In today’s briefing:
- Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains
- Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
- Softbank (9984 JP): Adding a Strengthening JPY to the Mix
- 2Q Follow-Up – Torex Semiconductor (6616 JP)
- 4Q Follow-Up – Japan Business Systems (5036 JP)
Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains
- On 28th Nov 2023, Toyota Motor (7203 JP) announced that it would sell around 9.4% of Denso Corp (6902 JP) in order to reduce its cross-shareholding.
- The shares hadn’t corrected much till our last note on 7th Dec 2023, they have since corrected by 6% .
- We have covered the deal background and deal dynamics in our earlier notes. In this note, we talk about the recent share price movement, as compared to prior deals.
Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
- On Monday after the close, trading house Yamazen Corp (8051 JP) announced a secondary offering where five bank shareholders would sell ~6.7mm shares (including greenshoe).
- It appears as if most of the banks are selling everything, making it about US$50mm, 50 days of ADV, and about 7% of shares out.
- But this should get swallowed pretty easily. The stock is DIRT CHEAP. The caveat? Crossholders and insiders will still own 45-48% post-offer.
Softbank (9984 JP): Adding a Strengthening JPY to the Mix
- In 1HFY23, a weak JPY – with it having depreciated from JPY132 to JPY149 to the USD – has actively supported the group’s valuation, contributing 12% to SoftBank group’s NAV
- The BoJ is looking to tighten monetary policy, whilst all other major central banks are set to cut rates; under this scenario, it is likely for the JPY to strengthen
- Softbank shares trade at a 51%+ stated NAV discount yet we believe that there is downside risk to at least Arm’s high valuations, which could tighten the discount significantly
2Q Follow-Up – Torex Semiconductor (6616 JP)
- Multiple signs are flashing that the reset phase of the silicon cycle is beginning to rebound.
- On November 28, WSTS (World Semiconductor Trade Statistics) announced its Fall forecast for 2023 and 2024, marking the first upward revision in the current down cycle, revising up both 2023 to a single-digit decline, and revising up 2024 growth to +13.1%, due to better-than-expected demand in Apr-Jun and Jul-Sep.
- Quarterly worldwide billings data shows the YoY percentage decline marked the bottom in Jan- Mar at -21.3% YoY, shrinking to only -4.5% in the Jul-Sep quarter.
4Q Follow-Up – Japan Business Systems (5036 JP)
- Among priority measures for FY24/9, JBS management is particularly focused on rolling out global licensing business for major enterprise customers, as well as strengthening cloud AI proposal capabilities.
- The strategic business alliance concluded with Crayon Group at the end of August enables JBS to offer global support services to customers outside the coverage of JBS overseas offices.
- The two partners will also collaborate on developing AI and security solutions mainly for Microsoft Products.
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