In today’s briefing:
- Canon (7751) Buyback Almost Done, TPX Selldown to Come = Trade Vs Ricoh or Basket
- Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity
- Seven & I Merger of FMCG Arms Signals Focus on Food – And Its All Good News
- TRYT IPO: Valuation Updates
- Fast Retailing (9983) | Exceptional Quarter
- Fast Retailing: Strong Performance in China & Korea, But Valuation Could Weigh on Price Performance
- Genda IPO – Has Weathered the Pandemic Better, Although Sector Doesn’t Seem to Be Growing Much
- JAL Aims for ¥12 Billion from New Online Mall
- TSE Should Shift Its Business Model from Growing Number of Listed Companies to Expanding Market Cap
Canon (7751) Buyback Almost Done, TPX Selldown to Come = Trade Vs Ricoh or Basket
- Canon Inc (7751 JP) announced a second buyback this fiscal year on 15 June. As discussed here previously, Canon buybacks are short, sharp, and sweet.
- The recent one should be done imminently (15 May start ended 13 July). 16 June start? (Note: Canon reports buyback results at 3pm local time, and did not report today).
- This time we have a double-setup with buyback ending and a large TOPIX sell on Canon on 28 July.
Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity
- Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
- It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good.
- Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.
Seven & I Merger of FMCG Arms Signals Focus on Food – And Its All Good News
- It will take a couple of years to see financial improvement but recent reforms suggest criticism of Seven & I’s inability to change may be increasingly unfair.
- The latest in-group merger further demonstrates Seven & I’s desire to refocus on food and FMCG.It also suggests that Seven & I may double down on divestment from non-food retailing.
- The share price may fluctuate but the outlook for domestic fundamentals are better than they have been for years.
TRYT IPO: Valuation Updates
- TRYT has priced its IPO at ¥1,200 per share, at the midpoint of the indicative IPO price range, at a market capitalisation and post-money EV of ¥120bn and ¥151.6bn respectively.
- In our previous insight, we compared the company’s implied trailing multiples with peer trailing multiples and concluded that TRYT’s IPO is overvalued at the above price range.
- In this insight, we have discussed our forecasts for Tryt Inc (9164 JP) and updated our valuation for the company.
Fast Retailing (9983) | Exceptional Quarter
- Another blow out quarter for Fast Retailing – beat and raise
- Fears (well, mine) of a miss in China were unfounded
- Still, Q3 results do nothing to change the view that this is one expensive stock
Fast Retailing: Strong Performance in China & Korea, But Valuation Could Weigh on Price Performance
- Fast Retailing (9983 JP) announced its 3QFY23 results today, surpassing the consensus OP estimate by approximately 10%.
- Notably, there was strong revenue growth for Uniqlo, including in recently underperforming markets such as mainland China and South Korea.
- Despite the strong set of results, it appears that Fast Retailing is overvalued as the stock is currently trading at a valuation of over 20.0x its medium-term FY27 OP target.
Genda IPO – Has Weathered the Pandemic Better, Although Sector Doesn’t Seem to Be Growing Much
- Genda Inc (9166 JP) is looking to raise around US$100m in its Japan IPO.
- Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
- In this note, we will undertake a peer comparison, share our earnings assumptions and discuss our thoughts on valuation.
JAL Aims for ¥12 Billion from New Online Mall
- Shopping may be a tiny fraction of Japan Airlines (9201 JP) business but every little helps.
- JAL has long offered a popular mail order catalogue selling premium products but has now converted its catalogues into an online mall.
- This means it can offer many more and new types of merchant and product, and create more connection with its customers.
TSE Should Shift Its Business Model from Growing Number of Listed Companies to Expanding Market Cap
- TSE, which receives listing fees from listed companies, has no choice but to take a negative attitude toward raising listing criteria that would reduce the number of listed companies.
- Behind many companies with stagnant P/Bs is the fact that managers lack stock price consciousness and companies with stock price stagnation for years eliminated and continue to be listing.
- In Japan, it is expected that industry restructuring, dissolution of parent-subsidiary listings, and going private will further increase through M&As, leading to a shakeout in the Japanese market.
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