In today’s briefing:
- Ihara Science (5999 JP) – Here Comes The Bumpitrage
- Aeon Retail: Profits Again After 4 Years
- Kubota (6326) | Signs of Stability
- Look HD: Imported Fashion on the Up, Achieves Targets Early
- Companies with High ROA Have High Potential for Corporate Governance and Further ROA Improvement
Ihara Science (5999 JP) – Here Comes The Bumpitrage
- In my first piece, Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement I noted that the price was too low. I expected activist efforts.
- The price did not trade below the Tender Offer Price after it opened for trading. That was a sign this wasn’t going to go easy.
- This morning I am made aware of a letter from one of the “active if not activist” shareholders saying the price is too low. Hint: It is.
Aeon Retail: Profits Again After 4 Years
- Aeon’s main GMS arm, Aeon Retail, is on track to post a net profit in FY2023 after a 4-fold increase in OP in 1H2022.
- This is largely thanks to stronger sales and footfall and the success of efficiency measures introduced over the past few years.
- The improvements look sustainable and should lead to improved results for Aeon longer-term adding to the already good results from the drugstore, real estate and overseas businesses.
Kubota (6326) | Signs of Stability
- We turn bullish on Kubota. Macro indicators point to stabilization
- Management guidance for 2023 surprised the market, but we think it is realistic
- We think that quarterly results will be a catalyst to convince investors that profitability is improving
Look HD: Imported Fashion on the Up, Achieves Targets Early
- Distributors of overseas fashion have been battered by the collapse of the Yen, forcing higher prices.
- Look Holdings has managed to elicit strong growth through this crisis, resulting in a doubling in its share price, and is looking for more brands.
- The sharp rebound in both domestic demand for premium fashion and inbound tourism should result in better than expected returns for the importer-distributor.
Companies with High ROA Have High Potential for Corporate Governance and Further ROA Improvement
- Except for the fact that companies with higher ROA tended to have higher ratios of independent directors, there were no significant correlations with many board practices.
- Companies with high ROA are expected to increase ROA by reducing cross-shareholdings in future, and by improving cash allocation to achieve further growth and shareholder returns on growing cash flow.
- Companies with high ROA tend to have a high ratio of foreign shareholders, and these companies’ corporate governance is expected to gradually improve in the future, further increasing ROA.
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