Japan

In today’s briefing:

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade
TOPIX October 2022 Rebal – BIG Names with BIG Flows
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax
Index Rebalance & ETF Flow Recap: HSCI, FTSE, HSI, TW Div+, China 50, KOSDAQ150, TOPIX FFW, PEXA

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

By Brian Freitas

At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.

TOPIX October 2022 Rebal – BIG Names with BIG Flows

The TSE announced its first large FFW rebalance under new rules and Market Segmentation. ~1,000 names see FFW drop 5% or more. 100+ rise 5+%. Reverse funding trades are significant.
Top BUY flow: Toyota, Olympus, Daiichi Sankyo, Tokio Marine, JP Holdings with an average of 4.0 days’ ADV to buy. Softbank/9984, MitCorp, Hitachi, Suzuki, Marubeni average 4.8 days to SELL.
493 names start their phased weight reduction out of TOPIX because they do not meet the hurdle for minimum trading value. And… Shinsei is the most impressive SELL name.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax

By David Blennerhassett

There are 48 – 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 this week: San Miguel (SMC PM)‘s MTO for Eagle Cement (EAGLE PM), Idemitsu (5019 JP)‘s Offer for Toa Oil (5008 JP), and O2Micro (OIIM US)‘s MBO.
Key updates took place for Tassal (TGR AU), Hitachi Transport System (9086 JP), Shidax Corp (4837 JP), Toyo Construction (1890 JP), and Singapore Medical (SMG SP).

Index Rebalance & ETF Flow Recap: HSCI, FTSE, HSI, TW Div+, China 50, KOSDAQ150, TOPIX FFW, PEXA

By Brian Freitas

We expect a few adds to the HSCI in December followed by a lot more change in March. We could finally reach 80 HSI INDEX constituents in December.
There will be a handful of adds to the FTSE All-World/All-Cap indices in December. But there will be many changes to the FTSE TWSE Taiwan Dividend+ Index in December.
There were large inflows to the Yuanta/PShares Taiwan Dividend Plus ETF (0056 TT), Hang Seng H Share Index ETF (2828 HK) and Tracker Fund of Hong Kong Ltd (2800 HK).

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Oct 08

Daily Brief Japan: Seven & I Holdings and more

In today’s briefing:

Seven & I – The US Is About to Hit the Brakes

Seven & I – The US Is About to Hit the Brakes

With OP up by 22% YoY to beat the consensus estimate by ¥2.0bn, Seven & I turned in a strong 2QFY23 along with a considerable upgrade to FY23 guidance.
However, the post-earnings price reaction seems to suggest that the market is a bit worried about the short-term performance of Seven & I Holdings (3382 JP)’s US convenience store business.
In addition, the struggling non-core businesses whose future remains undecided could also be weighing in on Seven & I’s price performance.

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Oct 07

Daily Brief Japan: Seven & I Holdings, Renesas Electronics, Sundrug Co Ltd, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Seven & I (3382) | U.S. Gas Margins Offset Rising Energy Costs at Home
Renesas (6723 JP): Steradian Acquisition Supports Alliance with Tata
Buying Japanese Drug Store Names: Welcia (3141-JP) And Sundrug (9989-JP)
Companies Should Communicate Their Human Resources Strategy Rather than Detailed Disclosure Rules

Seven & I (3382) | U.S. Gas Margins Offset Rising Energy Costs at Home

1H results, OP up +26% YoY, were good but in line with the recent Nikkei preview.
The U.S. convenience store operation was the standout performer and the reason for the full year guidance raise
We remain bullish on the stock. It is just too cheap relative to global peers

Renesas (6723 JP): Steradian Acquisition Supports Alliance with Tata

By Scott Foster

Acquisition of Steradian Semiconductors complements Renesas’ partnership with Tata Group and expands its presence in India.
Follows purchase of Reality Analytics of the U.S. and Celeno Communications of Israel. Global footprint growing, technological sophistication rising to meet ADAS, AI and IIoT requirements.
P/E below 10x on current guidance, but vulnerable to semiconductor down-cycle. Accumulate for long-term potential.

