In today’s briefing:
- Marui (8252 JP) – Increases Size of Delayed-Start Buyback, Cuts Yutai
- Disco (6146 JP): YoY Growth Headed Toward Zero
- Komatsu (6301) | Back Test Suggests 56% Upside from Here
- Make Us Consider the Issues on Anti-Takeover in a Company with Reduced Stake of Founding Family
Marui (8252 JP) – Increases Size of Delayed-Start Buyback, Cuts Yutai
- Marui Group (8252 JP) was a long-suffering Japanese retailer with generally sub-standard locations and “different” customer base, and much of its income came from consumer credit.
- Since a decade ago, helped by the rise of foreign tourism income, Marui has been redeveloping itself. Michael Causton‘s insights are a great help to understanding the background.
- They are aiming at non-stuff retailing. Friday saw earnings, cancellation of the yutai program, a slight div hike, and an increase in the already large buyback program. It’s interesting!
Disco (6146 JP): YoY Growth Headed Toward Zero
- After beating guidance every quarter last fiscal year, Disco fell short in the three months to June.
- Management is guiding for the usual seasonal rebound in 2Q, but year-on-year growth rates are forecast to drop sharply – most likely on their way to negative territory in 2H.
- Disco has stopped disclosing orders data, reducing visibility for investors. 2Q results are likely to be the next catalyst. We see no reason to jump in now.
Komatsu (6301) | Back Test Suggests 56% Upside from Here
- At 1.1x PB, Komatsu’s stock price has already discounted a severe recession
- Our back test suggests a 56% return over 12-months from this level (100% hit rate)
- We see little risk of balance sheet impairment and believe the stock is trading at attractive valuations for long-term investors
Make Us Consider the Issues on Anti-Takeover in a Company with Reduced Stake of Founding Family
- Eisai, which had more than 30% of foreign shareholdings, had retained anti-takeover measures while incorporating the opinions of foreign shareholders, and has background of seeking reconciliation through enhancing its governance.
- While foreign shareholders had voted against Mr. Naito, president who retained anti-takeover provision, most Japanese shareholders had voted in favor, showing “support” him at the shareholders’ meeting.
- It’s likely that Eisai will retain “contingency” anti-takeover, but if the founding family will use it to retain its position, this isn’t consistent with the goal of maximizing corporate value.
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