In today’s briefing:
- Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN
- Sakura Internet (3778) | Blossoming in the Cloud?
- Japanese Airlines – ANA’s Margin Outperformance Poses Big Questions for JAL
- Daiichi Kigenso Kagaku-Kogyo (4082) – Awaiting Solid Execution
Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN
- Now that the March 2024 Nikkei 225 Rebalance is decided, we have a model for the Sep 2024 Review. As previously discussed on Smartkarma, actual name changes get tough now.
- As of now, there should be two ADDs and two DELETEs. They might not occur. But there are two other situations which create interesting dynamics around big names.
- The dynamics of Fast Retailing and Tokyo Electron promise more fun than the actual name changes in September 2024. It impacts how you trade Nikkei vs TOPIX and tech internals.
Sakura Internet (3778) | Blossoming in the Cloud?
- Sakura Internet, a Japanese cloud provider, has seen a significant surge in stock price and market capitalization due to entry into AI cloud services.
- The company plans to invest in NVIDIA H100 GPUs for AI servers, expecting substantial demand but with uncertain revenue and profitability projections.
- Risks include concentrated ownership, lack of analyst coverage, potential shareholder pressure, and competition from larger cloud providers like AWS with advanced AI computing capabilities.
Japanese Airlines – ANA’s Margin Outperformance Poses Big Questions for JAL
- We refresh estimates for ANA and JAL, and highlight we think the strength of FY24 makes it difficult for ANA to avoid an earnings decline in FY25.
- However, ANA’s superior recovery to JAL poses bigger questions for JAL as it revisits its medium term plan on 21 March
- Our deep dive on margin management at each carrier suggests a revenue problem rather than a cost problem at JAL; but without revenue improvements, it will have to cut costs
Daiichi Kigenso Kagaku-Kogyo (4082) – Awaiting Solid Execution
- Q1-3 FY3/24 results were in line with company guidance, reflecting the strategic importance for DKK to scale its new growth initiatives.
- Ongoing positive developments related to semiconductor, secondary battery, and biomaterial applications were offset by weakness in electronics and the mature profile of the core automotive catalyst business.
- Operating a business model that is externally driven (such as FX movements and raw materials market pricing), the company has disclosed ROIC targets that coincide with its current 10-year plan for FY3/32.
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