In today’s briefing:
- Update: Shinko Electric (6967) Shorter-Dated and Break Risk Small but GAP RISK Now Much Higher
- Sumitomo Forestry (1911 JP): Selloff Provides Entry for Potential Index Inclusion
- Japan CorpGovReport Details: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Aug24)
- Sustainability Has Many Companies Confused About Linking Financial and Non-Financial Information
- CELSYS (3663 JP): 1H FY12/24 flash update, revision of dividend forecast
- Daiwabo Holdings (3107 JP): Q1 FY03/25 flash update
Update: Shinko Electric (6967) Shorter-Dated and Break Risk Small but GAP RISK Now Much Higher
- When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
- Nearly 7mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 5mos ago, recommended taking profits.
- Ibiden has now underperformed Shinko by 25+% in 2-plus weeks. GAP RISK is higher but this is a short-timer. HUGE yield to “expected” start date, so everyone assumes a delay.
Sumitomo Forestry (1911 JP): Selloff Provides Entry for Potential Index Inclusion
- Sumitomo Forestry (1911 JP) is a potential inclusion to a global index at the August rebalance. If added, passive trackers will need to buy over 6x ADV.
- Sumitomo Forestry (1911 JP) has traded lower on risk-off sentiment and further downside provides an entry point that could pay off if the stock is added to the index.
- Sumitomo Forestry (1911 JP) has outperformed its peers but trades at similar valuations to some stocks. A long/short trade could protect the downside.
Japan CorpGovReport Details: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Aug24)
- July saw 825 new Corporate Governance Reports filed and 8 new “Mgmt Conscious of Capital Cost/Stock Price” policies filed. June saw 1,673 and 5, respectively. That’s 2500 cos.
- We created a tool show every report, provide links to every document, and now a new diff file tool. Put in a name, see the difference between the Old/New Reports.
- We hope this tool will help. It is designed to be a shelf reference. We update the tool once a month, a couple of weeks ahead of the TSE.
Sustainability Has Many Companies Confused About Linking Financial and Non-Financial Information
- Sustainable management should be considered in the sustainable expansion of corporate value, including shareholders’ interest, and non-financial information should provide direction based on information that isn’t feasible, including financial information.
- Starting with appointing people who are diverse in nationality and gender to the board of directors will lead to discussing management issues with diverse opinions.
- Significant differences exist between those companies that have improved their efforts to improve board practices and capital profitability and achieved results, and those that have only formally put board practices.
CELSYS (3663 JP): 1H FY12/24 flash update, revision of dividend forecast
- Celsys reported 1H FY12/24 sales of JPY4.1bn (-4.5% YoY), operating profit of JPY1.1bn (+51.6% YoY), and net income of JPY944mn.
- Content Production Solutions segment achieved sales of JPY3.5bn (+16.6% YoY) and operating profit of JPY1.5bn (+26.1% YoY).
- Content Distribution Solutions segment recorded sales of JPY522mn (+2.8% YoY) and operating loss of JPY359mn (JPY327mn loss in FY12/23).
Daiwabo Holdings (3107 JP): Q1 FY03/25 flash update
- Revenue for FY03/22 was JPY227.8bn (+8.8% YoY), with IT Infrastructure Distribution segment revenue rising 17.4% YoY.
- Operating profit for FY03/22 was JPY4.3bn (-13.4% YoY), with a temporary drop in profit margin due to competition.
- Daiwabo Holdings’ FY03/25 forecast includes revenue of JPY1.0tn (+4.6% YoY) and net income of JPY21.8bn (+409.0% YoY).
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