Daily Brief Japan: Nexon, Rakuten, SCREEN Holdings and more

In today’s briefing:

Heads Up: Selling Event of a 30% Stake in NXC (Nexon Parent Company) Is Coming Soon
Last Week in Event SPACE:Tax-Loss Selling In Australia, China Conch/Anhui Conch, Canon, Rakuten
Screen Holdings (7735 JP): Positive Scenario Discounted

Heads Up: Selling Event of a 30% Stake in NXC (Nexon Parent Company) Is Coming Soon

As reported by a local news outlet (YTN), the Korean government will soon list the NXC stake on Onbid, the government’s online auction system (www.onbid.co.kr).
If the right buyer acquires the 30% stake in NXC, the family members may also sell their stake, leading to an unexpected price impact for Nexon (3659 JP).
Timing is critical, and the Korean government must aim to list the stake on Onbid as soon as possible, given its current revenue shortfall issue.

Australian tax-loss selling is a thing. Retail investors will take gains on things that run up in price, or get taken over, then look for losses.
The China Conch Venture Holdings (586 HK) / Anhui Conch Cement (600585 CH) ratio is at an all-time low. The implied stub is re-testing its all-time low.
Historically, Canon (7751 JP)‘s buybacks are aggressive. It may pay to observe market data to see when they are done. It may also pay to look at peer outperformance cycles.

The recent spike in the share price has discounted the positive scenario for sales and earnings, which is represented by management’s guidance for FY Mar-24.
The negative scenario – weaker than expected foundry demand, tougher than expected restrictions on exports to China – implies a significant downward revision to that guidance.
The share price is up 77.5% year-to-date and 36% since the end of April. That should be enough for now.

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