In today’s briefing:
- The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- BIG Fujitsu (6702 JP) Buyback – It’s a Lot, but Not, but Still Big
- Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market
- JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos
- Nidec (6594 JP): Buy into Current Weakness
- Quiddity Leaderboard JPX-Nikkei 400: End-Apr 2023
- Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29
The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
- The stock popped sharply. It isn’t “cheap” but it is under-owned, actively. And revenues up 20%yoy is a very good look.
- The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.
BIG Fujitsu (6702 JP) Buyback – It’s a Lot, but Not, but Still Big
- Fujitsu earnings are out. Forecasts are in, lighter than consensus.
- But there is a buyback. Looking at the way last year’s was executed is not that informative but it may be useful.
- This one is big enough to matter but not big enough to get excited about until we get confirmation.
Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market
- Kirin Holdings (2503 JP) is eyeing the vitamin game with a proposal to buy Blackmores at AU$95 per share, representing a 23.7% premium over the stock’s most recent closing price.
- Blackmores Ltd (BKL AU)‘s expertise in navigating China’s stringent regulations could be the missing piece for Kirin to gain access to the lucrative supplement market in China.
- Our main concern is Kirin’s history of unsuccessful overseas business acquisitions, particularly outside of its core beer business.
JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos
- Today, JVC KENWOOD (6632 JP) announced earnings, its forecast for this next year, and the outlines of its new Mid-Term Management Plan.
- That plan has the run to 2025 seeing sales rise slightly, Operating margins rising slightly. EBITDA margins at last year’s level or better, and Operating CF like last year.
- They also announced a buyback which they hoped would help them boost ROE and PBR to 1.0x as quickly as possible. The TSE pressure is working.
Nidec (6594 JP): Buy into Current Weakness
- FY Mar-23 results fell short of expectations and management is guiding for a weak 1H in the new fiscal year. This looks like a buying opportunity.
- The E-Axle business should reach break-even this year. Rising EV demand in China, Europe and elsewhere, plus general electrification, should take the overall Automotive operating margin to 10%.
- Projected valuations are attractive even if sales do not reach management’s ambitious target.
Quiddity Leaderboard JPX-Nikkei 400: End-Apr 2023
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-April 2023.
Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29
- This year, 26.4% of companies will hold AGMs on June 29. The trend will continue, with 1/4 companies holding AGMs on the day before the last business day of June.
- Electronic provision of shareholder meeting materials (3-4 weeks in advance) and electronic voting platforms for institutional investors progressed, mainly for prime market listed companies.
- The mismatch between supply and demand continues, with only 26.9% of companies providing English translations of business reports (materials for AGMs), a much-needed service for global institutional investors.
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