In today’s briefing:
- 2022 JPX Nikkei 400 Rebal Update – Going the Right Way
- Nikkiso (6376 JP) BIG Asset Sale Leads to Biggish Buyback
- Freee: Medium-Term Plan Seems Attainable but Profits to Delay
- The Key to Creating Added Value Is to Shift to Management that Values Human Resources
- Arteria Networks (Buy) – Q1 22 Results Reaction: In-Line Quarter Includes 7% Revenue Growth
2022 JPX Nikkei 400 Rebal Update – Going the Right Way
- As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly ‘smart’ vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.
- This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it’s doing even better.
- This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.
Nikkiso (6376 JP) BIG Asset Sale Leads to Biggish Buyback
- Nikkiso Co Ltd (6376 JP) announced an unusual buyback today. It is worth paying attention.
- In March, Nikkiso announced the sale of a subsidiary to Atlas Copco AB (ATCOA SS), noting the sale proceeds would used to pay down debt (Debt/EBITDA in high single digits).
- The company today announced Q2 earnings, and a large buyback, which should be taken as a positive surprise given the debt load.
Freee: Medium-Term Plan Seems Attainable but Profits to Delay
- Freee reported 4Q and full-year FY06/2022 results. 4Q revenue increased 31.2% YoY to JPY3.87bn (vs consensus JPY3.9bn) while full-year revenue grew 40.2% YoY to JPY14.4bn beating own guidance by 0.2%.
- Operating losses decreased to 18.7% of total revenue from 32.5% of revenue in the same period a year ago. Full-year OP. losses were 15.7% of revenue vs guidance 17.1%.
- Improvement in profitability was driven by growth in ARPU from mid-and-large paying users.
The Key to Creating Added Value Is to Shift to Management that Values Human Resources
- I would like to discuss the issues on several interesting points in the report “Vision for Future Human Resources” compiled by the Ministry of Economy, Trade and Industry (METI).
- Both company and employees have seen a gap between the skills they need and the reality, yet neither company nor employees have invested sufficiently. This has led to falling competitiveness.
- Companies need to invest sufficiently in human resources to create added value from management that has been so busy cutting costs that it has saved to invest in human resources.
Arteria Networks (Buy) – Q1 22 Results Reaction: In-Line Quarter Includes 7% Revenue Growth
- ARTERIA Networks Corp (4423 JP) posted Q1 22 results in line with expectations
- 7% revenue growth was the highest in five quarters whilst core segment growth was the best since 2019, supported by work from home demand and data volume growth
- Operating income is down YoY as it laps one-time gains a year ago – this has been well-flagged by management and consensus
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