In today’s briefing:
- Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks
- JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What
- Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- Trial Holdings IPO – Not Wholly Convinced but a Strong Market Should Help
- Sanyo Trading (3176 JP) – Small Secondary Offering as Banks Sell, More Later
- 3Q Follow-Up – Takamiya (2445 JP)
Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks
- The changes to the Nikkei 225 Average for the March 2024 Review were announced today after the close. A little earlier than I expected.
- Socionext, Disco, Zozo IN; Takara Hldgs, Sumi Osaka Cement, Pacific Metals OUT. Nitori PAF increase. US$4bn+ to trade one way on 29Mar close. One interesting surprise.
- Overall more impactful than it looks. And it changes the front-end arithmetic on Fast Retailing (9983 JP). There may be fun on the DELETEs.
JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What
- JSR Corp (4185 JP)’s shares rose 4.8% due to a Nikkan Kogyo article that states that JIC will start the tender within the month due to concluding negotiations with SAMR.
- Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.
- Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating.
Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
- Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
- Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.
Trial Holdings IPO – Not Wholly Convinced but a Strong Market Should Help
- Trial Holdings (5882 JP) (TH) is now looking to raise up to US$259m in its Japan IPO, after having canceled its prior listing attempt last year.
- TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
- We have looked at the company’s past performance in our previous notes. In this note, we talk about implied valuations in the IPO range.
Sanyo Trading (3176 JP) – Small Secondary Offering as Banks Sell, More Later
- Sanyo Trading (3176 JP) is a small specialised trading company (rubber, polymers, elastomers, etc). Niche, decent profitability/margins, highish ROE.
- Banks in the MUFG and SMBC family are selling. Norinchukin is selling a bit too.
- This is small in size but big in impact. 20% of Max RWF. 50d ADV. Unlike other recent, larger, offerings, this has no flow mitigants. But it’s cheap.
3Q Follow-Up – Takamiya (2445 JP)
- Takamiya announced its 3Q FY24/3 consolidated sales of ¥32,183 mn (+4.9% YoY), operating profit of ¥2,405 mn (+49.7% YoY), ordinary profit of ¥2,526 mn (+46.5% YoY), and profit attributable to owners of parent (hereafter, net profit) of ¥1,727 mn (+46.9% YoY).
- All the segments, sales business, rental business and overseas business, posted an increase in operating profit YoY.
- Especially, rental business became a driving force of the expansion of the whole business.
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