In today’s briefing:
- KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)
- Kirin: Another Beat Could Turn Consensus from Pessimism into Optimism
- Disco (6146 JP): Not Immune to a Downturn
- Softbank Corp (Buy) – Q2 22 Results Reaction: PayPay Boost to Guidance and In-Line Results
KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)
- Strong but slightly disappointing Q2 earnings from Kawasaki Kisen Kaisha (9107 JP), and full-year forecasts are higher, but not as high as consensus.
- The company has announced a buyback, to be executed on ToSTNeT-3. Effissimo and Mizuho Bank will participate. Other crossholders could too.
- Strategy depends on whether you think they will. If they do not, post-buyback float drops sharply.
Kirin: Another Beat Could Turn Consensus from Pessimism into Optimism
- Consensus has dismissed Kirin Holdings (2503 JP)’s revised revenue and OP guidance by maintaining consensus 2022 revenue and OP estimates at ¥1,970bn and ¥149.8bn respectively.
- With the yen depreciating by an additional 5-15%, domestic business outperforming expectations and raw material prices falling, we expect another raise to Kirin’s annual guidance in 3Q22.
- We think a second upgrade to 2022 guidance can turn consensus from pessimism to optimism.
Disco (6146 JP): Not Immune to a Downturn
- The share price is at the top of its trading range, but management sees YoY sales and profit growth dropping to single digits this quarter.
- On a QoQ basis, guidance is for double-digit declines, but that is partly seasonal.
- The shares have been in a trading range for almost two years. As interest rates rise, economies slow and the semiconductor down-cycle continues, watch out.
Softbank Corp (Buy) – Q2 22 Results Reaction: PayPay Boost to Guidance and In-Line Results
- This was a good print with underlying financial/operational results in line with our expectations whilst sector reads on competition (benign) and sales to corporates (positive) matching KDDI’s report
- The company raised its operating profit forecast by ¥50bn which seems low based on the announced PayPay revaluation gain but could include cover for asset retirement costs
- An implied valuation of almost ¥1,000bn for the PayPay business overall will have bankers keen but that seems high versus our valuation and public comparables
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