In today’s briefing:
- NTT (9432 JP) And SBI Sumishin NetBank (7163 JP)? Maybe. Maybe Not. Seven Bank A Better Idea
- Seven&I (3382): Who Will Be the Greater Fool?
- Kioxoa Pre-IPO – Peer Comparison
- Kioxoa Pre-IPO – Thoughts on Valuations
- Kioxia (285A JP) IPO: The Bull Case
- Kioxia IPO: Initial Thoughts on Financials and Valuation
- Nippo Ltd. (9913 JP) : Research Update
- 日邦産業株式会社 (9913 JP) : リサーチアップデート日本語サマリー
- Japanese Big Cap Banks – Shizuoka (5831 JP) Upgraded to Buy, Chiba (8331 JP) To Neutral from Buy
- Olympus Corp (7733 JP): One-Off Events Boost H1FY25 Result; Not Optimistic About FY25 Guidance
NTT (9432 JP) And SBI Sumishin NetBank (7163 JP)? Maybe. Maybe Not. Seven Bank A Better Idea
- An article in Japanese weekly magazine Bunshun this morning sent shares inSBI Sumishin Net Bank (7163 JP) limit up +17% with a headline that NTT Docomo was interested to buy.
- Without access to the article, I can’t go deep, but the base concept is that NTT Docomo is “worried” about KDDI (which has a bank, as does Softbank Corp)
- It is not clear how serious it is, SBI Sumishin is super-expensive, and buying a bank isn’t the same as buying a company. Hmmm…
Seven&I (3382): Who Will Be the Greater Fool?
- 7&I traded at less than 5x reported EV/EBITDA consistently for roughly 4 years straight, and no one seemed to care or notice.
- Now that it trades close to 9x, there is an overflow of eager financiers and a mile-long line of analysts who will tell you that it is still undervalued.
- This is the stock market equivalent of duct tape and a banana.
Kioxoa Pre-IPO – Peer Comparison
- Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our earlier notes. In this note we undertake a peer comparison.
Kioxoa Pre-IPO – Thoughts on Valuations
- Kioxia Holdings (285A JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our earlier notes. In this note we talk about valuations.
Kioxia (285A JP) IPO: The Bull Case
- Kioxia Holdings (6600 JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$740 million.
- Bain Capital, Toshiba Corp (6502 JP) and Hoya Corp (7741 JP) currently own 56.23%, 40.64% and 3.13% of the voting rights, respectively.
- The bull case rests on an attractive market opportunity, a return to revenue growth, margins close to all-time highs, a favourable cash conversion cycle, and modest leverage.
Kioxia IPO: Initial Thoughts on Financials and Valuation
- Kioxia Holdings (285A JP) ’s long waited IPO is now live and plans to raise US$700m at a much lower valuation of US$4.8bn vs price paid by Bain 6-years ago.
- The company’s IPO is very timely as earnings have almost approached the cycle peak, but margins have continued to trail peers who have a more balanced product portfolio.
- Kioxia’s valuation has declined while market sentiment for memory names has also been that great. We will discuss our valuation in a follow-up insight.
Nippo Ltd. (9913 JP) : Research Update
- FY24 1H results and update on the ongoing long-term plan
日邦産業株式会社 (9913 JP) : リサーチアップデート日本語サマリー
- FY24上期決算と長期計画のアップデート
Japanese Big Cap Banks – Shizuoka (5831 JP) Upgraded to Buy, Chiba (8331 JP) To Neutral from Buy
- Market expectations that the BoJ’s monetary policy meeting will raise benchmark interest rates in December are reflected in the rising JGB yields, and in the domestic lending rate trends
- We reiterate our core recommendations of Resona and Mizuho for their leverage to higher interest rates, their low LDRs and their high share of strategic holdings relative to market capitalisation
- We reduce Chiba to neutral from buy, keep our buy on Concordia; we add Shizuoka for its gearing to higher interest rates and very high share of strategic shareholdings
Olympus Corp (7733 JP): One-Off Events Boost H1FY25 Result; Not Optimistic About FY25 Guidance
- Olympus Corp (7733 JP) shares retreated 17% over the last one month, dragged by resignation of the CEO and weak H1FY25 result. No definite time for CEO succession is announced.
- Favorable Fx inflated H1FY25 result. On a Fx neutral basis, revenue growth is only 3% YoY, while adjusted operating profit growth is just 4% YoY.
- Olympus has guided for 9% YoY revenue growth to ¥1,009B in FY25, indicating H2FY25 revenue of ¥535B (-9% YoY). ESD revenue guidance seems to be aggressive amid current macro backdrop.
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