In today’s briefing:
- Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
- Itochu TOB on Itochu Techno Solutions – The Index Selldown Schedule for $700mm+ of Flows
- Descente a Key Part of Itochu’s Plans in Sports
- Softbank (9984 JP): Arm IPO Done, the Hard Part Comes Next
- Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate
- PHC Holdings (6523 JP): Despite Slow Start, FY24 Guidance Reiterated; Diabetes Can Be a Sweet Spot
- Few Companies Recognize Board Diversity as a Management Issue?
Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
- The JIP Tender Offer for Toshiba Corp (6502 JP) closes today. I expect that we will see results announced as early as late tonight, but by law, by latest tomorrow.
- There will be at least three major index downweights, and possibly deletions, most likely in the following five trading days.
- This shows the approximate maximum share and dollar amounts to be sold, and approximate dates.
Itochu TOB on Itochu Techno Solutions – The Index Selldown Schedule for $700mm+ of Flows
- In August, Itochu Corp (8001 JP) launched a Tender offer on Itochu Techno Solutions (4739 JP) to buy out minorities.
- That tender offer ended last week, with Itochu and the acquirer vehicle owning 85+%.
- Interestingly, there are near-term flow events as a result. Worth watching.
Descente a Key Part of Itochu’s Plans in Sports
- Through all the upheavals in discretionary product distribution in the last decade, Itochu Corp (8001 JP)’s Itochu Textile subsidiary has managed to maintain huge power in the channel.
- While the trading firm has traditionally focused on premium fashion brands, in the last few years it has invested heavily in the sports market, including its growing investment in Descente.
- The move is part of wider plans to take lead share in sports, footwear and department store brands.
Softbank (9984 JP): Arm IPO Done, the Hard Part Comes Next
- Softbank’s successful Arm Holdings IPO is a relief for Masa, with Arm valued at USD57bn and Arm shares trading above the issue price; this supports the SoftBank share price
- Arm’s key challenge is delivering on the growth strategy to justify its super-premium valuation; Arm’s historic price to sales is at a big premium to its peer group, excluding Nvida
- On current market values including Arm, Softbank shares trade at a 52% NAV discount; however, Arm’s current valuation seems unsustainable to us, threatening to erode the near term NAV lift
Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate
- While Yamazaki Baking (2212 JP)‘s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.
- From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.
- Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.
PHC Holdings (6523 JP): Despite Slow Start, FY24 Guidance Reiterated; Diabetes Can Be a Sweet Spot
- Despite the absence of special demand related to COVID-19, PHC Holdings (6523 JP)’s Q1FY24 revenue of ¥81.3B was at the same level as Q1FY23 due to favorable Fx impact.
- Operating profit declined 16% YoY to ¥1.7B, due to lower profit in the diabetes management business and a drop in the volume of PCR testing.
- PHC guided for FY24 revenue of ¥355.5B and operating profit of ¥29.3B (+47% YoY). The company expects FY24 net profit of ¥15.6B from a net loss of ¥3.2B in FY23.
Few Companies Recognize Board Diversity as a Management Issue?
- The percentage of female managers is low, around 10%, so it will take time for internal executive directors to be nominated, and meanwhile companies will be dependent on outside directors.
- Finally, TSE has clearly stated specific numerical targets, so the path to achieving the targets is clear. Now the focus will shift to the content of female board directors.
- Hiring talented people should be the biggest management challenge, but the appointment of foreign talent has been too slow compared to the globalization of the business.
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