In today’s briefing:
- Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
- EQD | Nikkei Index Options Weekly – Dec 02 – 06
- ASKA Pharmaceutical (4886) | Healthy Returns
- MEC Co., Ltd (4971 JP): Research Update Post FY24 Q3 Earnings
- In Order to Avoid Scandals in the Future, Management Must Take Leadership in Changing Mindsets
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
- The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
- The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
- We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.
EQD | Nikkei Index Options Weekly – Dec 02 – 06
- Price action has been mired in a sideways range since hitting these levels in Feb 2024. Implied’s have come full circle and are at the same levels they were in Feb.
- Option volumes over the past week look to be playing for a break above the sideways range of the last two months or a break below it.
- Skew is very steep with heavy Put volumes and open interest at levels under the current range.
ASKA Pharmaceutical (4886) | Healthy Returns
- ASKA Pharmaceutical Holdings represents an attractive investment opportunity with substantial upside potential
- The company combines solid growth, strong profitability, and clear avenues for shareholder value enhancement.
- With Nippon Active Value’s increasing involvement and the stock trading at deeply discounted valuations, ASKA is well-positioned for a re-rating.
MEC Co., Ltd (4971 JP): Research Update Post FY24 Q3 Earnings
- The +118.3% YoY growth in FY24 Q1~Q3 operating profit [OP] of ¥3,649mil on sales of ¥13,682mil (+37.1% YoY)] was due to easy comps, rather than a full recovery, especially in demand associated with PCs and servers used in general data centre.
- One of the growth drivers in FY24 is package demand associated with generative AI, to which MEC’s core products, CZ-8101 and CZ-8401 chemicals are used.
- MEC has maintained its FY24 guidance for a consolidated annual dividend payment of ¥45/share.
In Order to Avoid Scandals in the Future, Management Must Take Leadership in Changing Mindsets
- In many cases, management is involved rather than seeking clarification of the actual situation from an independent body. This is the reason why scandals are repeated.
- In Japan, awareness of integrity and code of ethics compliance remains very low. A thorough awareness change is required to consider “what is ethical to do and what is not.”
- Even after the revision of Whistleblower Protection Act in 2022, harassment of whistleblowers hasn’t stopped. Consequently, the number of whistleblowers is low and whistleblowing hasn’t been able to deter scandals.
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