Daily Brief Japan: Exedy Corp, Infocom Corp, Kansai Paint, TSE Tokyo Price Index TOPIX, Rakuten and more

• On Monday 27 May, Aisin (7259 JP) announced an offering to sell ALL of its 36+% stake in equity affiliate Exedy Corp (7278 JP) for likely ¥40bn+. 
• Exedy announced a big buyback to go with it. It bought back 30% of the total on Weds morning, and that reduced the size of the offer. 
• I had expected “short-term games” but we haven’t really had them. Which is a bit weird. This update shows the details and dynamics (they differ).

• The entire saga here of Teijin Ltd (3401 JP)‘s disposal of its 55.1% stake in Infocom Corp (4348 JP) is being played out in the non-generally-public press. 
• There is reportedly a new piece of writing out late Thursday which suggests an approach.
• I wrote about the “meaning” of words in Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’ and now there is more nuance to parse.

• 24mos ago, Kansai Paint (4613 JP) announced a new MTMP, a large buyback, and plans to unwind cross-holdings. Big. 15mos ago a large secondary offering kicked off the festivities.
• Key was Toyota sold. Then KP could sell its Toyota shares – two-thirds of its cross-holdings. The offering was one to buy. A buyback followed. KP vs Nippon Paint doubled.
• KP offered a CB recently with the delta hedge done by TN-3. Now there is a HUGE new buyback. Really big. This gets rid of more cross-holders. And there’s more.

• Companies with higher ratings for Corporate Governance Practices (Board Practices and Key Actions) tend to have significantly higher profitability, market capitalization and valuations.
• Foreign ownership has the highest correlation with the Metrical CG score, suggesting that years of overseas investor engagement have improved the companies’ corporate governance practices and profitability.
• The pace of efforts varies with criteria of Corporate Governance Practices.  Companies with Metrical CG scores of over 70% are ahead in % independent directors and % female board members.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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