In today’s briefing:
- Softbank Group – Q1 22 Results Reaction: So Many Surprises…a Few Were Positive
- Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback
- FTSE Japan: Potential Inclusions in March Following TSE Restructure
- Inpex (1605) | Blockbuster Buyback
- NTT (Buy) – Q1 22 Results Reaction: Forex Gains Flatter Top-Line; Signs of Mobile Stability
- Mercari (4385) | No Path to Profitability
Softbank Group – Q1 22 Results Reaction: So Many Surprises…a Few Were Positive
- Softbank posted record quarterly losses again ($23bn this time) after an aggressive writedown of private investments in the portfolio
- Vision Fund’s cumulative returns since FY17 are now less than $1bn and valuation losses for WeWork at the parent mean VF and related have lost money
- The good news is Softbank valuations are more closely aligned with reality whilst a ¥400bn buyback takes some of the sting away but tech values (and ARM) remain a risk
Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback
- Today Inpex Corp (1605 JP) announced Q2 earnings (results, presentation), a revised full-year forecast due to higher crude and lower yen, an 11%-above-guidance dividend, and a big buyback.
- The buyback is for up to 120mm shares spending up to ¥120bn, to run through year-end. Practically speaking, it is limited to 80mm shares or so at current price.
- This should be a non-negligible portion of Real World Float, and I expect the buyback to have impact over the next five months.
FTSE Japan: Potential Inclusions in March Following TSE Restructure
- Stocks that migrated from the JASDAQ and Mothers Boards to the Standard Market in April will be eligible for inclusion in the FTSE All-World/All-Cap indices at the March 2023 SAIR.
- Currently, we see 4 potential inclusions to the All-World Index and 12 potential inclusions to the All-Cap Index. There are some close adds on market cap and liquidity.
- The potential adds underperformed the TOPIX Index from April to June, but there has been a significant outperformance since then.
Inpex (1605) | Blockbuster Buyback
- Inpex reported strong Q2 financial results with operating income rising 161% to ¥584 billion
- The company revised its full-year OP guidance by 23% to ¥1,133 billion. It is still conservative
- Inpex also announced a blockbuster buyback of 120 million shares, or 8.65% of its outstanding capital
NTT (Buy) – Q1 22 Results Reaction: Forex Gains Flatter Top-Line; Signs of Mobile Stability
- Q1 revenue growth was the highest since Q3 17, helped by forex tailwinds and stability in the mobile segment
- Core telecom results were also positive as mobile erosion was less intensive than peers on better subscriber growth whilst DX demand has kept enterprise sales healthy
- Management did not change full-year guidance but this almost never happens with a Q1 report and we expect this report is enough to nudge consensus higher
Mercari (4385) | No Path to Profitability
- Mercari reported full year operating loss of ¥3.7b on sales of ¥147b, while providing no guidance for the coming year
- We remain most concerned about the US business, where GMV is declining and losses look entrenched
- Mercari JP is also clearly slowing, partly due to post-Covid, but also due to rising competition
💡 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
