In today’s briefing:
- TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool
- T&K TOKA (4636 JP): Bletcherous Bain Bump Doesn’t Even Reach Blandiloquent – Another Offensive Deal
- Japanese Laggard Opportunity #1: Kato Sangyo (9869 JP)
- T&K Toka (4636 JP): Bain Bumps to JPY1,410 as Dalton Agrees to Tender
- GENDA Lock-Up – Since Selling in the IPO, Midas Capital’s Remaining Stake Is up Another 60%
- EQD | Nikkei 225 – MONTHLY Rally Trajectory Analysis + Resistance Targets
TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool
- A few days ago, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】
- That translates to “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”. The TSE asked companies in Mar-2023 to formulate and disclose a policy.
- Some have. Some have not. The TSE made a list. They will update the list every month. However, their list is wholly inadequate, so we made it better.
T&K TOKA (4636 JP): Bletcherous Bain Bump Doesn’t Even Reach Blandiloquent – Another Offensive Deal
- I expected a blandiloquent but bletcherous bump from Bain. Discussed in T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain. We got bletcherous.
- But at a mere ¥10 uplift to ¥1,410, we did not get blandiloquent. That’s insulting. But as suggested in the first piece, there was NAVF Risk. And we got it.
- NAVF agreed to sell its 24+% to Bain at ¥1,410 in return for being able to buy 15% of the bidco, fully-levered (i.e. they roll in at minimal cost).
Japanese Laggard Opportunity #1: Kato Sangyo (9869 JP)
- We identified Kato Sangyo (9869 JP) (Kato) as the most attractive Japanese laggard opportunity due to its net cash balance sheet, undemanding PER, and attractive PEG and P/FCF ratios
- Management guides for 25% EPS growth in FY24 with only 15% net profit growth, implying a massive share buyback of ~JPY9 billion (5.4% shares in issue) with subsequent cancellation
- The combination of impending share buybacks, cancellation of existing treasury shares, and dividends equates to 10% shareholder returns in FY24
T&K Toka (4636 JP): Bain Bumps to JPY1,410 as Dalton Agrees to Tender
- T&K Toka Co Ltd (4636 JP) has recommended Bain’s revised tender offer of JPY1,410 per share, a highly disappointing 0.7% premium to the previous JPY1,400 offer.
- Bain’s marginal bump was due to securing Dalton’s support through the Nichii Gakkan Co (9792 JP) playbook. Dalton will tender its shares and make a 15% re-investment in the offeror.
- Shareholders representing a 60.82% ownership ratio, including share options, will accept, paving the way to success. With shares trading 4.7% above terms, it is time to move on.
GENDA Lock-Up – Since Selling in the IPO, Midas Capital’s Remaining Stake Is up Another 60%
- GENDA (9166 JP) (GENDA) was listed on the TSE on 28th July 2023. The IPO had been a mix of primary and secondary shares.
- Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
- Coming up for six-month lockup expiry are the pre-IPO shareholders, notably Midas Capital, and the firm’s executives and directors.
EQD | Nikkei 225 – MONTHLY Rally Trajectory Analysis + Resistance Targets
- The seasonal matrix indicates a possibility for the Nikkei 225 (NKY INDEX) to continue its current rally into April and that rally should end in May.
- The index at the moment is very overbought, we expect some form of WEEKLY pullback soon, please consult our previous insight to find the WEEKLY resistance levels.
- The pullback should be seen as a WEEKLY pullback within a larger, longer MONTHLY (multi-month) uptrend, i.e. an opportunity to buy and/or add positions at better prices.
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