Daily Brief Japan: Nissin Foods Holdings, Softbank Group, Japan Elevator Service Holding, TSE Tokyo Price Index TOPIX and more

• Inflation, having peaked at 4.3% in January 2023, has been on a downward trend throughout the year, with figures dropping to 2.8% in November and further to 2.6% by December.
• In this insight, we analyze the recent quarterly performance of Yakult Honsha (2267 JP), Nissin, and Seven & I, Japanese Consumer Staples companies discussed in our prior Smartkarma Original.
• While Nissin Foods Holdings (2897 JP) showcased excellent performance, Yakult and Seven & I Holdings (3382 JP) faced struggles in their recent quarters.

Softbank Group’s (SBG) Q3/23-24 results were positive as expected, with decent investment gains, a significant increase in NAV, along with stable and healthy LTV. The development came on the back of strong equity markets, at least in the US. Conversely, portfolio diversification has worsened severely. SBG intends to maintain share buybacks while actively making investments.

• Solid execution, high earnings visibility – Q1-3 FY3/2024 results demonstrated a continuation of positive developments in 1) sustained growth in maintenance and repair services, and 2) stronger than expected demand for modernization services.
• We believe JES is providing in-demand high-quality services driven by secular growth as building owners convert to reputable independent providers for cost management, and structural demand driving modernization of aging elevators.
• The company is on track to increase service capacity with the new JES Innovation Center Kansai (JIK) due to commence operations in April 2024.

• There are 167 companies of 1,784 companies in Metrical Universe (12/2023) with major shareholders holding over 50% stake, and 605 companies with major shareholders holding between 20% and 50% stake.
• TSE has requests listed parent companies, listed subsidiaries, and affiliates to disclose the significance of parent-subsidiary (affiliates) listings. This will further increase pressure for the dissolution of parent-subsidiary (affiliates) listings.
• Hitachi’s transformation into value-creating company, which once spawned numerous listed subsidiaries, has been a success story since it began full-fledged “selection and concentration” process through the dissolution of parent-subsidiary listings.