Daily Brief Japan: Citizen Watch, Open House, Hisamitsu Pharmaceutical Co and more

In today’s briefing:

Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
Open House (3288-JP): Part 1
Hisamitsu Pharmaceutical (4530 JP): FY23 Result Ahead of Expectations; FY24 Guidance Initiated

Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways

In mid-February 2023, Citizen Watch (7762 JP) announced another buyback. It had averaged nearly two small buybacks a year for the past four years for a total of ¥10bn.
This new one was ¥40bn, which assuming a 20% share price jump was 12% of ADV for a year. Bigly! We got the 20% jump, then not much more.
But Citizen has been buying fiercely. In the first 25 days of trading they averaged 25.8% of volume and bought back 11.5% of shares out. There’s a story here.

Open House (3288-JP) is a niche homebuilder in Japan that has a special expertise in building/selling cheap detached homes in urban cities.
It participates in many segments of the residential property market, though earns the lions share (~60-65%) of its profits from the single-family homes business.
Despite its relatively modest profile in the investment community, the company has a ~US$4bn capitalization. It trades at ~1.3x 2023e P/B and ~6.8x P/E.

Hisamitsu Pharmaceutical Co (4530 JP) reported better-than-expected FY23 results, as OTC business revenue from the overseas market, specially Salonpas increased more than expected. OTC business contributed 54% of total revenue.
The company guided for FY24 revenue of ¥132B (+3% YoY), operating profit of ¥11.8B (+2% YoY), and net profit of ¥10.6B (-10% YoY). Dividend for FY24 is expected at ¥85/share.
With the resumption of outdoor events globally, Hisamitsu’s OTC business will be the main growth engine, going ahead. The company is on track to achieve 7th mid-term management plan target.

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