In today’s briefing:
- StubWorld: Japex/Inpex, Amorepacific, Wynn, Shimao, Takara, Silicon Integrated/United Micro
- Keisei Electric (9009): The Chinese Are Back.
- Beenos: Ramps Up Buybacks
- SMFG – Least Achieved of FY24 Forecast, With Lowest ROE of Mega’s & Less JPY Bond Leverage
- The Fruit of TSE Market Reorganization Was the Creation of Prime Market with 600 Fewer Companies
- Recruit 1Q: Earnings Further Slow Down; New Pricing Model Seems to Impact HR Tech Further
- Restar Holdings (3156) – Remaining on Course with Business Transformation
- Q1 FY3/2024 Results Update – Japan Elevator Service Holdings (6544)
StubWorld: Japex/Inpex, Amorepacific, Wynn, Shimao, Takara, Silicon Integrated/United Micro
- For a change of pace, this insight briefly canvasses a clutch of Holdco’s trading at extreme levels.
- Preceding the chart-heavy insight are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Keisei Electric (9009): The Chinese Are Back.
- The moment of truth is here, the Chinese are finally coming back to Japan.
- Keisei Electric Railway Co (9009 JP) is one of the biggest beneficiaries of increased tourist arrivals in Japan.
- It is trading at 0.04 PEG, a very low valuation considering its potential for producing large growth rate.
Beenos: Ramps Up Buybacks
- Beenos revealed a ¥300m buyback plan in 2QFY23 and recently declared a ¥500m buyback in 3QFY23. This incremental buybacks is likely to continue due to disposal of incubator investments.
- The cash balance of 34% of total assets and over 49% of market cap, supports the ongoing buyback trend even if incubator divestments take longer than expected.
- Hence, we expect Beenos Inc (3328 JP)’s Holdco discount to move closer to the 20% mark, potentially resulting in a 75% upside in the short term.
SMFG – Least Achieved of FY24 Forecast, With Lowest ROE of Mega’s & Less JPY Bond Leverage
- SMFG achieved less of its FY24 profit forecast than peer megabanks; less upgrades
- SMFG reported a far lower ROE than peer megabanks & some worse financial metrics
- SMFG’s JPY bonds are only 0.88x of total equity; it is less leveraged than peer megabanks
The Fruit of TSE Market Reorganization Was the Creation of Prime Market with 600 Fewer Companies
- The number of companies that announced their intention to move to Standard Market has increased to 48, while most of 268 transitional companies are expected to move to Standard Market.
- Companies that cannot meet Prime Market listing criteria in 2026 can also move to Standard Market by undergoing examination, so they don’t need to announce their move in a hurry.
- Prime Market has slimmed down from TSE 1st Section by 600 companies, but it will remain market where many companies with market capitalization of about 50 billion yen are listed.
Recruit 1Q: Earnings Further Slow Down; New Pricing Model Seems to Impact HR Tech Further
- Recruit Holdings (6098 JP) reported 1QFY03/2024 results yesterday. Revenue and OP increased 0.9% and 1.9% YoY to ¥850.8bn (vs consensus ¥818.7bn) and ¥121.6bn (vs consensus ¥109.9bn) respectively.
- 1QFY03/24 revenues of ¥850.8bn and adjusted EBITDA of ¥165.9bn were higher than the company guided revenues and adj. EBITDA of ¥800-830bn and ¥140-160bn respectively.
- HR Tech segment’s revenues declined 9.1% and Recruit has shifted to a new pricing model for HR Tech which we think would further impact the segment’s earnings.
Restar Holdings (3156) – Remaining on Course with Business Transformation
- Focus maintained on growth, experiencing temporary headwinds – Q1 FY3/2024 results showcased the company’s strong execution in driving growth, with sales increasing by 6.2% YoY.
- Although there was a major improvement in profitability in the Environmental Energy segment, the core Semiconductor and Electronics Components experienced a negative of persistent demand weakness in China.
- There was also reduced spot demand, negative FX translation impact YoY and on inventory valuation, and allowance for doubtful debt related to a key customer.
Q1 FY3/2024 Results Update – Japan Elevator Service Holdings (6544)
- Accelerating growth profile – Japan Elevator Service (JES) made a strong start in Q1 FY3/2024, reporting high double-digit growth for both sales (+21.4% YoY) and operating profit (+35.7% YoY).
- It continues to gain market share in Maintenance & Repair with its quality and cost-efficient offering and is experiencing accelerating demand in its Modernization business with its structural tailwinds.
- While this may dilute the sales mix, the combination of cost management and rising engineer productivity is driving operational leverage.
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