In today’s briefing:
- Shift (3697): Profitability Rebound Underway
- Yamaha Motors (7272 JP) – Secondary Offering as Toyota Sells Down – Easy To Digest
- Hogy Medical (3593) | New Strategy Sparks Investor Confidence
- SoftBank Group (9984 JP): A Bigger Bounty Awaits with Swiggy’s Upcoming IPO
- Issues Related to Outside Director Compensation Are Plentiful
Shift (3697): Profitability Rebound Underway
- A massive shortage of IT professionals combined with Shift’s overwhelming dominance of the labor market should drive 20% annual revenue growth through 2030.
- But Shift missed consensus profitability estimates 3 consecutive quarters, and the share price is down 67% in 12 months, compared to an 18% rise in the median peer.
- In our view, a recovery in profitability is already underway, and shares are at least 45% undervalued
Yamaha Motors (7272 JP) – Secondary Offering as Toyota Sells Down – Easy To Digest
- On Firday 23 August, Yamaha Motor (7272 JP) announced that three cross-holders would sell about 4.6% of the shares out in a secondary sale.
- MS&AD was expected. Toyota was probably expected. Yamaha Corp is a bit of a surprise. But it also frees up Yamaha Motor to sell down cross-holdings (top 2 are Toyota/Yamaha).
- Given the price/guidance/dividend yield and limited size, this should be quite easy to place.
Hogy Medical (3593) | New Strategy Sparks Investor Confidence
- Dalton & Co. increased their stake in Hogy Medical to 19.15%, signaling confidence in the new Medium-Term Business Plan.
- Hogy Medical’s new plan aims to boost ROE above 6%, drive revenue to ¥46 billion, and enhance shareholder returns.
- Potential M&A activity in Japan’s med-tech sector and the new plan could unlock significant shareholder value, with a possible 50% upside in share price.
SoftBank Group (9984 JP): A Bigger Bounty Awaits with Swiggy’s Upcoming IPO
- Softbank Group (9984 JP) could see its USD450 million investment in India food delivery player, Swiggy , triple in value with the upcoming IPO, reportedly valuing it at USD15 bn.
- SoftBank Group, generated a total return, net of investments, of USD1.4 billion with the listing of Ola Electric (OLAELEC IN) , Unicommerce (UNIECOM IN), and BrainBees Solutions, this month.
- If Swiggy’s IPO reaches valuations closer to Zomato’s, SoftBank could reap even greater rewards than from its recent portfolio company listings.
Issues Related to Outside Director Compensation Are Plentiful
- A few companies have stock compensation plans for outside directors, but their common features are a majority of outside directors on the board and a high percentage of foreign ownership.
- 8 million compensation for an outside director would be too low to devote much of his/her time to that company. Consequently, 17.5% of all outside board members serve multiple companies.
- The need to raise the ratio of female board members amid the low percentage of women in managerial positions has increased the concurrent positions of female board members.
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