In today’s briefing:
- Outsourcing (2427) – Earnings Delay Causes Consternation
- Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come
- JSR (4185) – Updated Information in SUNY Lawsuit, and Other Developments
- Toei Animation Placement – Looks Ripe for a Correction
- Outsourcing (2427 JP): Keep Calm or Worry About the Earnings Delay?
- Toei Animation (4816 JP): A US$550 Million Secondary Offering
- Freee: New Invoicing System Helps Onboard Corporate Clients Though Losses Widen
- Sanyo Trading (3176) – Aiming for Growth and a Strong Start to FY9/24
- Goldwin: Sustainable Records
Outsourcing (2427) – Earnings Delay Causes Consternation
- Originally, the MBO for Outsourcing Inc (2427 JP) was expected to get launched end-January 2024. A late-ish filing with regard to the EU’s Foreign Subsidies Regulation regime prompted a delay.
- Yesterday Outsourcing announced a delay its earnings release by 3 business days, the delay “procedures related to impairment losses are continuing.”
- Outsourcing shares are down hard on this. -1.5% as I write. I examine.
Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come
- In December 2021, when companies were required to file statements with the TSE as to plans to meet continuing listing requirements, Toei Animation (4816 JP) had a Plan.
- That plan? Get from a then-current 15.5% Tradable Shares level to 25.0% by 31 March 2025. That was “OK” though later, the TSE asked companies to speed it up.
- Today, shareholders Sony and Bandai Namco announced an equity offering to sell down up to 4.48mm shares in a domestic+overseas offering. It’s big, heavy, and there is more to come.
JSR (4185) – Updated Information in SUNY Lawsuit, and Other Developments
- 12 days ago, JSR Corp (4185 JP) announced that former research collaboration partner Research Foundation of the State University of New York had sued in an intellectual property ownership dispute.
- I wrote about it here to the extent I could. Since then, more information has become available, or available to me. Some details on the case. Some on lawyers.
- Since then JSR has reported earnings with unchanged forecast, and major pure play comp Tokyo Ohka Kogyo (4186 JP) today reported earnings; the stock popped 10+% to an all-time high.
Toei Animation Placement – Looks Ripe for a Correction
- Bandai Namco (7832 JP) and Sony Pictures are looking to raise up to US$525m via selling around 10.66% of Toei Animation (4816 JP) (TA).
- The purpose of the placement is to unwind some of the cross-shareholding, as well as help TA to maintain its listing in the Standard Segment.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Outsourcing (2427 JP): Keep Calm or Worry About the Earnings Delay?
- Outsourcing Inc (2427 JP) has delayed the announcement of its 4QFY2023 results from 14 to 19 February as the impairment loss accounting is yet to be completed.
- Outsourcing has a history of impairments, resulting in missed forecasts, which suggests a weak 4Q. The concern is that a weak 4Q could force Bain to trim its JPY1,755 offer.
- Persol Holdings (2181 JP) guidance cut today suggests a weak 4Q reflects near-term industry weakness rather than company-specific issues. The weak 4Q is a valuable cover to justify the less-than-stellar offer.
Toei Animation (4816 JP): A US$550 Million Secondary Offering
- Toei Animation (4816 JP) has announced a secondary offering of up to 4.5 million shares (including overallotment). Bandai Namco Holdings (7832 JP) and Sony Corp (6758 JP) are the sellers.
- The offering will allow Toei Animation to maintain its listing in the TSE Standard Market and enable Bandai Namco and Sony to reduce and liquidate cross-shareholdings.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 27 February and 4 March (likely 27 February).
Freee: New Invoicing System Helps Onboard Corporate Clients Though Losses Widen
- Freee KK (4478 JP) reported 2QFY06/2024 results today. 2Q revenue increased 35.1% YoY, however, both revenue and operating losses fell below consensus estimates.
- As expected, upfront investment in selling and marketing and personnel expenses prior to the new invoicing system led to an increase in operating losses.
- However, these investments have helped the company acquire a large no. of corporate paying users and we expect losses to decline going forward.
Sanyo Trading (3176) – Aiming for Growth and a Strong Start to FY9/24
- Q1 FY9/24 results were at a record high for the company for a first quarter period, with the company benefitting from stronger-than-expected demand from the auto sector, together with a forex tailwind from a weak Japanese yen benefitting the Overseas Subsidiaries segment; this business saw a major uplift in profitability YoY with positive trading conditions in the Americas and Thailand for exported Japanese goods.
- Demand also remained firm in the company’s specialist areas of expertise such as bio-related and feed-related areas, and geothermal equipment.
- The company has maintained FY9/24 guidance, which indicates some expectations of auto demand normalizing from pronounced levels in Q1 FY9/24.
Goldwin: Sustainable Records
- Goldwin has had a remarkable run of record sales and profits, a beneficiary of the continuing growth in the outdoor market as well as its own retail strategy.
- Although much of its success has come from The North Face, Goldwin is determined to become a more diversified – and global – sports business.
- When we first recommended the stock it was around ¥5,000 and rose to a peak of ¥12,600 but is now about ¥9,000. Will it grow again? We think so.
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