In today’s briefing:
- Fujitsu (6702) Subsidiary Selldowns To Come
- January TOPIX FFW Review – Some Big Sells
- Lawson: Underappreciated China Expansion & Expanding Domestic Profitability Warrants an Upside
- It’s Not Who The Directors Come From, but Their Skills and Ability to Fulfill Their Fiduciary Duties
Fujitsu (6702) Subsidiary Selldowns To Come
- Three years ago I wrote Fujitsu Subsidiary Selldowns or Buy-Ins? My choice then was Fujitsu Frontech which was bought out 8 months later.
- A Bloomberg article today with quotes from an interview with the CEO of Fujitsu fuelled some movement today.
- The “obvious” trade is Shinko Electric Industries (6967 JP) but you have to buy the new dream.
January TOPIX FFW Review – Some Big Sells
- The January 2023 TOPIX FFW Trade was announced today. The two-way trade is worth about ¥325bn.
- There are four ADDs previously discussed: Sun* (4053 JP), Appier Group (4180 JP), Chubu Steel Plate (5461 JP), and Chubu Steel Plate (5461 JP).
- There are 57 downweights, 11 upweights (but only seven FFW buys). The rest is reverse funding to buy. There are 10 names with >$10mm AND >3 days ADV to sell.
Lawson: Underappreciated China Expansion & Expanding Domestic Profitability Warrants an Upside
- Lawson’s Q3 OP of ¥16.2bn was around 20% above consensus suggesting that the company’s profitability is starting to outperform after being held back by upfront investments on store renovations.
- Although this is the 3rd beat in a row, Lawson Inc (2651 JP)’s guidance has remained unchanged and the consensus OP only saw a marginal improvement.
- After ignoring for so long, we think investors could soon start noticing Lawson’s growth prospects in China as the business there is starting to turn profitable.
It’s Not Who The Directors Come From, but Their Skills and Ability to Fulfill Their Fiduciary Duties
- People who can make business strategy decisions that are economic sense should be hired to serve on the board, not necessarily investors or financial experts.
- If the motivation to increase corporate value is weak, linking the compensation of directors to the expansion of corporate value or granting them the company’s stock is an alternative.
- Investors aren’t necessarily the only ones with conflicts of interest with shareholders. Founders hold significant shares, and the same problem can be assumed for directors from financial institutions with cross-shareholdings.
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