In today’s briefing:
- Sanrio (8136 JP) – Kitty Behaving Badly
- Lucror Analytics – Morning Views Asia
- ａｖｉｃ (9554 Jp) – Quality Company with High Growth, Profit Margin, and ROE
- Japan Lifeline Co., Ltd (7575 JP): Research Update
- Tsubakimoto Kogyo (8052 Jp) – Executed a Share Buyback of 450,000 Shares
- In the Dissolution of the Parent-Subsidiary Listing, the Second Step Is Key for the Parent Company
Sanrio (8136 JP) – Kitty Behaving Badly
- Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon. Next day it fell sharply.
- There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
- There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: China Water Affairs, Shui On Land, Rakuten Group, Vedanta Resources
- In the US, the November ISM manufacturing index came in above estimates at 48.4 (47.5 e / 46.5 p). The prices paid component fell to 50.3 (55.2 e / 54.8 p), while the new orders component rose to 50.4 (48.0 e / 47.1 p).
- Separately, the November (final) US manufacturing PMI climbed to 49.7 (47.3 p), above the preliminary estimate of 48.8.
ａｖｉｃ (9554 Jp) – Quality Company with High Growth, Profit Margin, and ROE
- Under its mission of “Creating a new view of the world with the AViC Team as the business driver,” AViC (hereafter, the Company) provides a full range of services related to digital marketing, from strategy development to execution.
- In addition, the Company strives for and ensures “quality growth” by maintaining and improving profitability while pursuing sustainable business growth.
- One of the Company’s distinguishing characteristics is its high productivity compared to competitors.
Japan Lifeline Co., Ltd (7575 JP): Research Update
- Japan Lifeline [JLL] produced historical semi-annual earnings with FY24 1H OP of ¥6,260mil (+14.4% YoY) on sales of ¥27,985mil (+11.4% YoY), which landed above expectation.
- Despite this robust performance, JLL has not revised its full-year FY24 guidance as the 2H presents with several potential earnings risks such as 1) fewer operating days, which will impact device sales, 2) an increase in outsourced products reducing GPM, 3) the possibility of a change in the competitive landscape for one of JLL’s core products.
- The company’s shareholder return policy is the higher of (1) a pay-out ratio of 40% or (2) a Dividend on Equity [DOE] of 5%.
Tsubakimoto Kogyo (8052 Jp) – Executed a Share Buyback of 450,000 Shares
- Tsubakimoto Kogyo announced at 10:00 a.m. on November 29, 2024 that it had completed its share buyback, which it announced following the previous day’s market close.
- The Company explained that the reason for the share buyback is to improve shareholder returns and capital efficiency and to enable the implementation of an agile and flexible capital policy.
- In its Q2 FY2025/3 earnings briefing held on October 31, 2024, the Company reported results that fell slightly short of plan, leading to a temporary drop in its share price.
In the Dissolution of the Parent-Subsidiary Listing, the Second Step Is Key for the Parent Company
- The measure to implement 100% inclusion or separation of subsidiary profits from parent company profits is only the first step, and this alone won’t reflect positively on the stock price.
- The key is the second phase of measures to strengthen the parent company’s overall ability to generate cash flow by investing in highly profitable businesses after restructuring its business portfolio.
- Hitachi is one of the few cases where it quickly implemented the second phase and reflected growth in corporate value in its stock price through realization of cash flow expansion.
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