Daily Brief Japan: Outsourcing Inc, Itoki Corp, Tosoh Corp, Industrial & Infrastructure Fund Investment, TSE Tokyo Price Index TOPIX, Restar Holdings Corporation, Kosaido, Adani Transmission and more

• I got a bunch of questions about my Outsourcing comments yesterday in Outsourcing (2427) – Earnings Delay Causes Consternation. 
• This piece is intended to clarify what I know (still limited), put parameters around what it might be, and draw lines in the sand which I might later erase.
• This may be nothing. But it may not be. I will try to answer the questions I received in a kind of Q&A format, and I hope that helps.

• Two days ago, Japanese manufacturer of ubiquitous office furniture Itoki Corp (7972 JP) announced salutary earnings/presentation(J) results, new MTMP(E) outlines, new shareholder return policy(J), yutai program(J), div hike(J), and buyback(J). 
• It was a big day. The stock went limit up on 14 Feb and is +12% today. +25% in two days.
• No single holder holds that much BUT the parameters tell you how this gets done. It’s interesting, but it is important to read the fine print below!

• BayCurrent Consulting, Open House, Sumitomo Chemical, Koei Tecmo Holdings, Kose Corp, Oji Holdings, Daiwa House Reit Investment and Tosoh Corp will have passive selling at the close on 29 February.
• Short interest has increased on all these stocks over the last few weeks and there has been big underperformance versus the Nikkei 225 Index and TOPIX Index.
• Cumulative excess volume has increased on the stocks and there will be short covering in the last week of the month.

• Industrial & Infrastructure Fund Investment (3249 JP) is looking to raise around US$341m in its primary follow-on offering to acquire 28 properties and an equity interest in a silent partnership. 
• The deal is a somewhat large one to digest, at 83 days of three month ADV and 16.2% dilution.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• % of independent directors continued a modest rise, and % of women board members still reached 10% level. 6 of 1,788 companies transitioned to Company with US type 3 Committees.
• Growth Policy score improved as more companies included ROIC in their KPIs, and AGM Disclosures score improved as the majority of prime market listed companies joined the voting platform.
• Scores related to the use of cash and IR Disclosures score also didn’t improve noticeably. Companies are not taking action on how to use cash to expand their corporate value.

• Environmental Energy boosting earnings – Q1-3 FY3/24 results were ahead of expectation, with the company upwardly revising FY3/24 guidance.
• Demand remained firm from the automotive sector for the Procurement segment, but trading remained somewhat mixed in the Semiconductor and Electronic Components.
• The positive surprise was the sustained high levels of profitability in the Environmental Energy segment; we have raised our earnings estimates for FY3/24 and beyond to reflect this as a sustainable business. 

• Solid earnings visibility – Q1-3 FY3/24 results were in line with recently revised company guidance, with the core earnings driver being the Profit-Generating Funeral Services segment.
• Positive trends seen in Q2 FY3/24 continued QoQ, with growth in services and high utilization rates from the newly expanded funeral halls.
• The legacy Information segment (print media) relatively underperformed, and the company is continuing cost improvement efforts.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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