In today’s briefing:
- Japan – Increase in Shorts on Some Interesting Stocks
- Merger Arb Mondays (07 Aug) – JSR, ITOCHU, Allkem, Origin, Symbio, Pacific Current, United Malt, MPI
- Weekly Deals Digest (06 Aug) – Toshiba, E-Guardian, ITOCHU, Allkem, Symbio, Pacific Current, MPI
- Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer
- Astellas Pharma (4503 JP): Mixed Q1 Result; FY24 Profit Guidance Cut; New Drug Approval
- [Z Holdings (4689 JP, SELL, TP JPY 340) Target Price Change]: Continued Impact of Chinese E-Commerce
- Trucker Call for End to Free Shipping Will Help Relieve Pressure on Yamato
Japan – Increase in Shorts on Some Interesting Stocks
- Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
- The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
- Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.
Merger Arb Mondays (07 Aug) – JSR, ITOCHU, Allkem, Origin, Symbio, Pacific Current, United Malt, MPI
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), Chindata Group (CD US), Estia Health (EHE AU), Invocare Ltd (IVC AU), ENM Holdings (128 HK), Eoflow (294090 KS), JSR Corp (4185 JP).
- Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Penguin International (PBS SP), Itochu Techno Solutions (4739 JP), Oishi Group PCL (OISHI TB), Kenedix Retail REIT (3453 JP).
Weekly Deals Digest (06 Aug) – Toshiba, E-Guardian, ITOCHU, Allkem, Symbio, Pacific Current, MPI
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK) and Lianlian DigiTech (2104619D CH) IPOs.
- Event-Driven developments – E Guardian Inc (6050 JP), Itochu Techno Solutions (4739 JP), Toshiba Corp (6502 JP), Symbio Holdings (SYM AU), Metro Pacific Investments Co (MPI PM).
Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer
- Yaizu Suisankagaku Industry (2812 JP)/YSK has recommended J-STAR’s tender offer of JPY1,137 per share, a 35.0% premium to the undisturbed price (4 August).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.67% ownership ratio.
- YSK is cash rich, and the offer is below book value. The tender offer is a reasonable alternative in challenging trading conditions that have slashed operating margin targets.
Astellas Pharma (4503 JP): Mixed Q1 Result; FY24 Profit Guidance Cut; New Drug Approval
- Astellas Pharma (4503 JP) reported Q1FY24 results, with revenue beating and operating and net profit missing consensus. Revenue declined 2%, while operating and net profit increased 17% and 13%, respectively.
- Astellas has reiterated FY24 revenue guidance of ¥1,520B, while reduced operating profit guidance by ¥29B to ¥259B (+95% YoY) and net profit guidance by ¥23B to ¥204B (+106% YoY).
- On August 4, Iveric Bio has received FDA approval for Izervay for the treatment of geographic atrophy secondary to age-related macular degeneration, which impacts approximately 1.5M people in the U.S.
[Z Holdings (4689 JP, SELL, TP JPY 340) Target Price Change]: Continued Impact of Chinese E-Commerce
- ZHD reported F1Q/C2Q23 top-line, non-GAAP operating profit and non-GAAP net profit in-line, in-line and (32%) vs. consensus, respectively. Earnings miss was driven by wider tax expense.
- ZHD’s B2C e-commerce platform GMV continued to decline, which we suspect is due to the continued impact of STAT, especially Shein.
- We maintain SELL and raise TP to JPY 340 due to improved ads-spending, but we expect the transient ad spend increase to be offset by loss of ecommerce customers.
Trucker Call for End to Free Shipping Will Help Relieve Pressure on Yamato
- Transport industry officials want to ban ‘free shipping’, forcing customers to pay for all deliveries and even redeliveries.
- The aim is to reduce demand in time for new rules on driver overtime due to come into force next year and should relieve pressure on Yamato and others.
- There is also more collaboration to reduce costs and labour: Yamato has scrapped its small packet business entirely, passing customers on to Japan Post.
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