In today’s briefing:
- New Benefit One Deal Recalculated, More Benefit for All, Less for One
- Pasona Is Up Bigly. More To Come
- Kasumigaseki Capital (3498 JP) – An Offering Worth Examining
- KOSAIDO Holdings (7868) – Showcasing Growth Through Competitive Advantage
- Hamamatsu Photonics (6965 JP): Buy into Current Weakness
- EQD | Nikkei 225 WEEKLY Analysis
New Benefit One Deal Recalculated, More Benefit for All, Less for One
- The deal from Dai-Ichi Life for Benefit One Inc (2412 JP) appears language I did not get the first time around. The JPY 1800/share price is a proposed combined value.
- The deal would then lower the TOB price to Pasona, and share the benefits from that lower price to Benefit One minorities.
- That suggests more upside to Benefit One than I originally thought, and less upside (but still a chunk) to Pasona.
Pasona Is Up Bigly. More To Come
- After M3 Inc (2413 JP) announced an intention to buy 51.16%-55.00% of Benefit One Inc (2412 JP) via a partial Tender Offer at ¥1,600, Pasona Group (2168 JP) took off.
- Now Dai Ichi Life Insurance (8750 JP) has countered with an unsolicited ¥1,800/share Offer of Equity Value; TOB followed by a Benefit One buyback to mop up Pasona’s stake.
- The big news is how tax would be applied under Dai Ichi’s deal structure, which should see Pasona’s net proceeds significantly exceed those under M3’s Offer.
Kasumigaseki Capital (3498 JP) – An Offering Worth Examining
- Kasumigaseki Capital is a small cap consulting real estate speculator/developer. They have an interesting, aggressive model. People will recognise the model from pre-GFC but this one is structured better.
- The company had planned explosive growth and in October, brought growth plans forward and guidance way up. Now there is an offering to fund that growth.
- It appears to also be an offering to get a very large short position out of a risk of potential squeeze. For that, I expect this goes smoothly.
KOSAIDO Holdings (7868) – Showcasing Growth Through Competitive Advantage
- Capitalizing on growth opportunities – Q1-2 FY3/2024 results were ahead of company guidance, driven by the Funeral Services segment, as attendee numbers and refreshment sales grew, and new funeral hall openings saw higher than expected utilization rates.
- We believe this indicates the strong competitive positioning the company has as the market-leading funeral services operator in the Tokyo metropolitan area.
- With effective cost control in the Information and HR segments, the company has high earnings visibility and raised FY3/2024 company guidance, as well as increasing the planned dividend payout ratio to 32.5% from 30%.
Hamamatsu Photonics (6965 JP): Buy into Current Weakness
- The shares are down 27% from their May high, largely discounting excessive inventory and a decline in profits that is likely to continue through next March or June.
- Inventory adjustment, the revival of semiconductor, factory automation and medical related demand, plus the leveling off of depreciation, should enable a return to growth after that.
- Projected valuations are at the low end of their 10-year ranges. Buy into the current weakness, keeping in mind that 1Q results are likely to be weak.
EQD | Nikkei 225 WEEKLY Analysis
- The Nikkei 225 (NKY INDEX) closed the week down (CC=-2) at 32307.86, it’s OVERSOLD, WEEKLY and MONTHLY.
- Our hypothesis is that this pullback is about to end (it could last maybe another week, or maybe it’s already over…), and will be followed by higher prices.
- Go LONG the Nikkei 225 in the support area between 31000 and 32000, this coming week.
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