Daily BriefsJapan

Daily Brief Japan: NTT (Nippon Telegraph & Telephone), Toshiba Corp, Polaris Holdings and more

In today’s briefing:

  • NTT (9432 JP) – Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?
  • Toshiba – Tendering Now Recommended
  • Toshiba (6502 JP): Risk/Reward as Board Unconvincingly Recommends JIP’s Offer
  • Toshiba’s Board Buckles Under – As Things Stand, Board Supports and Recommends JIP Offer
  • Polaris Holdings (3010): Experiencing a Growth Renaissance


NTT (9432 JP) – Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?

By Travis Lundy

  • The Kishida administration is looking for funding sources for its two big objectives – 1) raising the birthrate, 2) raising defense spending by 60% in 5yrs to 2% of GDP.
  • The second is not new. It was in an “order” PM Kishida gave to FinMin Suzuki and MinDef Hamada last November. They need ¥48trln by end 2027. 
  • Yesterday, in an LDP meeting, the idea of changing the NTT Law so the government could sell more NTT shares was mooted. It’s worth thinking about.

Toshiba – Tendering Now Recommended

By Mio Kato

  • Toshiba announced today that its board had shifted stance on JIP’s upcoming tender and would recommend shareholders tender. 
  • The special committee will review its opinion on the tender offer and based on that the company will offer another opinion when the tender commences. 
  • Despite peers rising 13-30% since April an offer price increase still looks unlikely.

Toshiba (6502 JP): Risk/Reward as Board Unconvincingly Recommends JIP’s Offer

By Arun George

  • Toshiba Corp (6502 JP) Board now recommends shareholders accept Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share. The Board also effectively rules out a bump.
  • The Board unconvincingly recommends the offer in part on the premise that the IFA’s DCF valuation is unrealistic due to punchy forecasts and positive feedback from stakeholders.  
  • The Board fails to consider that the peers have materially re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers’ multiples.

Toshiba’s Board Buckles Under – As Things Stand, Board Supports and Recommends JIP Offer

By Travis Lundy

  • In March, when the JIP Offer for Toshiba Corp (6502 JP) was announced, the Toshiba Board supported the Offer but declined, at the time, to recommend it to shareholders. 
  • “[The price] has clearly not reached the level at which it is possible to recommend to general shareholders that they tender their shares at this time.” That was then.
  • 10 weeks later and the Board has a Revised Opinion. It has recommended the Offer for reasons which smack of resignation rather than appropriate deliberation. Investors beware.

Polaris Holdings (3010): Experiencing a Growth Renaissance

By Astris Advisory Japan

  • The waiting is over – Q4 FY3/2023 results highlighted 1) continued recovery in the hotel industry spurred by domestic and overseas traveler demand, 2) improvement in profit structure through business model transformation and increased accommodation demand has led to an increase in revenue, and 3) the completion of the acquisition of Red Planet’s business in the Philippines highlights the company’s expansion into overseas operations.
  • However, as the tourism industry in Japan is in a full-fledged recovery phase, the company believes it can achieve sustained growth.
  • Sound financial foundations – the company’s recapitalization strategy has been a success, and we maintain our view that there will be positive free cash flow generation in FY3/2024.

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