In today’s briefing:
- JAPAN PASSIVE: Who Owns What 2022?
- Fast Retailing (9983) | Time to Ditch the Shorts
- Eisai Co (4523 JP): Trying Another Luck for Alzheimer’s Disease; Strengthening Presence in Oncology
- Lawson: Profitability to Expand with Slowing Growth Investments
- Dissolution of Parent-Subsidiary Listing Is Just the Beginning for a Slow Decision-Making Company
JAPAN PASSIVE: Who Owns What 2022?
- 2022 Version of JAPAN PASSIVE: Who Owns What? where we break down the major (and minor) passive tracking indices and which category of investor owns how much of each.
- Even if you do not “play” index changes, understanding impact is important. Japan Exchange Group (8697 JP) entered Nikkei 225 in July 2020 after rising 30%. That was the top.
- Understanding the nature of the ownership and flows is crucial to understanding how to trade certain stocks.
Fast Retailing (9983) | Time to Ditch the Shorts
- We turn bullish on Fast Retail as the current quarter marks the bottom for China sales
- The company continues to surprise in its mastery of gross margins and operating costs
- China is key, but the US is emerging as a new (and profitable) growth driver
Eisai Co (4523 JP): Trying Another Luck for Alzheimer’s Disease; Strengthening Presence in Oncology
- Eisai Co Ltd (4523 JP) has been granted priority review by the FDA for its second Alzheimer’s disease drug candidate, lecanemab. Approval is expected in Q1 2023.
- Lecanemab could become the first anti-amyloid antibody to obtain full approval for Alzheimer’s disease in the U.S. Eisai is aiming for submission of lecanemab in Japan and EU this fiscal.
- Anticancer agent Lenvima is the largest selling drug of Eisai. Revenue from Lenvima increased 44% in FY22. The drug has taken top share in hepatocellular carcinoma market.
Lawson: Profitability to Expand with Slowing Growth Investments
- Lawson Inc (2651 JP)’s Q1 OP of ¥13.3bn (consensus: ¥10.6bn) seems to suggest that the company’s profitability is heading up following the upfront investments in store renovations.
- After beating consensus OP by more than 25% in Q1, we think the company is being overly conservative by maintaining the OP guidance around ¥10.0bn below the pre-COVID level.
- Based on the FY+1 OP to share price trend historically, our FY23 OP estimate of ¥63.0bn suggests that Lawson should trade at around ¥6,500 per-share, an upside of around 36%.
Dissolution of Parent-Subsidiary Listing Is Just the Beginning for a Slow Decision-Making Company
- On June 1, the Nikkei Shimbun published an article titled “Shareholder Proposal to Toyo Suisan, Seeking Explanation of Parent-Subsidiary Listing. I would like to discuss the issues in the article.
- Although some may have impression that this problem is on its way to being resolved due to dissolution of relatively large companies, in reality there are still many parent-subsidiary listings.
- For companies that are slow to make management decisions, the dissolution of parent-subsidiary listings may be just the beginning, so the resolution of the parent-subsidiary listing issue has just begun.
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