In today’s briefing:
- Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering
- Fujitsu (6702) Buyback Just Getting Started
- JAFCO (8595) Sells NRI Shares But VWAP Falling Short – Comes Down To Murakami-San
- Nippon Prologis Placement – Although Only Minimally Accretive, Past Deals Have Performed Well
- DeNA (2432) Buyback – Accretive on a Low Leverage Business Which Will Grow In Time
- Shiseido: Outperforms With Relaxation Of China’s COVID Restrictions, Long Term We Are a Bit Cautious
- Net Protections Holding IPO Lock-Up – PE Owner Is Free to Shed Its Remaining Stake
- Not Which KPI Is Better, but What Is Shared Between Investors and Managers to Achieve the Same Goal
Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering
- JIP, Toshiba Corp (6502 JP)‘s preferred bidder, is reported to be under pressure from co-investors to cut its offer price. Securing financing continues to be troublesome.
- An offer valuing Toshiba less than JPY2.2 trillion would face pushback from the special committee, let alone shareholders. There are no signs of a JIC/Bain coming to the rescue.
- While the Toshiba/peers price ratio remains undemanding compared to historical ratios, Toshiba looks expensive vs peers on multiples. With short-term newsflow likely to be incrementally negative, remain on the sidelines.
Fujitsu (6702) Buyback Just Getting Started
- On 28 April 2022, with full-year earnings, Fujitsu Ltd (6702 JP) announced a buyback programme to buy back up to 12mm shares (6.11% of shares out) for up to ¥150bn
- That was when the shares were ¥18,540. The shares popped 10% in 2 days. Then fell 25% into end-September. Yesterday, they announced they’d bought back 1.9mm shares in November.
- Those were the first shares bought back under the Programme. And that leaves 4 months and a lot of stock to buy.
JAFCO (8595) Sells NRI Shares But VWAP Falling Short – Comes Down To Murakami-San
- Late last month, JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback and set the large buyback from Murakami-san to occur through a Tender Offer.
- The TOB price would be set at a 1% discount to the average 30 Nov – 7 Dec VWAP if VWAP was between ¥2,525 and ¥2,828/share. That’s not happening.
- So now we read the fine print, look at waive-ability of conditions, and look at contingencies.
Nippon Prologis Placement – Although Only Minimally Accretive, Past Deals Have Performed Well
- Nippon Prologis Reit (3283 JP) is looking to raise around US$175m in its global follow-on offering to acquire three logistics properties.
- Acquisitions are well flagged, having been in the REIT’s pipeline for some time now. Past offerings have performed well in the first month as well.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
DeNA (2432) Buyback – Accretive on a Low Leverage Business Which Will Grow In Time
- DeNA (2432 JP) announced in June a buyback programme to buy up to ¥15bn of stock over the next nine months. They are two-thirds the way through.
- At current pace, they should finish by end-Jan or early Feb, then cancel 8mm shares, leading to a small TOPIX selldown likely in March or April.
- The company remains cash and securities rich (net cash, after-tax value of securities, and equity affiliates are 100% of market cap). And growth lines will slowly claw their way positive.
Shiseido: Outperforms With Relaxation Of China’s COVID Restrictions, Long Term We Are a Bit Cautious
- The indication that China is prepared to scrap its strict Zero-COVID policy has gotten Shiseido Company (4911 JP) going again after an earnings beat in Q3 saw shares climb almost 20%.
- Given that the shares have been range bound throughout the COVID crisis, we think Shiseido could reach near the upper limit of the COVID-range in the near-term to around ¥8,000.
- Nevertheless, we would approach this trade with caution and only with a short time horizon as we see a lot of downside risks in the medium to long term.
Net Protections Holding IPO Lock-Up – PE Owner Is Free to Shed Its Remaining Stake
- Net Protections (7383 JP), a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in Dec 2021.
- As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.
- In this note, we will talk about the upcoming lock-up expiry on 9th Dec 2022.
Not Which KPI Is Better, but What Is Shared Between Investors and Managers to Achieve the Same Goal
- There is a gap between investors, who seek KPIs that reflect future cash flows and cost of capital to determine the prospects for corporate value, and the company.
- Many companies aren’t able to manage investment and return by business, and under such conditions it is difficult to show future investments and growth prospects in a mid-term business plan.
- Metrical’s analysis shows that simply increasing shareholder returns isn’t sufficient to raise market capitalization; growth policy and capital allocation policy must be systematically established as part of management policy.
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