In today’s briefing:
- Two Bits of Non-Bullish Toshiba News
- Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
- Lasertec (6920 JP): Accumulate for the Long Term
- Asics (7936) | Nike Air Pockets
- Japanese Cosmetics: Trading Around Q3 Earnings
- NTT (Buy) – Investor Day Highlights Global Data Center Business
- Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional
Two Bits of Non-Bullish Toshiba News
- On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
- Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba’s announcement on the Privatisation process status implied some delay.
- Today the shares are getting hit vs Peers. It’s still a problem of lots of moving parts.
Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
- Saudi Arabia’s Savvy Games Group has a grand ambition to invest in the global gaming industry. It recently announced that it will invest US$37.8 billion in the global gaming industry.
- There has been a sharp appreciation of the USD and Riyal versus JPY which could help to accelerate more M&As of Japanese game companies by SGG.
- Saudi Arabia’s aggressive push to expand into the global gaming industry could aid this sector in the coming months as it could result in further major M&As in this sector.
Lasertec (6920 JP): Accumulate for the Long Term
- The shares are down 58% from their January high. Our 3-year forecast brings valuations down to levels not seen since FY Jun-18.
- The great surge in orders is coming to an end, but EUV lithography and SiC power devices should keep demand for Lasertec’s mask inspection systems at high levels.
- The severity of the emerging semiconductor down-cycle and global recession remain to be seen, but the company’s long-term potential warrants another look.
Asics (7936) | Nike Air Pockets
- NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).
- ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk
- ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now
Japanese Cosmetics: Trading Around Q3 Earnings
- The latest rally in Japanese cosmetics, driven by improving domestic market conditions has strangely avoided two of the big names in the market, Shiseido Company (4911 JP) & Pola Orbis.
- Although both of these names seem to offer big upside potential, we think Pola Orbis Holdings (4927 JP) has a significantly better risk-reward profile in the short term.
- We would also be inclined to hedge the market risk using Kose Corp (4922 JP) on the short side as the name has the biggest downside potential.
NTT (Buy) – Investor Day Highlights Global Data Center Business
- NTT’s global data center business has 6% market share with annual revenue growth of 20% that is twice the industry average
- We have updated our model and valuation summary to reflect the transfer of NTT Ltd, which operates the GDC business, into NTT Data
- Our valuation remains unchanged although we have lowered our target price ¥4,500 to ¥4,450 for payment of the H1 dividend. NTT remains a top pick in our coverage
Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional
- With the revision of Corporate Governance Code in 2021 and its listing criteria on prime market, the groundwork has been laid to some degree to facilitate functioning of compensation committee.
- Meanwhile, there are not many companies with voluntary nominating and compensation committees that disclose the authority of their nominating and compensation committees in their annual securities reports.
- Many companies, even large companies, do not even have a compensation policy in place, indicating that individual director compensation is a much lower priority to consider.
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