In today’s briefing:
- Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
- Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100
- Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).
- Only Seriousness of Shareholder Return Can Judge Change in Management in 1 Year After TSE’s Request
- Golf Digest Online (3319 JP) – 1Q FY24/12 Profits Down YoY Is Temporary
Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
- In mid-January 2024, 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】. But they did not actually shame.
- The TSE list shows which companies have disclosed a policy/consideration. But no data/links. We are weeks ahead of the TSE and we have all the links (and the shame list).
- We created a tool to name everyone, show their reports, provide links to every document, and now a new tool. Put in a name, see the difference between the Old/New Reports.
Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100
- Nagatanien Holdings (2899 JP) recommended a Marunouchi Capital-sponsored MBO at JPY3,100, a 38.4% premium to the undisturbed price.
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The offer period is from 4 June to 16 July.
- While not a knockout bid, the offer represents a five-year high and requires a 58% minority acceptance rate. This is a done deal with payment commencing from 23 July.
Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).
- MitCorp – the largest shareholder – and the Nagatani family – today announced an MBO where they will buy a classic ubiquitous brand at an Adjusted EV of 5.4x EBITDA.
- The equity check appears to buy at ~2.5x Mar27-29 average FCF but they probably have 50% of the shares in the bag. Retail, or who they sell to, matter.
- There is room for a noisy activist to get involved here and disrupt the retail ownership. But there are very few of those around. And none in it now.
Only Seriousness of Shareholder Return Can Judge Change in Management in 1 Year After TSE’s Request
- Since companies with higher foreign ownership have better profitability and corporate governance practices, it can be inferred that the overseas investor engagement has improved the company’s profitability and corporate governance.
- If the company’s management has changed to value-creating management through the overseas investor’s engagement, the company isn’t expected to change to value-creating management in just one year after “TSE’s request”.
- Many companies that do not receive overseas investor engagement have more room for improvement in aspects of management strategy execution and will be evaluated over time for improvements in profitability.
Golf Digest Online (3319 JP) – 1Q FY24/12 Profits Down YoY Is Temporary
- Numerical targets for FY24/12 initial guidance are shown in the exhibit below.
- Despite initial guidance for consolidated OP of ¥800mn, an increase of ¥420mn (+110.3% YoY), the Company cites conservatively forecasting non-operating and extraordinary items such as interest expenses, restructuring costs, and exchange rate fluctuations for initial guidance for ordinary profit break-even and a net loss of (¥600mn) for profit attributable to owners of parent (see P2).
- Key initiatives and expectations for 2024 include: 1) in Japan, aim to provide more data-oriented and efficient services (online golf equipment sales GPM improving after 4Q inventory adjustment), 2) GOLFTEC golf lesson cash sales set to improve on coach issue addressed and marketing campaigns such as “7 shots better,” and 3) expand SkyTrak sales distribution channels.
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