Buying Japanese Drug Store Names: Welcia (3141-JP) And Sundrug (9989-JP)

By Joe Jasper

Japan has been a favorite country since late-March, and we have continued to see improvement ever since.
Vermilion’s international Group CS-35 Drug Stores, Japan displays bullish price and RS downtrend reversals, giving us added confidence that outperformance is likely to continue
The two stocks highlighted today display base breakouts over the last couple of days, making them timely buys. Buy: Welcia Holdings (3141-JP) and Sundrug (9989-JP)

Companies Should Communicate Their Human Resources Strategy Rather than Detailed Disclosure Rules

Companies had expected detailed rules, as with various disclosure documents, but was puzzled by government’s guidelines, which were conceptual and didn’t provide guidance on what to disclose and how much.
It is likely that the disclosure in annual securities reports, which are legal documents, will fill the space by disclosing items that are specifically identified and easy to show quantitatively.
Companies that cannot clearly explain their policies on investment in human capital and human resource strategies in their management strategies are unlikely to attract human resources.

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Oct 06

Daily Brief Japan: Shinsei Bank, Rakuten Inc, Toshiba Corp, Ryohin Keikaku, Z Holdings, Shidax Corp, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Thinking Strategically About a Shinsei Position – Things To Do NOW
Rakuten – Sale of Stake in Securities Business Eases Funding Pressure
Toshiba (6502 JP): Kioxia Nanoimprint Update – Look to the Next Cycle
Ryohin Keikaku: A Beat Can Turn Around Price Performance
Z Holdings / PayPay – A Focus on Margin Improvement as ZHD Moves to Consolidate
Shidax Outlook May Change – Better Governance Matters
Activist Investors Will Grow Their Presence, as Japanese Equities Would Be Good Fit for The Approach

Thinking Strategically About a Shinsei Position – Things To Do NOW

SBI Holdings (8473 JP)‘s subsidiary has reportedly filed its application to become a Bank Holding Company, the definition being a company holding a 50% or greater stake in a bank.
The day after I last wrote, Shinsei announced it had received approval to change its name to SBI Shinsei Bank as of 4 January 2023.
My expectation is the move above 50% happens sooner rather than later. And in that case, investors should think about their approach. Get your cowbells ready.

Rakuten – Sale of Stake in Securities Business Eases Funding Pressure

Rakuten is reportedly selling a stake in its Securities unit for ¥80bn, which probably means a near-term IPO of that business is off the table
It may also give Rakuten greater flexibility on the timing of a Rakuten Bank IPO should pricing for that be problematic
In terms of surfacing the value of Rakuten’s fintech assets this is good news but it is mobile losses that have held the shares back. We remain at Neutral.

Toshiba (6502 JP): Kioxia Nanoimprint Update – Look to the Next Cycle

By Scott Foster

Canon’s reported capital spending plan suggest that commercial production of nanoimprint lithography tools could start in time for the next semiconductor up-cycle.
If this is the case, Kioxia is likely to be the main beneficiary. In the meantime, LightStream recommends that investors in Toshiba hedge against tech/semi weakness.
Technical hurdles remain formidable, but nanoimprint lithography has the potential to be much cheaper than EUV.

Ryohin Keikaku: A Beat Can Turn Around Price Performance

Our analysis points to a significant earnings beat for Ryohin Keikaku, whose share price is down more than 50%-YTD and is currently hugging the bottom-end of the long-term trend channel.
With freight and logistics down more than 50% since June 2022, we are expecting Ryohin Keikaku (7453 JP)’s gross margin to return to around 49-50%.
In addition, the company’s monthly sales growth figures indicate that FQ4 revenue should be around ¥114.6bn compared to ¥105.8bn for consensus.

