In today’s briefing:
- Shinko Electric (6967) – Waiting for a Package
- Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem
- High Conviction Shift: Another Upbeat Quarter; Wipes Off Concerns Over an Earnings Slowdown
- Low Cost Apparel Sales Keep Rising: Shimamura Aims for ¥800 Billion
- Saizeriya (7581 JP): Japanese Company + Fast Casual Italian Food = China Growth Story?
- Suzuken Co Ltd (9987 JP): Better-Than-Expected Q1FY24 Result; Full Year Guidance Reiterated
Shinko Electric (6967) – Waiting for a Package
- Shinko Electric Industries (6967 JP) has been on the block. 2nd Round Bids were apparently due last month, but with “Economic Security” considerations, one wonders if that stretches a bit.
- The stock is now at the low end of its range vs Ibiden, and the timing is right for a deal which could give it a pop.
- A “split price” takeover seems reasonable as a structure. I expect upside. Still.
Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem
- Fast Retailing (9983 JP) today announced better than guided results, and 10% revenue growth, 18% OP growth to August 2024. NP is light, but still well higher than street consensus.
- At 10.37% Nikkei 225 weight, it is still above the target for 31 July 2024. If it does not underperform Nikkei 225 between now and then, US$2bn to sell end-Sep24.
- If people like the growthiness, that can be absorbed. But if the stock were to go up 10% vs Nikkei, there’d be US$2bn, then maybe another US$2bn to sell.
High Conviction Shift: Another Upbeat Quarter; Wipes Off Concerns Over an Earnings Slowdown
- Shift Inc (3697 JP) reported 4Q and full-year FY08/2023 results today. 4Q revenue increased 38.2% YoY while OP more than doubled during the quarter. Both revenue and OP beat consensus estimates.
- Full-Year revenues and OP increased 35.7% and 67.4% respectively beating consensus estimates by 1.2% and 67.4% respectively. Both revenue and OP were above the company’s own guidance.
- Shift’s share price has dropped by about 17% since August as market became concerned over the growth prospects, however, share price has started to move up.
Low Cost Apparel Sales Keep Rising: Shimamura Aims for ¥800 Billion
- Price consciousness remains high among most Japanese consumers at present, a boost to low-cost apparel retailers.
- Shimamura, which has posted three straight years of growth But when price is the main driver, competition from the likes of Shein and Temu becomes a growing problem.
- So even Shimamura is trying to add value through branding, collaborations and Shein-like supply chains and the outlook is promising, suggesting significant upward gains for the stock.
Saizeriya (7581 JP): Japanese Company + Fast Casual Italian Food = China Growth Story?
- Saizeriya (7581 JP) is a Japanese restaurant chain of fast casual Italian food, with currently the majority of operating profit and growth coming from China.
- The Asia segment, which is primarily restaurants in China, nearly doubled operating profit in FY23 (year ending August) from pre-COVID FY19.
- The company is trading at 27x FY24E PE, with more than 80% expected growth in operating profit in FY24.
Suzuken Co Ltd (9987 JP): Better-Than-Expected Q1FY24 Result; Full Year Guidance Reiterated
- Suzuken Co Ltd (9987 JP) reported better-than-expected Q1FY24 result, due to an increase in specialty drug distribution contracts and a larger than expected contribution from products related to COVID-19.
- In Q1FY24, revenue increased 4% to ¥573.6B, driven by 4% YoY growth in pharmaceutical distribution business, due to increased sales of new drugs such as specialty drugs and COVID-19 therapeutics.
- The company guided for FY24 revenue of ¥2,231.9B, down 4% YoY. Operating profit is expected to decline 48% YoY to ¥17B. Net profit is guided at ¥13B, down 36% YoY.
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