Daily Brief Japan: CyberAgent Inc, Rakuten Group , Outsourcing Inc, TSE Tokyo Price Index TOPIX and more

• CyberAgent Inc (4751 JP) reported 1QFY09/2024 results yesterday. Revenue increased 15.2% YoY with OP increasing 12.4% QoQ, and beat consensus estimates by a huge margin.
• All three business segments have shown strong improvement, with newly released gaming title  “Jujutsu Kaisen Phantom Parade” driving growth for Games business.
• CyberAgent’s (CA’s) share price moved up by about 4% following earnings announcement and seems that the worst is over for the company.

Rakuten Group has launched a USD 1.8 bn 144A/RegS three-year notes offering with a coupon of 11.25% at 97.83, yielding 12.125%. The deal was upsized from USD 1.0 bn. Proceeds from the transaction will be used to fund a concurrent tender offer for the company’s two USD 2024 bonds.

The tender offer is for the 10.25% 2024s (USD 950 mn outstanding) and 3.546% 2024s (USD 800 mn). The tender cap is set at the size of the notes offering, which would be enough to buy back all the outstanding 2024 bonds. The tender consideration is USD 1,006.76 per USD 1,000 principal for the 10.25% ’24s, and USD 956.75 for the 3.546% ’24s. The early tender consideration is USD 30 per USD 1,000 principal.

• On 31 January 2024, Outsourcing Inc (2427 JP) put out a notice to the Exchange regarding progress towards Execution of the Tender Offer by Bain.
• All preconditions for the commencement of the Tender Offer except for the acquisition of clearance of EU Regulations on foreign subsidies affecting the EU market. 
• This process appears to be “as expected” given Outsourcing’s multinational presence and the new Foreign Subsidies Regulation which went into effect in the EU 28 weeks ago.

• The fact that only 7% of companies disclosed their cost of capital disappoints investors who had hoped that the “TSE request” would change management’s mindset to become more share-price conscious.
• The average ROE of listed companies declined slightly. This indicates that they haven’t been able to find effective investments to raise business profitability and that shareholder returns have been inadequate.
• The ROE trend does not indicate a significant change in management’s mindset, so this will be a major issue if the stock price moves lower to the June AGM season.