In today’s briefing:
- Canon Strikes Again. One Buyback Done, Another Begins. Shareholder Structure STILL Matters
- Takeda: Clinical Development of HUTCHMED’s Fruquintinib Progressing Well
- Fast Retailing: Opportunities for Long-Term Growth Overshadowed by High Valuation
- Watch for Changes in Proxy Voting by Domestic Institutional Investors on Shareholder Proposals
Canon Strikes Again. One Buyback Done, Another Begins. Shareholder Structure STILL Matters
- Canon Inc (7751 JP) has, as discussed in these pages, conducted 18 buybacks since the GFC. Every single one is ¥50bn. They are short and sharp. The longest? 23 days.
- The most recent took 18 days, and was only 15% of ADV, significantly lower than the average of the last dozen at 23-24%.
- This time, 3 days after the finished they launched another. The stock popped 5% the first day. There’s a reason for that. Shareholder structure STILL matters a lot.
Takeda: Clinical Development of HUTCHMED’s Fruquintinib Progressing Well
- HUTCHMED developed Fruquintinib has demonstrated positive results in a Phase III FRESCO-2 study which reduced the risk of death by 34% in patients with previously treated metastatic colorectal cancer.
- In addition, Fruquintinib also has been validated and accepted for regulatory review (for marketing authorization) by the European Medicines Agency (EMA) last week.
- In January 2023, Takeda Pharmaceutical (4502 JP) entered into an exclusive licensing agreement with HUTCHMED to further develop and commercialise Fruquintinib outside of Mainland China, Macau and Hong Kong.
Fast Retailing: Opportunities for Long-Term Growth Overshadowed by High Valuation
- Japan’s strong domestic demand and a rebound in China fuel optimistic growth outlook for Fast Retailing (9983 JP) in the short term.
- Furthermore, the markets such as Europe, North America, South East Asia, India, and Australia present promising long-term growth opportunities.
- However, Fast Retailing’s valuation is a cause for concern as it currently trades at a consensus FY27 OP of 20.0x.
Watch for Changes in Proxy Voting by Domestic Institutional Investors on Shareholder Proposals
- Many companies that cannot make significant investments in growth will reduce cash from their balance sheets through shareholder returns, and ROE+DOE will continue to reach high levels in FY2023.
- A company with a P/B of less than 1x for a long time should consider the option of going private after weighing the costs and benefits of being listed.
- Although most of the shareholder proposals will be rejected unless the foreign ownership is very high, whether the voting rights of domestic institutional investors will change remains to be seen.
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