In today’s briefing:
- StubWorld: Pasona’s Expanding Cash Pile
- Aeon/DCM/Keiyo Deal Changes on DCM TOB for Keiyo – Watch for Market Impact
- Silicon Wafers. SUMCO Sounds The Alarm As Inventory Continues To Climb
- Freee 1Q: Earnings Beat; Qualified Invoice System to Further Drive Earnings
- Terumo Corp (4543 JP): Record High Revenue and OP in H1FY24; Better Profitability Expected in H2FY24
- Onward on the March: More Profit from Japanese Apparel Firms
- Why Should Policy Shares Be Viewed as Including Deemed Shares Held?
StubWorld: Pasona’s Expanding Cash Pile
- A double dose of StubWorld this week as Pasona Group (2168 JP) finally takes the hint to sell (if not exit altogether) its holding in Benefit One Inc (2412 JP).
- Preceding my comments on Pasona/Benefit One are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Aeon/DCM/Keiyo Deal Changes on DCM TOB for Keiyo – Watch for Market Impact
- DCM Holdings (3050 JP) and Keiyo Co Ltd (8168 JP) and Aeon Co Ltd (8267 JP) signed capital and business tie-up agreements 30+yrs ago. Recently, DCM bought Keiyo.
- Aeon got some money from this and has decided to put that money back into DCM shares.
- That changes both the current dynamics and future shareholder structure. And that leads to interesting questions about the outcome.
Silicon Wafers. SUMCO Sounds The Alarm As Inventory Continues To Climb
- Global silicon wafer area shipments declined 10% QoQ in Q323 but customer inventory remains at historical highs and is showing no signs of declining
- SUMCO’s Operating Profit forecasted to fall by ¥8.6 billion QoQ in Q423
- The company vowed to make “substantial” production cuts in a bid to bring their inventory situation under control.
Freee 1Q: Earnings Beat; Qualified Invoice System to Further Drive Earnings
- Freee KK (4478 JP) ’s 1QFY06/2024 results beat consensus estimates. Introduction of qualified invoicing system in October has resulted in strong corporate user growth for the company.
- Upfront investment in selling and marketing has helped freee onboard a large no. of corporate clients prior to the introduction of the new invoice system.
- Freee expects selling and advertising spending to decline going forward which should help the company reach break-even in FY06/2025E.
Terumo Corp (4543 JP): Record High Revenue and OP in H1FY24; Better Profitability Expected in H2FY24
- In H1FY24, Terumo Corp (4543 JP)‘s revenue increased 10% YoY to ¥443.9B, mainly driven by a 13% YoY growth in C&V business, due to strong global demand of catheter products.
- Revenue from TIS (catheter) segment reported 12% YoY growth to¥176.5B, driven by a 12% YoY growth in overseas business, with EU and China being the main drivers.
- Terumo has reiterated FY24 guidance, which implies significant improvement in operating profit in H2FY24 due to the realization of the full effect of global price revision and cost cutting initiatives.
Onward on the March: More Profit from Japanese Apparel Firms
- Some of Japan’s big apparel firms are making a comeback, and only some of the recent growth is coming from department stores.
- Most of the revival is thanks to direct sales through e-commerce and stores, and the increasingly seamless links between them.
- Onward Holdings is one of the leaders in this renaissance and is delivering the same profits as it used to with 30% higher sales.
Why Should Policy Shares Be Viewed as Including Deemed Shares Held?
- Tobin’s Q is not high for companies whose policy holdings are low relative to their net assets or total assets. When discussing policy shareholdings, deemed shareholdings should be included.
- Companies with a low ratio of total policy holdings plus deemed holdings to total assets have notably higher ROE, ROA, and Tobin’s Q. Vice versa.
- These companies generate returns exceeding their cost of capital and are managed with asset and capital efficiency in mind, which shows in their approach to policy shareholdings as governance practices.
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