Z Holdings / PayPay – A Focus on Margin Improvement as ZHD Moves to Consolidate

The PayPay conversion is complete and management is focused on managing costs, which is reassuring for ZHD financial targets and for an eventual IPO
There was less said about the latter, however, whilst detail on the valuation gain that parent Softbank Corp needs to hit its own operating income target has not been confirmed
Our valuation of ¥500bn for PayPay looks more reasonable as 50-73% YTD declines in public comps have brought trading multiples in line (PayPay at 5x FY22e revenue versus 5-8x)

Shidax Outlook May Change – Better Governance Matters

On 8 September, I went over the Oisix ra daichi (3182 JP) bid for the stake in Shidax Corp (4837 JP) held by Unison Capital.
The founding Shida family had a deal whereby when the company raised capital years ago, the family had ROFR to buy or nominate a buyer of the Unison stake.
The problem? Shidax’ independent board said this was unfair to minorities. The back and forth has continued but there may now be hope for a better deal.

Activist Investors Will Grow Their Presence, as Japanese Equities Would Be Good Fit for The Approach

Given the increased stock market volatility, it’s not surprising that activist investment strategies are a good fit for investors seeking investment strategies that are less correlated with stock market fluctuations.
Japanese companies that have lower valuations, less effective steps to maximize their corporate value, and face many challenges in their governance practices are are well suited to activist investor approach.
Unlike passive investors who have an impact on the overall stock market, activist investors’ purchases will have a limited impact on the overall market, but their presence will be significant.

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Oct 05

Daily Brief Japan: Hitachi Transport System, Appier Group, Toshiba Corp, Yamada Denki, Itochu Advance Logistics Investment and more

In today’s briefing:

Hitachi Transport (9086) – Delay Doesn’t Mean Ditched
TOPIX Inclusions: Who Is Ready (Oct 2022)
MBK Partners Joins JIC Consortium to Acquire Toshiba
Yamada Holdings: Time to Lock In Profits
Itochu Advance Logistics (3493 JP): Offering Could Trigger Outperformance Vs Peers

Hitachi Transport (9086) – Delay Doesn’t Mean Ditched

The KKR consortium which was to buy Hitachi Transport System (9086 JP) has encountered a delay. What was to start in September is now scheduled for November.
On the 29th, HTS released a document saying KKR still had a couple of approvals or lapses of waiting periods needed.
The HTS announcement suggested the start of the Tender Offer would be early November rather than end-September.

TOPIX Inclusions: Who Is Ready (Oct 2022)

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.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Aug 2022)
At present, there are 53 names that satisfy all of these conditions and there are more names that are close to being in that group.

MBK Partners Joins JIC Consortium to Acquire Toshiba

By Douglas Kim

It was announced today that MBK Partners will join a consortium led by Japan Investment Corporation (JIC) to acquire Toshiba Corp (6502 JP).
The sharp appreciation of the USD vs JPY could make a stronger case for JIC consortium (now backed by both Bain Capital and MBK Partners) to become the main bidder.
Including the premium for management rights, the acquisition price of Toshiba is expected to reach about 3 trillion JPY (US$21 billion).

Yamada Holdings: Time to Lock In Profits

We were lucky with our call on Yamada Denki (9831 JP) earlier this year as the stock outperformed Topix by around 30% in the first 9 months of 2022.
We were expecting to make more than 70%, but revenues have fallen short of our expectations.
With demand falling more than expected after a short boost during COVID through telework and online classes, we would look to cash in the gains before the 2QFY23 earnings release.

