In today’s briefing:
- Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
- 18yrs Later, Shin-Etsu Chem Takes Out Sub Mimasu Semi (8155) – Cheap But Whatchagonnado?
- Japan – Increase in Shorts & Potential Passive Selling in May
- Yamaha (7951): Making Waves Again
- High Conviction 2024 – CyberAgent: Strong Recovery in Gaming While Media Biz Reports Profits
- Challenges in Using Cash, Even in Companies with 30%+ Female Board Members, with Excellent Practices
- Daiichi Sankyo (4568 JP): FY24 Ends on Strong Note; Initiates FY25 Guidance; ¥200B Buyback Announced
- Full Report – Frontier Management Inc. | 7038
Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
- Last October, activist Palliser Capital launched a campaign (presentation) on well-known “stub trade” Keisei Electric Railway Co (9009 JP) with a stake of about 1.6%.
- The proposal? Monetise a decent stake in Oriental Land (4661 JP), repurchase shares, and invest for growth. Keisei responded 6-8 weeks ago with a buyback and 1% OLC stake sale.
- I thought that was time to bail. That was it. But now, Palliser has re-engaged. Today a press release (Japanese/English) and a Letter to the Board.
18yrs Later, Shin-Etsu Chem Takes Out Sub Mimasu Semi (8155) – Cheap But Whatchagonnado?
- Shin Etsu Chemical (4063 JP), owner of a 44% stake in Mimasu Semiconductor Industry (8155 JP), has announced a Tender Offer to take out minorities in Mimasu.
- This is not surprising. They bought in 19 years ago, raised to 40+% 18yrs ago, then waited. Finally, we have a deal. But it’s too cheap.
- Shin-Etsu starts with ~45%, and crossholders and the chairman get it to 52%. Then they need a bit to get them to 67% but it should be straightforward.
Japan – Increase in Shorts & Potential Passive Selling in May
- There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in May.
- The deletion from passive portfolios will lead to a liquidity event at the end of May where passive trackers will need to sell multiple days of ADV.
- Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.
Yamaha (7951): Making Waves Again
- Yamaha releases new guidance on May 8 for its fiscal year ending March 2025. The previous Mid-term plan for OP was ¥68bn, while the consensus is looking for just ¥40.9bn.
- We expect ¥50bn, and think the shares are as much as 30% undervalued.
- Analysts have responded to multiple downward revisions to current year guidance, driven by collapsing Piano sales to China, but haven’t responded to cost cutting or growth in other product lines.
High Conviction 2024 – CyberAgent: Strong Recovery in Gaming While Media Biz Reports Profits
- CyberAgent Inc (4751 JP) reported 2QFY09/2024 results yesterday which shows further improvement across all three segments. Both 2Q revenue and OP beat consensus estimates, with OP by a huge margin.
- Newly released game titles have helped further recovery in Gaming business while Media segment reported its first-ever OP since the company began investing on AbemaTV.
- As we continue to reiterate, the worst is over for CyberAgent (CA) and we remain positive over the company’s growth prospects.
Challenges in Using Cash, Even in Companies with 30%+ Female Board Members, with Excellent Practices
- The two groups with the highest percentages of female board members (companies with over 30% and 20%-30%) are consistent with the characteristics of companies in which overseas investors primarily invest.
- Companies with over 30% female board members show superior values in many of Board Practices and Key Actions evaluation items. This may be due to improved engagement by overseas investors.
- Companies with no female board members have the lowest values in most Corporate Governance Practices items. Therefore, percentage of female board members indicates the seriousness of improving corporate governance practices.
Daiichi Sankyo (4568 JP): FY24 Ends on Strong Note; Initiates FY25 Guidance; ¥200B Buyback Announced
- Daiichi Sankyo (4568 JP) announced better-than-expected Q4FY24 result, with all key parameters exceeding guidance. Q4 revenue increased 30% YoY to ¥429B, driven by 76% YoY growth in Enhertu product sales.
- For FY25, Daiichi Sankyo guided 9% increase in revenue to ¥1,750B. Core operating profit is expected to increase 8% to ¥210B, while net profit to decline 5% to ¥190B.
- In addition to the dividend of ¥60 per share for FY25, Daiichi Sankyo has announced buyback plan of 55M shares (2.87% of issued shares) for ¥200B.
Full Report – Frontier Management Inc. | 7038
- Frontier Management (hereafter referred to as “the company”) is a consulting firm that operates in the three pillars of management consulting, M&A advisory, and business revitalization services, as well as an investment business that began in 2022.
- Founded by Mr. Shoichiro Onishi and Mr. Masahiro Matsuoka, both former employees of the Industrial Revitalization Corporation of Japan, the company has expanded its operations through proactive hiring.
- It is characterized by its lineup of specialists with diverse backgrounds and is able to solve a wide variety of management issues as a one-stop shop. Mr. Matsuoka retired as of the shareholders’ meeting held on March 27, 2024, leaving Mr. Onishi as the sole leader of the company.
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