In today’s briefing:
- JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade
- Fuji Soft (9749 JP): A Rumoured KKR-Sponsored MBO
- JPX-Nikkei 400 Rebal Aug 2024 – 44 IN, 41 OUT, ¥500bn of Capping, Just Under ¥1trn to Trade
- [JAPAN ACTIVISM] KKR Reportedly Plans Takeover of Fuji Soft (9749) – Relief from Activist Pressure
- Japanese Big Five Banks – Opportunity in the Face of Market Turmoil; Focus on Resona and Mizuho
- Beenos Inc (3328 JP): Q3 FY09/24 flash update
- If We Don’t Change the Way We Used to Do Things, We Cannot Embrace Diverse Values
- H2O Retailing (8242 JP): Q1 FY03/25 flash update
- Ebara Foods Industry (2819 JP): Q1 FY03/25 flash update
- Harmonic Drive Systems (6324 JP): Q1 FY03/25 flash update
JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade
- There are 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
- Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).
- The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.
Fuji Soft (9749 JP): A Rumoured KKR-Sponsored MBO
- Nikkei and Bloomberg report that Fuji Soft Inc (9749 JP) will be privatised through a KKR-sponsored MBO at a price just below JPY9,000, a 21.8% premium to the last close.
- The rumoured privatisation proposal is the culmination of a sale process initiated by 3D Investment Partners, the largest shareholder, in September 2023.
- The Board will meet tomorrow to discuss the proposal. The rumoured offer represents an all-time high and a knockout bid, suggesting a done deal if a binding proposal materialises.
JPX-Nikkei 400 Rebal Aug 2024 – 44 IN, 41 OUT, ¥500bn of Capping, Just Under ¥1trn to Trade
- Janaghan Jeyakumar, CFA who does the predictions for this index got 10/10 of his high conviction names, 8/10 of his medium conviction, and 50% of low conviction ADDs.
- This year, there are fewer caps but some big ones. Nearly ¥500bn of capping flow to sell.
- I see just over $6.3bn in buying and selling to be done. A half dozen names with both high ADV impact to buy and decent size.
[JAPAN ACTIVISM] KKR Reportedly Plans Takeover of Fuji Soft (9749) – Relief from Activist Pressure
- Last year into early 2024, Fuji Soft Inc (9749 JP) – partially at the prodding of 3D Investment Partners – took in 4 subs and conducted a strategic review.
- In January, I explored the situation here suggesting the stock had run, FujiSoft needed to liquidate more assets, but a PE firm would look at a valuation of ¥600bn.
- Last night, the Nikkei reported that US PE Firm KKR planned to take Fuji Soft private with a TOB valued at ¥600bn. Limit up will take us to ¥560bn+.
Japanese Big Five Banks – Opportunity in the Face of Market Turmoil; Focus on Resona and Mizuho
- The sharp Japanese market correction has hit the banks hard, and heightened market volatility is likely to remain a feature, at least in the very near term
- Nonetheless, the big five’s results in the first quarter to June-end paint a reassuring picture, and we see that BoJ is pausing on rate rises in these unsettled markets
- Among the big five Japanese bank shares, we highlight Resona and Mizuho in particular for their strong gearing to higher interest rates; we are also positive on SMFG and Concordia
Beenos Inc (3328 JP): Q3 FY09/24 flash update
- GMV increased 21.4% YoY to JPY85.7bn, while revenue decreased 7.7% YoY to JPY20.4bn, and operating profit fell 46.6% YoY to JPY1.4bn.
- In Q3 FY09/24, GMV grew 21.4% YoY, with Global Commerce revenue up 21.3% YoY and Entertainment revenue up 6.8% YoY.
- The company recorded an extraordinary gain of JPY1.0bn from the Value Cycle segment share transfer, impacting FY09/24 results.
If We Don’t Change the Way We Used to Do Things, We Cannot Embrace Diverse Values
- The government only considers foreign personnel as labor force and accepts them in industries where labor is in short supply and places restrictions on their transfer to other industries.
- Imposing a Japanese language test on long-term residents who are eligible to stay in Japan may result in the loss of opportunities to recruit talented foreign personnel.
- The government has been unable to step forward to “respect human rights and share diverse values.” If Japanese people do not change, we will never be able to embrace diversity.
H2O Retailing (8242 JP): Q1 FY03/25 flash update
- The company applied ASBJ Statement No. 29 in FY03/22, affecting revenue recognition and sales commissions, impacting financial metrics.
- Department Store business saw increased gross sales and operating profit YoY, driven by domestic sales and inbound tourist expansion.
- Supermarket business experienced flat sales YoY but a decline in operating profit due to higher personnel expenses.
Ebara Foods Industry (2819 JP): Q1 FY03/25 flash update
- Q1 FY03/25 revenue was JPY11.9bn (+9.6% YoY); operating profit JPY725mn (-2.4% YoY); recurring profit JPY813mn (-0.7% YoY).
- Food business revenue JPY10.0bn (+10.4% YoY); household-use products JPY7.2bn (+4.1% YoY); commercial-use products JPY2.8bn (+30.7% YoY).
- Distribution business revenue JPY1.8bn (+5.2% YoY); segment profit JPY8mn (-65.2% YoY); Other businesses revenue JPY134mn (+13.6% YoY).
Harmonic Drive Systems (6324 JP): Q1 FY03/25 flash update
- Q1 FY03/24 sales declined 13.4% YoY to JPY13.0bn, with an operating loss of JPY238mn and net loss of JPY283mn.
- Orders increased 38.6% YoY to JPY7.4bn, driven by industrial robots and semiconductor production equipment, particularly in the Chinese market.
- The company targets FY03/27 sales of JPY90.0bn and operating profit of JPY15.0bn, with significant capital investment and R&D expenditure planned.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