Itochu Advance Logistics (3493 JP): Offering Could Trigger Outperformance Vs Peers

By Janaghan Jeyakumar, CFA

Today after the close, small-cap logistics JREIT Itochu Advance Logistics Investment (3493 JP) (“IAL”) announced a follow-on equity offering to fund part of their recently-announced property acquisition.
The primary offer quantity is 70,773 units. In addition, there will also be an over-allotment quantity of 3,500 units. The total size of this offering could be roughly ¥10bn (~US$76mn).
Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

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Oct 04

Daily Brief Japan: Toshiba Corp, Nexon, Lasertec Corp, ASICS Corp, Pola Orbis Holdings, NTT (Nippon Telegraph & Telephone), Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Two Bits of Non-Bullish Toshiba News
Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
Lasertec (6920 JP): Accumulate for the Long Term
Asics (7936) | Nike Air Pockets
Japanese Cosmetics: Trading Around Q3 Earnings
NTT (Buy) – Investor Day Highlights Global Data Center Business
Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional

Two Bits of Non-Bullish Toshiba News

On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba’s announcement on the Privatisation process status implied some delay.
Today the shares are getting hit vs Peers. It’s still a problem of lots of moving parts.

Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry

By Douglas Kim

Saudi Arabia’s Savvy Games Group has a grand ambition to invest in the global gaming industry. It recently announced that it will invest US$37.8 billion in the global gaming industry.
There has been a sharp appreciation of the USD and Riyal versus JPY which could help to accelerate more M&As of Japanese game companies by SGG.
Saudi Arabia’s aggressive push to expand into the global gaming industry could aid this sector in the coming months as it could result in further major M&As in this sector.

Lasertec (6920 JP): Accumulate for the Long Term

By Scott Foster

The shares are down 58% from their January high. Our 3-year forecast brings valuations down to levels not seen since FY Jun-18.
The great surge in orders is coming to an end, but EUV lithography and SiC power devices should keep demand for Lasertec’s mask inspection systems at high levels.
The severity of the emerging semiconductor down-cycle and global recession remain to be seen, but the company’s long-term potential warrants another look.

Asics (7936) | Nike Air Pockets

NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).
ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk
ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now

Japanese Cosmetics: Trading Around Q3 Earnings

The latest rally in Japanese cosmetics, driven by improving domestic market conditions has strangely avoided two of the big names in the market, Shiseido Company (4911 JP) & Pola Orbis.
Although both of these names seem to offer big upside potential, we think Pola Orbis Holdings (4927 JP) has a significantly better risk-reward profile in the short term.
We would also be inclined to hedge the market risk using Kose Corp (4922 JP) on the short side as the name has the biggest downside potential.

NTT (Buy) – Investor Day Highlights Global Data Center Business

NTT’s global data center business has 6% market share with annual revenue growth of 20% that is twice the industry average
We have updated our model and valuation summary to reflect the transfer of NTT Ltd, which operates the GDC business, into NTT Data
Our valuation remains unchanged although we have lowered our target price ¥4,500 to ¥4,450 for payment of the H1 dividend. NTT remains a top pick in our coverage

Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional

With the revision of Corporate Governance Code in 2021 and its listing criteria on prime market, the groundwork has been laid to some degree to facilitate functioning of compensation committee.
Meanwhile, there are not many companies with voluntary nominating and compensation committees that disclose the authority of their nominating and compensation committees in their annual securities reports.
Many companies, even large companies, do not even have a compensation policy in place, indicating that individual director compensation is a much lower priority to consider.

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Oct 02

Daily Brief Japan: Toa Oil Co Ltd, Toyo Construction, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

BREAKING! Dog Loses To Mangalore – Idemitsu Kosan Does Its Deal for Toa Oil (5008)
Toyo Construction (1890 JP) – There’s Nuance in Them Thar Press Releases
What Initiatives Are Being Taken by Companies that Have Increased Valuations?

BREAKING! Dog Loses To Mangalore – Idemitsu Kosan Does Its Deal for Toa Oil (5008)

Friday post-close, Idemitsu Kosan (5019 JP) announced a deal to buy out subsidiary Toa Oil Co Ltd (5008 JP). Cornwall has agreed to tender, so it’s a done deal.
This is at ¥3,150/share, which is nearly 30% higher than the bid 21 months ago, where Cornwall bought enough to block, but it is a disappointing outcome for governance.
A clearly problematic tolling agreement with the parent, and what could be ¥100bn of excess land value are ignored. Minority investors get hosed. One of the problems of minority investments.

