In today’s briefing:
- Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update
- Tosei (8923) | Strong Performance with Dalton’s Governance Watch
- KOSAIDO Holdings (7868) – Pursuing Comprehensive Growth
Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update
- 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 5mos 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 12wks ago, recommended taking profits.
- Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 2.6% wider than at narrowest. In May, gap risk narrowed as Shinko underperformed Ibiden.
Tosei (8923) | Strong Performance with Dalton’s Governance Watch
- Tosei achieved record revenue and profit, driven by robust growth in its fund management business and a balanced portfolio of stable and sales-driven operations.
- Activist investor Dalton acquired a 5.02% stake, highlighting concerns over recent governance decisions and potential Board independence dilution due to the Nagoya Railroad alliance.
- Dalton’s involvement ensures heightened scrutiny, promising better governance, and potentially favorable outcomes for minority shareholders amid Tosei’s continued strong business performance.
KOSAIDO Holdings (7868) – Pursuing Comprehensive Growth
- Results underline high earnings visibility in Profit-Generating Funeral Services – Q1-4 FY3/24 results were in line with guidance, with positive high growth momentum being sustained at Profit- Generating Funeral Services.
- The legacy businesses (Information and HR) missed forecasts, highlighting turnaround challenges.
- However, the new business Asset Consulting has started strongly as a high-margin activity, and the outlook is positive.
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