectations.

Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise

By Shifara Samsudeen, ACMA, CGMA

Domestic results were better than we expected driving operating income to its highest level in six quarters. Management will launch credit card services to boost fintech exposure
The US business remains a drag on results with platform sales down 5% YoY and expanding operating losses. A downgrade to expectations is likely in the quarters ahead
Q1 results were better than we expected but a weak US business and higher spending ahead may disappoint markets that bid shares 28% higher over the last month

Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals

Takeda Pharmaceutical (4502 JP) reported 2QFY03/2023 results last week. Reported revenue increased 18.6% YoY to JPY1.0trn (vs consensus JPY962bn) while OP increased 7.2% YoY to JPY104.4bn (vs consensus JPY119bn).
Growth in sales was driven by Takeda’s blockbuster drug Entyvio (+36.6% YoY), Takhzyro (+75.8%) and immunoglobulin products (HYQVIA in particular).
The company also has raised its peak sales estimate for Entyvio to US$7.5-9.0bn (from US$5.5-6.5bn) driven by further market growth and market share expansion.

Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23

By Tina Banerjee

Asahi Intecc (7747 JP) reported better-than-expected FY22 results, driven by overseas sales primarily in Europe and China mainly due to market recovery and a weaker yen versus other major currencies.
Asahi has raised FY23 revenue guidance to ¥89.3 billion (+15% y/y) from ¥83.5 billion earlier. However, with weakening yen, another beat is on card.
Although Asahi shares have strong upside potential, continued hospital staff shortages in the U.S. and COVID-related restrictions in China are the main downside risks.

SoftBank Robotics: Robotics Arm of Japanese Conglomerate SoftBank

By Andrei Zakharov

SoftBank Robotics is a pioneer in the industry of service robots and human-robot interactions. The company unveiled the world’s first social humanoid robot Pepper in 2014.
Alibaba Group and Foxconn Technology have invested $118M each in SoftBank Robotics: 5%+ investor shareholders include Alibaba (20%), Foxconn (20%), and SoftBank holds a 60% stake.
The company is struggling to grow revenues, and the business is structurally unprofitable. However, SoftBank Robotics announced RI strategy with plans to introduce a new series of smart robots.

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Oct 31

Daily Brief Japan: Keyence Corp, Seiko Epson, Aeon Co Ltd, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Keyence(6861 JP) | The Rise of the Phoenix – A Company like No Other
Seiko Epson(6724 JP)| Neutral 2Q Earnings; Negative Outlook – Remain Bearish
Aeon: Making Omnichannel a Reality
Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

Keyence(6861 JP) | The Rise of the Phoenix – A Company like No Other

Keyence reported record 2Q Sales and OP, thoroughly beating street expectations. The company recorded high double-digit growth in all regions – even in Europe.
Pricing power is on display 10-35% price hikes to shore up the dip in GPM to 81.3%, depressed on higher raw material costs. Sets up for future earnings growth.
The share price has underperformed the TOPIX -26%YTD. Valuations at the bottom of the recent range. We expect a share price recovery and are bullish.

Seiko Epson(6724 JP)| Neutral 2Q Earnings; Negative Outlook – Remain Bearish

2Q Earnings Neutral; Mainly FX driven. The company sidestepped the worse of what we are seeing in broader printer market (See XEROX; Canon)
The outlook remains Negative. Macro conditions set to be worse in H2 vs H1. Core Home & Office Printing Business key IJP unit sales struggling with severe margin pressures.
Ongoing share buyback mildly supportive but unlikely to be a game changer with falling earnings. Target-based 0.8x PBR implying ¥1700 TP.

Aeon: Making Omnichannel a Reality

By Michael Causton

In search of ¥1 trillion in ‘digital-related’ sales by 2026, Aeon opened its first, built-from-scratch online-offline marketing store in Yokohama this month.
The new Aeon SC introduces a range of features and processes to make e-commerce a natural supplement to the store and the shopping experience.
Aeon has a way to go to reach its targets for e-commerce but is moving in the right direction and has a clearer direction than rival, Seven & I.

Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

Clearly, the pace of decline of deemed cross-held shares held in retirement benefit trusts is slower than the pace of decline of ordinary cross-held shares held on the balance sheet.
Companies with deemed shareholdings tend to have larger total assets than companies with general policy shareholdings (policy shareholdings account for 7.3% of total assets).
Although they are less visible, the reduction of deemed shareholdings will come later because shares of important business partners and banks are contributed to retirement benefit trust as deemed shareholdings.

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Oct 30

Daily Brief Japan: Suzuki Motor, Hitachi Transport System and more

In today’s briefing:

Suzuki (7269 JT) | Way Too Cheap Ahead of 2Q Earnings – India’s Maruti (MSIL IN) Shows the Way
(Mostly) Asia-Pac Weekly Risk Arb Wrap: ELMO, Kingston Financial, Hitachi Transport, Nearmap, Aruhi

Suzuki (7269 JT) | Way Too Cheap Ahead of 2Q Earnings – India’s Maruti (MSIL IN) Shows the Way

Maruti Suzuki reported above Consensus 2Q driven by strong volumes and improved margins
Earnings bode well for Suzuki’s 2Q earnings on Nov 8. Also, Maruti indicated significant easing of semi-driven supply constraints. Positive readacross for Suzuki.
Suzuki’s ex-Maruti operations are now cheaper than ever at under 2.5x PER. We see upside to earnings vs. Consensus and keep our bullish stance on the stock.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: ELMO, Kingston Financial, Hitachi Transport, Nearmap, Aruhi

By David Blennerhassett

There are 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.
Three new deals discussed on Smartkarma this week: K1’s Offer for Elmo Software (ELO AU), Chu’s Offer for Kingston Financial (1031 HK), KKR’s tilt for Hitachi Transport System (9086 JP).
Key updates took place for Nearmap Ltd (NEA AU), Jinke Smart Services (9666 HK), Lifestyle International Holdings (1212 HK), and Aruhi Corp (7198 JP).

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Oct 29

Daily Brief Japan: SBI Holdings, Fanuc Corp, Softbank Group, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

JPX-Nikkei 400 Rebal 2023: End-Oct 2022
Japan Weekly | Ibiden, Fanuc, Canon
Softbank Group (9984 JP) – Defying Gravity into 4Q 2022
Hostile Takeovers Should Be Well Thought Out on Fair Basis, Both in Boardroom and in Judicial Arena

JPX-Nikkei 400 Rebal 2023: End-Oct 2022

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-October 2022.

Japan Weekly | Ibiden, Fanuc, Canon

NKY +0.80%WoW; TOPIX +0.91%WoW; TSE Mothers +3.0%WoW. 3 days up; 2 days down this week as small caps; high valuation and tech stocks rallied
PM Kishida orders additional fiscal stimulus of ¥29.1 trillion. Including other private sector investment and funding, the total stimulus size to exceed ¥71 trillion.
Bank of Japan maintains their ultra looks monetary policy in place at the end of their 2-day policy meeting

Softbank Group (9984 JP) – Defying Gravity into 4Q 2022

By Victor Galliano

Softbank Group’s share price has been supported by the share buyback programme since late September, but 2Q FY2022 results are likely act as a negative catalyst for Softbank shares
Alibaba and its core listed holdings in the Vision Funds have seen market values go lower in recent months; see the diverging market price chart trends in this report
In addition, valuations among the unlisted holdings are also under pressure into October, so 2Q results may not capture the full extent of the down rounds

Hostile Takeovers Should Be Well Thought Out on Fair Basis, Both in Boardroom and in Judicial Arena

Since hostile takeovers are one of the key strategies to quickly gain market share in domestic market with limited growth, more hostile takeovers are expected to occur in the future.
Only 12.1% of prime market companies have majority of independent directors. This raises concerns about whether the opinions of independent directors in minority position will be heard by the boards.
The court’s decision to dismiss the claims of companies that proposed hostile takeovers makes us think about whether hostile takeovers are being considered on fair standpoint, even in judicial arena.