Toyo Construction (1890 JP) – There’s Nuance in Them Thar Press Releases

On Friday, post-close, there was a flurry of excitement as YFO put out a press release amending the start date of the planned Tender Offer to early November.
Not long after, there was another release by Toyo Construction (1890 JP) itself.
You have to read both for what they are. And as they say…. Get your programs here!

What Initiatives Are Being Taken by Companies that Have Increased Valuations?

Changes in Tobin’s q were closely related to increases in foreign ownership. Companies with increases in Tobin’s q reduced cash equivalents and total assets, suggesting they used assets more effectively.
No significant correlation was shown between Tobin’s q and board practices, but companies with large increases in Tobin’s q improved in % independent directors and the independence of compensation committees.
Companies with increases in Tobin’s q showed superior values in Key Actions: change in growth policy score, dividend policy score, cash holdings score, frequency of share retirements, AGM/IR disclosure scores.

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Oct 01

Daily Brief Japan: Softbank Group, iShares MSCI ACWI ex US ETF and more

In today’s briefing:

Softbank Group – Vision Fund Losses Accelerate into Quarter End
MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports — Bounce Potential

Softbank Group – Vision Fund Losses Accelerate into Quarter End

Valuation losses in the Vision Fund public portfolio are now approaching $5bn as the end of the quarter looms versus break-even as recently as 13 September
That may have influenced the level of VF staff reductions which press reports ut at 30% versus expectations of 20% last month
The discount remains elevated on tech weakness and that is unlikely to change

MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports — Bounce Potential

By Joe Jasper

Many major indexes have broken below critical supports, including MSCI ACWI (ACWI-US), EURO STOXX 50, STOXX Europe 600, and the DAX.
Odds suggest a bearish downside continuation, and a bearish outlook is appropriate as long as the YTD downtrend remains intact on the ACWI-US, MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
There is bounce potential given these broad global indexes are testing their respective downtrend channel supports, but the fact remains that they are in downtrends, a major problem longer-term.

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Sep 29

Daily Brief Japan: Eisai Co Ltd, Appier Group, Lawson Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Eisai Co (4523 JP): Positive Trial Result For Alzheimer’s Disease Drug- A Step Closer to Approval
Appier (4180) | Five Reasons to Remain Bullish
Lawson Confirms Seijo Ishii IPO
Criteria for TOPIX Components and Prime Market Listing Criteria Should Be Discussed Separately
Continuing Deflationary Cycle Will Not Raise Younger Generation’s Desire to Marry and Have Children

Eisai Co (4523 JP): Positive Trial Result For Alzheimer’s Disease Drug- A Step Closer to Approval

By Tina Banerjee

Eisai Co Ltd (4523 JP) has announced positive clinical trial results for its Alzheimer’s disease (AD) drug candidate, lecanemab. Lecanemab succeeded in slowing cognitive decline by 27%.
Importantly, the study shows that removal of aggregated amyloid beta in the brain is associated with a slowing of disease in patients, thereby opening innovation pathway for new treatment options.
Eisai aims to file for traditional approval in the U.S. and to submit marketing authorization applications in Japan and Europe by the end of FY23.

Appier (4180) | Five Reasons to Remain Bullish

Appier provides AI software that helps large enterprises to grow and monetize their customer base.
Using Appier’s AI analysis tools, brands can automate the way they interact with shoppers and create new business models more efficiently
Business is booming, it is sheltered from macro headwinds and the TAM is expanding aggressively as Appier expands into key US/EMEA markets

Lawson Confirms Seijo Ishii IPO

By Michael Causton

Lawson Inc (2651 JP) has confirmed it will list its upscale supermarket subsidiary, Seijo Ishii early next year.
Seijo leads in premium supermarket retailing and is growing as fast as the wealth market does, with plenty of room left to expand.
Seijo Ishii is now building its own production and import capabilities to increase originality and could begin to challenge even some of their larger rivals.

