In today’s briefing:
- JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)
- Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback
- TOPIX Inclusions: Who Is Ready (Feb 2024)
- Yaizu Suisankagaku Industry (2812 JP): Murakami Succeeds in Securing a New Tender at JPY1,350
- What Is A “Growth Market” Where Many Companies Do Not Grow in Market Cap or Raise Capital?
JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)
- The FT carries an article this AM saying Elliott Management have built a stake in Mitsui Fudosan (8801 JP) and has asked it to undertake measures to increase ROE.
- Measures requested apparently include a very large buyback and a demand the company sell down its stake in Oriental Land (4661 JP). The article is worth reading.
- Shares are up sharply on this news. The fund was in the news last year about this time regarding Dai Nippon Printing (7912 JP). I’d expect more noise to come.
Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback
- Isetan Mitsukoshi Holdings Ltd (3099 JP) on Friday announced Q3 results, a huge hike in H2 dividend (from ¥12/share guided to ¥20/share newly guided), and a buyback.
- 9mo Revenues were up 9.4%yoy (after +16.7% the previous year), OP +66.7%, and Net Profits +59.0%yoy through three quarters. Full-year Revenues, OP, and NP were all revised up slightly.
- The buyback is for up to 11mm shares, spending up to ¥15bn over the next 8 weeks. Looking at details of the shareholder structure is worthwhile.
TOPIX Inclusions: Who Is Ready (Feb 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- The TOPIX Inclusion events of Visional (4194 JP) and Furuya Metal (7826 JP) took place at the end of January and the price performances were mostly in line with expectations.
- Currently, there are no upcoming TOPIX Inclusion events that have been announced officially but there are couple of pre-event names that should be on your watchlist.
Yaizu Suisankagaku Industry (2812 JP): Murakami Succeeds in Securing a New Tender at JPY1,350
- Yaizu Suisankagaku Industry (2812 JP)/YSK has recommended Inaba’s tender offer of JPY1,350 per share, an 18.7% premium to J-STAR’s failed offer and a 9.8% premium to the last close.
- J-STAR’s offer failed as shares consistently traded above terms due to Murakami and 3D Investment Partners emerging as substantial shareholders. J-STAR extended the close but did not bump its offer.
- While Inaba’s offer values YSK below book value, Murakami is now supportive. Based on the irrevocables, the minimum acceptance condition requires a 57.2% minority acceptance rate.
What Is A “Growth Market” Where Many Companies Do Not Grow in Market Cap or Raise Capital?
- In addition to the large number of micro-caps among companies listed on the Growth Market, another problem is the lack of growth in market capitalization after IPOs.
- Many managers consider IPO to be the goal, and this is evidenced by the fact that not many companies raise capital at IPO and after listing.
- The government proposed raising the market capitalization criteria for IPOs and revitalizing the secondary market for pre-listed companies. TSE is likely to review its listing criteria as early as 2025.
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