In today’s briefing:
- Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
- Shareholder Returns Should Be Examined on a Cash Basis, Not on a Net Profit Basis
- Look HD Bullish on Fashion Imports and Exports
Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
- In response to Roland DG Corp (6789 JP) request, on 22 March, Taiyo said it was considering a revised offer. However, Taiyo has since remained silent.
- Despite discussions with Brother Industries (6448 JP), the Board have not been able to eliminate dis-synergies concerns. The Board has left the decision to accept the Taiyo offer to shareholders.
- While the Board is trying to dissuade Brother, Brother will take its offer directly to shareholders if the Taiyo offer fails. Taiyo’s behaviour suggests a reluctance to bump.
Shareholder Returns Should Be Examined on a Cash Basis, Not on a Net Profit Basis
- The pace of share repurchases in 2023 (+1.4%, YoY) is not sufficient compared to the increase in corporate profits, and there is much room for reconsideration of cash allocations.
- In Japan, where many manufacturers keep CapEx within the depreciation, it’s more important to verify whether shareholder return is appropriate on a cash basis rather than a net income basis.
- Companies that fail to formulate measures to generate ROE that exceeds the cost of capital in accordance with TSE requests are not able to achieve an appropriate cash allocation.
Look HD Bullish on Fashion Imports and Exports
- It has been a tough few years for premium fashion importers.
- Decimated sales during Covid were followed by a sharp depreciation in the Yen that has forced a hike in prices and/or a squeeze on profits.
- Look has found some solutions, adding new brands while exploring new markets and expects significant upside in revenues and profits.
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