In today’s briefing:
- Lasertec (6920) – The State of Things May Be Different Than You Think
- Nidec (6594) | Big Revision Down to E-Axle Sales
- Rakuten Securities IPO: The Bull Case
- Yakult: Yakult 1000 Could Deliver a Surprise Yet Again
- Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals
- United Arrows Plans to Double Sales in 10 Years but 2x OPM May Come Sooner
Lasertec (6920) – The State of Things May Be Different Than You Think
- Lasertec (6920) is a shoo-in for Nikkei 225 inclusion in September according to the quantitative analysis. The amount to buy is a small multiple of ADV, making the inclusion “unimpressive.”
- It is probably worth looking at the details of ownership, of volume, and of relationship to other stocks in the same general sector.
- It is also worth thinking about flow channels (stock up or down changes flows) and forward fundamental calculations.
Nidec (6594) | Big Revision Down to E-Axle Sales
- Nidec reported strong Q1 results – operating profit of ¥60.2 billion (+35% YoY), significantly above Street expectations of ¥45 billion
- The big positive was a rebound in profitability following successful structural cost cuts last year. The key negative is a cut to unit shipments for key growth driver, E-axles.
- We remain bearish for now given valuation of 25x EV/EBIT. We are not sure that the new growth driver in Motion & Energy will offset lowered expectations for EVs.
Rakuten Securities IPO: The Bull Case
- Rakuten Securities (RAKUSEC JP), a leading Japanese online brokerage, seeks to raise US$500 million. Rakuten Bank (5838 JP) (80.01%) and Mizuho Financial Group (8411 JP) (19.99%) are its shareholders.
- Rakuten Securities has grown its business by pursuing a low-cost, high-volume strategy. It has the largest number of non-consolidated securities accounts among Japanese securities companies.
- The key elements of the bull case rest on rapid customer growth, low-cost fees, market share gains, synergies with the Rakuten ecosystem and improving profitability trends.
Yakult: Yakult 1000 Could Deliver a Surprise Yet Again
- Market expectations for Yakult’s 1QFY24 earnings seem weak, with consensus looking light, and the share price currently lingering near the lower boundary of the minus 2x trend channel.
- Therefore, we believe that even a minor earnings beat next week could potentially drive Yakult Honsha (2267 JP)‘s share price back up to the ¥10,000 level.
- We anticipate that Yakult 1000 has the potential to drive that earnings beat, as it is projected to grow by as much as 65% YoY this quarter.
Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals
- Tryt Inc (9164 JP) raised around US$344m in its Japan IPO. The IPO consisted of 100% secondary shares.
- Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
- In this note we will talk about the trading dynamics.
United Arrows Plans to Double Sales in 10 Years but 2x OPM May Come Sooner
- United Arrows (7606 JP) is a bellwether retailer for the premium fashion sector.
- Its slow initial recovery after the pandemic worried many but the last year saw a solid improvement, even if sales are still well below the peak.
- Following rationalisation, the fashion firm has now put in place plans to double sales to ¥250 billion in the next decade and we expect a return to 10% OPM.
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