In today’s briefing:
- KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!) Redux (Another Buyback in H2 Possible)
- Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question
- Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked
- Paycloud Holdings (4015 JP)
KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!) Redux (Another Buyback in H2 Possible)
- In May 2023, KDDI Corp (9433 JP) announced a ¥300bn buyback program, did nothing for two months, then announced a Tender Offer Buyback to buy shares from Toyota.
- Toyota had increased its stake years before, then KDDI bought back shares from others, so Toyota was backing its ownership down. I discussed the relationships, history, etc, here.
- This year, KDDI announced Friday with earnings that is buying back another large stake from Toyota.
Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question
- Sumitomo Chemical issued new guidance in-line for 3/24 and xx% ahead of consensus for 3/25 EBIT, yet, the shares promptly declined by 10%.
- Traders were probably spooked by the company’s booking of ¥340bn in impairments that was ¥200bn more than published consensus, but we argue that this was more than already priced in.
- The only reasonable explanation for the reaction is that the market doesn’t believe the new guidance for 3/25. This could prove to be a huge mistake.
Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked
- MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
- Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
- Consolidation of the share price is likely to continue until orders and profit trends are confirmed.
Paycloud Holdings (4015 JP)
- 1H Results: On April 12, 2024, Paycloud Holdings Inc. announced its 2Q FY2024/8 earnings, its first earnings announcement since becoming a holding company and changing its name on March 1, 2024.
- In 1H FY2024/8, the company reported net sales of ¥1,990 mn, adjusted EBITDA of ¥226 mn, and operating profit of ¥86 mn. It had an irregular 5-month accounting period in 1Q FY2023/8 that included the July-August 2022 earnings following a change in the accounting period of the former Valuedesign Inc., which was merged with the company.
- As a result, the company’s earnings summary for 1H FY2024/8 show sales being down 12% YoY, adjusted EBITDA up 2% YoY, and operating profit up 237% YoY.
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