In today’s briefing:
- Seven & I’s Valuation Nears Breaking Point
- Transitional Measures Will End in 2-3 Years, but Will Prime Market Listing Criteria Remain the Same?
Seven & I’s Valuation Nears Breaking Point
- Seven & I Holdings (3382 JP)‘s Q3 OP of ¥160.1bn was a significant surprise to the upside with consensus OP at ¥130.2bn and us expecting around ¥125-130bn.
- This was mostly driven by an unexpected upside to the retail fuel margin while gasoline prices have come down by more than 34%.
- Nevertheless, we would expect this temporary misalignment in retail fuel margin to correct over the next few quarters, resulting in around 35-40% downside to the company’s valuation multiples.
Transitional Measures Will End in 2-3 Years, but Will Prime Market Listing Criteria Remain the Same?
- TSE will probably settle on a compromise: “transitional measures will be completed as soon as possible,” while “measures to minimize negative impacts will also be adopted.
- Of 271 companies that failed to meet prime market listing criteria and are allowed to list under transitional measures, 227 (98%) don’t have tradable market capitalization of 10 billion yen.
- The market capitalization of companies that disclosed plans to meet listing criteria within 3 years increased, while those that stated that they would meet criteria in over 3 years decreased.
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