In today’s briefing:
- Softbank (9984 JP): This Time, It’s Different
- Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?
- TOPIX Inclusions: Who Is Ready (June 2024)
- Saizeriya (7581 JP): Buy On Any Weakness On A More Profitable Japan And Continued Strength In China
- Geniee (6562) – Pursuing an Earnings Recovery and a Major Capital Restructuring
- Duskin (4665 JP) – Prospects for Further Progress on Positive Transformation
Softbank (9984 JP): This Time, It’s Different
- Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
- Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
- Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount
Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Last September, Toyota Motor (7203 JP) Group affiliate Aisin (7259 JP) said they would get rid of ALL their cross-holdings. That signalled a future sea change in Toyota intra-group relations.
- It meant all Toyota group companies could do that. The big moves started with a multi-party offering of Denso Corp (6902 JP) shares – Toyota, Toyota Industries, and Aisin sold.
- Then others. Then in March, Denso announced a 2.5yr selldown of ~¥460bn of Toyota Industries shares. That meant a TI buyback was likely. We got one. Now we have details.
Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?
- Activist short seller Scorpion alleges Lasertec is a “colossal fraud” and “ticking time bomb”
- Most of their allegations relate to problems with Lasertec’s EUV mask inspection tools
- Lasertec achieved Intel’s distinguished supplier ward for the past six years and last December landed an award from TSMC for “Distinguished EUV Mask Inspection and Metrology Collaboration”. What gives?
TOPIX Inclusions: Who Is Ready (June 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- There have been no TOPIX Inclusions in 2024 so far although dozens of companies have been able to meet the key Section Transfer requirements on paper for several months.
- However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.
Saizeriya (7581 JP): Buy On Any Weakness On A More Profitable Japan And Continued Strength In China
- After a strong 68% increase in share price in 2023, Saizeriya (7581 JP) has been trading range bound, and up 8% year-to-date in 2024.
- Continued weakness in Japan on the profitability front in 1HFY24 offset continued strong performance in China.
- Japan’s operating profit is set to improve in the second half of the current fiscal year (ending August), and China’s strength will continue on the back of accelerating store openings.
Geniee (6562) – Pursuing an Earnings Recovery and a Major Capital Restructuring
- Earnings rebound for FY3/25 – Q1-4 FY3/24 results missed guidance, with underperformance experienced in the Overseas and Marketing SaaS businesses.
- The core domestic Ad Platform business maintained a stable growth profile with its competitive technology and market position, and we believe will continue to act as the core earnings driver for the medium term.
- FY3/25 guidance points to a recovery profile YoY with high double-digit sales and earnings growth, with sustained growth in the domestic online ad market, customer acquisition in Marketing SaaS, and a recovery in the Overseas business through a combination of cross-selling activities and cost reductions.
Duskin (4665 JP) – Prospects for Further Progress on Positive Transformation
- Food Group driving earnings – Q1-4 FY3/24 results were ahead of revised guidance for earnings, driven by solid growth at the Food Group with ‘Mister Donut’ chain restaurant experiencing increasing footfall and price hikes YoY.
- Profits were also boosted by lower- than-planned investment costs at the Direct Selling Group (due in part to delays), although this highlights the challenges of raising sales volume in this mature business.
- With the RFID investment project mostly complete, the company is in a position to benefit from cost savings YoY.
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