In today’s briefing:
- Rakuten (4755 JP) – A Tricky Offering But Lots of Non-Fundamental Long Demand
- StubWorld: Japan Post Holdings Coming Up “Cheap”
- Stuck With Each Other: Toyo “Special Committee” Against Toyo Tender, Toyo Against YFO Proposals
- Rakuten Bank & SBI Sumishin Net Bank: Upcoming Passive Flow
- Suzuki (7269) | EV Strategy – A Dead End?
- Isn’t It Too Much to Expect Instantaneous Screening to Yield the Same Shares as Buffett’s Approach?
- Itochu and Donki Tie on Retail Media to Create Major New Revenue Stream
- Japan-Based Nuclear Fusion Firm Powers up with $79m Raise
Rakuten (4755 JP) – A Tricky Offering But Lots of Non-Fundamental Long Demand
- The Rakuten (4755 JP) offering is producing interesting analysis. My read on the telecom side is that things are better (or less bad) than they were.
- Longer-Term, I see the idea. Shorter-term, there will still be questions until there are not. However, there could be a lot of non-fundamental “I want this” demand in the offering.
- Questions to ask yourself are: 1) how much will get placed with investors who want it 20+% lower than 15 May highs? 2) how many shorts will cover?
StubWorld: Japan Post Holdings Coming Up “Cheap”
- At 0.3x, Japan Post Holdings (6178 JP) is top of the heap in terms of dollar “UpValue” to move to PBR 1.0x under Japan’s governance changes.
- Preceding my comments on Japan Post 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%.
Stuck With Each Other: Toyo “Special Committee” Against Toyo Tender, Toyo Against YFO Proposals
- Today, Toyo Construction (1890 JP) announced it was against YFO’s AGM shareholder proposals. And that the Special Committee was unanimously against YFO’s tender proposal.
- The content is mixed. Some is probably correct (YFO hasn’t done a great job it appears). Some is clearly taking management’s statements at face value where it shouldn’t.
- And some is just the passage of time. Last year, ¥1,000 was “too high.” This year it is “not enough.” Now Toyo and YFO are stuck with each other.
Rakuten Bank & SBI Sumishin Net Bank: Upcoming Passive Flow
- SBI Sumishin Net Bank (7163 JP) and Rakuten Bank (5838 JP) listed over the last couple of months and the stocks will be added to various indices over the year.
- First up, Rakuten Bank (5838 JP) will be added to the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) at the close on 30 May.
- Then both stocks will be added to other global indices between August and December bringing in passive flows and helping support the stock.
Suzuki (7269) | EV Strategy – A Dead End?
- After reviewing Suzuki’s EV Strategy we turn Bearish on the outlook and see downside for the share price.
- We believe that Street has missed the rising costs associated with the electrification strategy. We see a period of weaker margins.
- Suzuki only targets 20% of sales to come from EVs in India, its largest market. It could be viewed as a laggard.
Isn’t It Too Much to Expect Instantaneous Screening to Yield the Same Shares as Buffett’s Approach?
- It’s doubtful that if the outcomes of factor analysis of Berkshire Hathaway’s portfolio stocks and screened to Japanese stocks would be the stocks that Buffett would want to invest in.
- Berkshire Hathaway wouldn’t invest in a Japanese company if there were companies in other countries with the same type of business that are more competitive and worthy of investment.
- Investors continue to look for companies that few investors are aware of, as stock prices are often high for companies that have competitive advantages and promising future cash flow growth.
Itochu and Donki Tie on Retail Media to Create Major New Revenue Stream
- Itochu, Familymart, PPI (Don Quijote) and their data analytics partners have come together in the first case of cross-retailer ad platform development.
- Itochu provides the central relationship that ties these companies together, and other deals are likely given the significant potential for retail media.
- The opportunity for brands to market to these retailers’ customers through highly targeted ads will become ever more compelling, delivering new revenue streams for Donki and Familymart.
Japan-Based Nuclear Fusion Firm Powers up with $79m Raise
- Kyoto Fusioneering, a Japan-based energy company, has raised US$79 million in an oversubscribed round.
- The firm develops equipment that harnesses fusion energy, which involves merging two or more hydrogen atoms – the same process that powers the sun.
- According to the company, its method of energy generation produces no greenhouse emissions, no long-lived radioactive waste, and no risk of nuclear reaction-triggered meltdowns.
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