In today’s briefing:
- Shinko Electric (6967) Update – MitCorp In The Mix?
- ANTA Sports Investor Day Targets DESCENTE (8114) For Growth
- Shinko Electric (6967 JP): Bidders Circle for Fujitsu’s Stake
- Kenedix J-REIT Family Merger – Still Room (But Less Time) To Move (Redux-Ish)
- Sponsor of Sankei Real Estate (2972) To Buy More Units in Revival Plan
- Money Forward (3994) | A Deep Dive into the Corporate Business
- SoftBank Group (9984 JP): More Downside Risk to the NAV than Upside Potential
Shinko Electric (6967) Update – MitCorp In The Mix?
- Yesterday about 5 minutes before the close, Shinko Electric Industries (6967 JP) went into kehai, rising 8.6%, then falling back to end + 3% on the day.
- This morning, the stock opened down 2%, rose 4%, fell 4%, then rose 4%. All in the first 45 minutes. Then it fell back 4% and ended down 2% today.
- The proximate cause of all of this was a Reuters article out 5mins before the close yesterday suggesting Mitsubishi Corp (8058 JP) is considering bidding for Shinko Electric.
ANTA Sports Investor Day Targets DESCENTE (8114) For Growth
- Yesterday, Anta Sports Products (2020 HK) held its Investor Day in Beijing. They talked about Descente Ltd (8114 JP) and their plans.
- The presentation made by the Descente China Chairman talked about the evolution of performance and the target for 2026, suggesting higher profit now and growth going forward than market expectations.
- None of this changes my outlook for why Itochu Corp (8001 JP) is buying Descente shares in the market. And the stock is going up.
Shinko Electric (6967 JP): Bidders Circle for Fujitsu’s Stake
- Reuters reported that Mitsubishi Corp (8058 JP) is considering a joint bid for Fujitsu Ltd (6702 JP)’s 50% stake in Shinko Electric Industries (6967 JP).
- Fujitsu first flagged a potential stake sale in its 1HFY22 results last October. Previously rumoured suitors include Apollo Global Management, Bain Capital, Dai Nippon Printing, JIC and KKR.
- Shinko’s shares are up 73% YTD, which is not excessive compared to Ibiden Co Ltd (4062 JP) (up 63.2% YTD). The valuation is undemanding, which facilitates a potential offer.
Kenedix J-REIT Family Merger – Still Room (But Less Time) To Move (Redux-Ish)
- A month ago I wrote there was still time, and room, to move on the Kenedix Merger.
- Now there’s less time, but the situation and relationships are better understood.
- Tracking Excess Volume during the period since the announcement is interesting. And it may tell you less than you think.
Sponsor of Sankei Real Estate (2972) To Buy More Units in Revival Plan
- On 16 October, the Asset Management Co of Sankei Real Estate (2972 JP) announced earnings, the execution of a Revival Plan, and said the sponsor, Sankei Building would buy more.
- They’ll buy for up to 220 days starting sometime before Feb-end. Presumably after the Revival Plan transactions have been executed.
- The REIT is cheap to peers. It is small to peers. It needs some reviving. But when a sponsor promises to buy, it pays to take a look.
Money Forward (3994) | A Deep Dive into the Corporate Business
- Money Forward’s Corporate SaaS business is thriving, with +44% year-over-year growth in ARR, a 139,000-strong customer base, and a healthy CAC-to-LTV ratio of 3.7x.
- Despite strong fundamentals, the stock’s 20% decline is attributed to market fixation on quarterly earnings and concerns about rising interest rates.
- The company’s untapped potential lies in the mid-market segment, where cross-selling opportunities across 18 paid products could significantly boost ARPA, tapping into a TAM estimated at $15 billion.
SoftBank Group (9984 JP): More Downside Risk to the NAV than Upside Potential
- There is downside risk to SoftBank’s NAV, due to valuations relating to Arm and the Vision Funds including LatAm; on aggregate, these holdings account for 70% of group equity value
- We believe that Arm’s super-premium valuation is unsustainable; there is lack of transparency on the valuations relating to the unlisted Vision Fund holdings, especially in SVF2
- We estimate that SoftBank shares trade at a 44% NAV discount, tighter than the average at the end of the last eight quarters; add to this Arm’s current over valuation
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