In today’s briefing:
- The Hunt for the Japanese Laggards, Here Are 47 Attractive Companies
- HK Connect SOUTHBOUND Flows (To 19 Jan 2024); High Div SOEs Again BIG Buys as CBBC Hedging Hurts
- Dickson Concept (113 HK) Update: Trading at 40% Discount to NCAV, 8% Dividend Yield
- ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings
The Hunt for the Japanese Laggards, Here Are 47 Attractive Companies
- Tokyo Stock Exchange (TSE) has published the list of companies that are conscious of stock capital and share price; this will be a recurring monthly feat
- The initial compliance rate is encouraging and should continue to grow as peer pressure is relentless and doing nothing is not an option. The shake-up is happening
- We narrow down a list of companies that are the most compelling laggard opportunities based on their low price to book ratio (PBR) and strong balance sheet
HK Connect SOUTHBOUND Flows (To 19 Jan 2024); High Div SOEs Again BIG Buys as CBBC Hedging Hurts
- An ugly week for HK stocks but SOUTHBOUND flows showed decent net buying at HK$14.7bn on the week. High-Div SOEs continue to be in favour.
- What appears to have been strong net selling on the mainland combined with CBBC unwinds in Hong Kong related to mainland-linked stocks caused HK to have a baaaaad week.
- The separately published AH Monitor highlights a Really Tough Week. Hs got KILLED vs their A-share counterparts as CBBCs sold the HK names and National Team bought A-shares.
Dickson Concept (113 HK) Update: Trading at 40% Discount to NCAV, 8% Dividend Yield
- Dickson Concepts Intl (113 HK) reported the best result in its last six semi-annuals in H1 FY24, with profits rising 42% YoY.
- Net cash on the balance sheet was 9.6 HKD/share (vs. share price of 4.54 HKD/share). Gross cash was over 12 HKD/share.
- The company increased its interim dividend by 25% to 10 cents for the first time after four years (the expected full-year dividend is 37-40 cents).
ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings
- It’s no surprise that some companies consider the dissolution of parent-subsidiary listings as a swift and effective measure to raise ROE. However, not every listed subsidiary will be TOB.
- TOB of a high-profitability subsidiary can have significant impact on both the denominator and numerator of the parent company’s ROE because it uses more cash and will improve profit margins.
- Even if the “significance of parent-subsidiary listings” is disclosed, few investors believe that the listed subsidiary’s independence is fully ensured, and the dissolution of parent-subsidiary listings will eventually follow.
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