Criteria for TOPIX Components and Prime Market Listing Criteria Should Be Discussed Separately

The ongoing panel discussions also call for increasing TOPIX liquidity as a market need. However, TSE seems to think that it has completed the TOPIX reform for the time being.
TSE appears to be insisting that the criteria for TOPIX stock selection be consistent with the prime market listing criteria of 10 billion Yen in tradable market capitalization.
On the periodic replacement of TOPIX components, TSE isn’t looking at the urgent need of improving liquidity as issue to be addressed after the completion of the staged-weighting-reduction (February 2025).

Continuing Deflationary Cycle Will Not Raise Younger Generation’s Desire to Marry and Have Children

Even couples who have decided to get married are squeezing wedding expenses, indicating that financial reasons are overshadowing the factors that keep young people from getting married.
Real wages have continued to decline over the past 25 years, and real income per household is known to be lower in 2018 than it was in 1980.
The deflationary cycle that has carried out by procuring cheap labor from overseas under the guise of technical intern trainees and women as non-regular workers doesn’t seem to be sustainable.

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Sep 28

Daily Brief Japan: Shinsei Bank, Nidec Corp, US Dollar Index, Nintendo, Rakuten Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

The October TOPIX FFW Review and Shinsei Bank (8303)’s Future Float
About A Gajillion Yen of Index Flows At the Close
GMO Q2 2022 Quarterly Letter
Nintendo (7974) | Beware of Cycles
Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum
Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code

The October TOPIX FFW Review and Shinsei Bank (8303)’s Future Float

This is a hybrid insight on the upcoming TOPIX FFW Review to be announced 7 October, and the situation around Shinsei Bank (8303 JP).
Shinsei Bank is in “limbo” post control-acquisition by SBI Holdings (8473 JP) and an attempt to go over 50% should be in the works. When is not known.
The TOPIX FFW Review should see ¥2.0-2.2trln of one-way flow, and amongst that flow, a large sell on Shinsei to increase Real World Float by 60+% and 25d of ADV.

About A Gajillion Yen of Index Flows At the Close

Today is a day which happens twice a year in Japan.
It is Day Before Divs Go Ex- Day. Which theoretically means a fair bit of buying.
Nikkei 225 is pretty neutral. But there is a Nikkei 225 buy of Nidec Corp (6594 JP). TOPIX and other float market cap indices are a buy on the close.

GMO Q2 2022 Quarterly Letter

By Fund Newsletters

Equity investors in countries with overvalued currencies have two ways to lose and those with undervalued currencies have two ways to win.
Today’s strong USD looks, in the end, to be our currency and our problem.
Keep an eye out for dangerously destructive economic policies, but don’t use that as an excuse to avoid the asset class entirely.
The yen and euro are at their cheapest levels in decades and hedging emerging market equities would be an expensive proposition even if the currencies weren’t generally cheap versus the USD.

Nintendo (7974) | Beware of Cycles

Nintendo’s stocked recently popped on two positive developments – Splatoon 3 sales set a record for a Switch game & Nintendo Direct announced the release date of Legend of Zelda
Switch life cycle is coming to an end. The cycle had been extended by Covid and supply issues for Sony PS5
Nintendo’s stock is cheap, defensive and pays a reasonable dividend, but catalysts are running out and the stock will likely follow revenues lower

Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum

Rakuten’s Mobile losses have held back its share price over the last few years, but it is finally starting to show some improvements with costs shrinking sequentially in 2QFY22.
However, most investors seem to have overlooked this QoQ drop thinking that it is driven by the impact of seasonality.
With the loss of subscribers in the previous quarter seeming temporary, we are expecting revenue growth through ARPU expansion to more than offset Rakuten Inc (4755 JP) Mobile’s cost growth.

Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code