Daily Brief Equity Bottom-Up: Advantest (6857 JP): AI Speculation Discounted and more

• Advantest has dropped back 11.5% from its recent high but is still up 43% year-to-date and up 2.3X from a year ago. Consolidation is likely to continue.
• Demand for High Bandwidth Memory (HBM) for use with AI processors could lift sales, profits and profit margins to new highs within the next two years.
• That could bring the projected P/E ratio down from 75.5x FY Mar-24 EPS guidance to 31x FY Mar-26 EPS in a favorable but not unreasonably optimistic scenario. 

• Q423 revenue growth, core margins, and expense control all looked strong
• Evolving revenue mix bodes well for long-term improvement in core margin
• Buyback update & Q124 guidance both +ive; appears cheap at 14x consensus

• Core business well positioned to benefit from the growth in the Japanese VC industry
• A good Partner for international firms looking to invest in Japan
• New direction on Capital Allocation is underappreciated by the market

• Jafco Co Ltd (8595 JP) is the largest specialist venture capital company in Japan.
• In FY03/23, JAFCO reported revenue of JPY14.1bn, an operating loss of JPY4.4bn, a recurring loss of JPY3.0bn, and net income of JPY40.6bn.
• JAFCO Group Co., Ltd. has announced a partnership with Nomura Asset Management Co., Ltd. to create a new publicly offered investment trust incorporating unlisted shares.

• T&D Holdings (8795 JP) , formed in 2004, is Japan’s first life insurance holding company.
• In FY03/23, ordinary revenues were JPY3.2tn, ordinary loss was JPY74.1bn, and loss attributable to owners of the parent was JPY132.2bn.
• T&D Holdings, Inc. has announced a change in its president.

• Monex Group Inc (8698 JP) started as online brokerage Monex, Inc. in April 1999 with CEO Oki Matsumoto and Sony Corporation as core investors.
• For FY03/23, the company reported full-year consolidated operating revenue of JPY79.3bn, net operating revenue of JPY73.3bn, operating profit equivalent of JPY4.8bn, pre-tax profit of JPY4.7bn.
• Monex Group, Inc. has announced that it will record a gain on fair value remeasurements under the equity method of accounting.

• Many are asking why KDDI would want to buy 50% of Lawson, Japan’s third biggest convenience store chain.
• Some more imaginative analysts suggest this could be just the first step towards KDDI merging with Rakuten in order to beat Amazon.
• The more likely future is an ecosystem to challenge Rakuten and LY Corp (Yahoo etc), starting with points and payments and evolving to other Fintech, e-commerce and health.

• Bank of Ningbo saw its margins decline dramatically from 1.79% to 1.55% from 3Q22 to 3Q23. This is of concern for earnings power in coming quarters.
• The bank’s loan-to-deposit ratio (LDR) is now down to 73% from 78% YoY which tends to act as a dampener on NIM and core income.
• Credit metrics are worsening with NPLs up from RMB7.9bn to RMB9.3bn YoY in 3Q23. This rise is not easily visible in the NPL ratio due to rising total loans.

• GSAT is a telecom infrastructure provider with two core businesses: Mobile Satellite Services and spectrum holdings
• Despite progress and validation from companies like Apple and Qualcomm, the stock price does not reflect the value of the assets
• Recent developments, including partnerships and leadership changes, indicate a promising future for GSAT, despite past challenges and skepticism from institutional investors

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Kumiai Chemical Industry Co (4996 JP) is an R&D-focused agrochemical manufacturing and marketing company with herbicides occupying a large portion of sales.
• Overall sales decreased as sales in the mainstay Agricultural Chemicals and Agriculture-Related Businesses fell YoY. Overseas sales accounted for 61.4％ of total sales.
• Operating profit decreased 49.3% YoY. Recurring profit fell 11.6% YoY, due mainly to a drop in earnings of affiliates under non-operating income, despite narrower foreign exchange losses.