In today’s briefing:
- Shinko Electric (6967) Deal Approval Delayed; From Here, Big Gap-, Small Break-, Some Delay-Risk
- Shinko Electric (6967 JP): Tender Start Timelines Delayed
- Kioxia IPO Early Re-Look – Better Placed This Time Around
- Nitori (9843.T) – Headwinds to Tailwinds -Cleaning House
- MIXI Inc. (2121 JP) – Results in Line with Positive Signaling
- Okinawa Cellular (9436 JP) – Strong Sales Growth, but Operating Costs Push Down Profit
Shinko Electric (6967) Deal Approval Delayed; From Here, Big Gap-, Small Break-, Some Delay-Risk
- Today after the close, Shinko Electric Industries (6967 JP) offered a progress report on the approvals for the JIC Consortium Tender Offer originally “scheduled” to start in late August 2024.
- “Procedures and Steps Necessary under the competition laws of Vietnam and China have not been completed” so the Tender Offeror expects to commence the Tender Offer in/after late January 2025.
- The announcement appears to suggest no update is likely for another five months or until the Tender Offer starts. That will introduce questions of further delay.
Shinko Electric (6967 JP): Tender Start Timelines Delayed
- Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The tender start has been delayed from late August to around late January 2025.
- The delay was due to outstanding China SAMR and Vietnam regulatory approvals. The stretched timeline suggests that SAMR will likely conditionally approve the deal.
- While Ibiden Co Ltd (4062 JP)’s underperformance lowers the deal’s break price, timing, not break risk, remains the key concern. At the last close, the gross/annualised spread was 3.7%/7.5%.
Kioxia IPO Early Re-Look – Better Placed This Time Around
- Kioxia Holdings (6600 JP) aims to list in Japan by Oct 2024 at a valuation of over US$10bn, as per media reports.
- Kioxia is a manufacturer and a global leader in flash memory and solid state drives for smartphones, PCs, enterprise servers and data centers
- In this note, we take an early look at the possible listing.
Nitori (9843.T) – Headwinds to Tailwinds -Cleaning House
- A Strong JPY beneficiary as the company imports >80% of its products
- Profits have been rising despite the weakness of the Japanese Yen
- Redesigning product portfolio to be profitable at much weaker yen levels
MIXI Inc. (2121 JP) – Results in Line with Positive Signaling
- Q1 FY3/25 results were in line with guidance in our view, with indications that efforts to activate earnings growth are starting to deliver.
- While the core Digital Entertainment segment maintains a stable source of earnings, the Lifestyle business showed 13% sales growth YoY and reduced segment losses as monetization efforts began to make an impact.
- The Sports business continues to scale, with accelerated growth at the ‘TIPSTAR’ keirin (cycle team sports) betting service.
Okinawa Cellular (9436 JP) – Strong Sales Growth, but Operating Costs Push Down Profit
- Handset sales bolster sales growth amid intensifying competition – Q1 FY3/25 results provided a steady start to the fiscal year, thanks to rising handset sales.
- Competition amongst carriers is intensifying in the prefecture though, and costs of procuring electricity for its au Denki business rose.
- The key earnings drivers were increased sales (+7.1% YoY to ¥19.81bn) from rising handset demand, solid additions of au Denki electricity contracts, and telecommunications ARPU.
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