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Oct 27

Daily Brief Japan: Calbee Inc, CyberAgent Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Calbee – Price Hikes Are Appealing to Institutional Investors
CyberAgent 4Q: Gaming Deteriorates Further with Absence of New Hit Titles
CyberAgent (4751) | World Cup Boost for Abema
Human Capital Investment Is Also Necessary to Remind Valuations of Growth-Based Corporate Value

Calbee – Price Hikes Are Appealing to Institutional Investors

By Shifara Samsudeen, ACMA, CGMA

Japan’s largest snacks maker, Calbee Inc (2229 JP) is raising prices by 10-20% for almost 75% of its product range.
These price hikes have boded well with institutional investors with a vast most of them deciding to up their stake in the company following the first price hike announcement.
While institutional-investors bet on earnings growth over long-term through regular price revisions, we think there could also be short and medium-term gains as OP growth turns positive after many years.

CyberAgent 4Q: Gaming Deteriorates Further with Absence of New Hit Titles

CyberAgent Inc (4751 JP) reported 4QFY09/22 financial results after the market closed on 26th. Revenue for the quarter decreased 1.9% YoY to JPY 176.2bn vs consensus revenue of JPY 175.5bn.
OP declined 50.8% YoY to JPY 13.2bn vs consensus JPY 16.0bn (miss of 9%) due to decline in profits from gaming business. OPM declined to 7.5% from 14.9% in 4QFY09/21.
CA’s earnings have come under pressure with absence of new hit game titles. Media segment continues to see strong growth and FIFA World Cup is only a one-off boost.

CyberAgent (4751) | World Cup Boost for Abema

CyberAgent’s stock price could fall after releasing very weak guidance for the coming fiscal year
We would buy into any weakness as we see CyberAgent well placed to benefit from the structural growth of the Digital Ad market
We expect losses in ABEMA TV to shrink further next year and think the whole Media segment can break-even, driven by betting platform, Winticket

Human Capital Investment Is Also Necessary to Remind Valuations of Growth-Based Corporate Value

Human investment, the engine of medium-to-long-term growth, was burden for companies without high profit margins, and it wasn’t of much interest to investors seeking stock price returns from short-term perspective.
Today, where people are required to do jobs that machines and robots cannot do and to think about mechanisms for making them work, investing in people is becoming more important.
The fact that investors have focused more on short-term earnings volatility indicates that they have failed to assume growth-based corporate value in valuations. Growth investing is essential to raising valuations.

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Oct 26

Daily Brief Japan: NTT (Nippon Telegraph & Telephone), Yamazaki Baking, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

TOPIX October 2022 Rebal – Treading Water
Yamazaki Baking: Profitability to Double Over The Next Few Years
Little Discussion of Listing Criteria Appropriate for Prime Market Listed Companies

TOPIX October 2022 Rebal – Treading Water

By Travis Lundy

The TOPIX October FFW rebalance is Friday at the close.
It is still ¥2trln+ to buy and ¥2trln+ to sell. And there are some big names. A spreadsheet is attached with all the flows.
Surprisingly, the top 40 Z-scores on each side have traded in a VERY tight range for the 6 weeks prior to the announcement and the two weeks post. Very weird.

Yamazaki Baking: Profitability to Double Over The Next Few Years

Yamazaki Baking (2212 JP)’s Q3 was mixed with revenue growing 5.6% YoY to surpass consensus by 3% but OP of ¥1.6bn was ¥650m below consensus.
However, this was mostly priced-in, as shares are currently trading at the bottom end of the upward trend channel.
With wheat prices down 23% from the peak, pressure from input price inflation should alleviate, resulting in margin upside in the fourth quarter.

Little Discussion of Listing Criteria Appropriate for Prime Market Listed Companies