In today’s briefing:
- Toshiba – How Much Risk Is There On A Deal Break?
- Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent
- Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise
- Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals
- Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23
- SoftBank Robotics: Robotics Arm of Japanese Conglomerate SoftBank
Toshiba – How Much Risk Is There On A Deal Break?
- With Toshiba giving up its deal premium on news that the JIP consortium was struggling to secure financing it is worth assessing how much downside risk there is.
- Prospects are deteriorating rapidly and we believe valuations for Kioxia and the HDD business are likely to lead the way down.
- We estimate that there is still a premium of about 20-25% being assessed for the possibility of a deal but that there is fundamental risk beyond this.
Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent
- Oriental Land (4661 JP) raised its FY23 revenue and OP guidance by 8.4% and 59.4% respectively last week sighting a recovery in demand for leisure during the second-half of the year.
- The modest price reaction to upgraded guidance could be an indication that a breakdown is imminent.
- Cost overruns of ¥70bn and a delay to the scheduled opening of Fantasy Springs from FY23 to FY24, could force investors to second guess consensus medium-term expectations.
Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise
- Domestic results were better than we expected driving operating income to its highest level in six quarters. Management will launch credit card services to boost fintech exposure
- The US business remains a drag on results with platform sales down 5% YoY and expanding operating losses. A downgrade to expectations is likely in the quarters ahead
- Q1 results were better than we expected but a weak US business and higher spending ahead may disappoint markets that bid shares 28% higher over the last month
Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals
- Takeda Pharmaceutical (4502 JP) reported 2QFY03/2023 results last week. Reported revenue increased 18.6% YoY to JPY1.0trn (vs consensus JPY962bn) while OP increased 7.2% YoY to JPY104.4bn (vs consensus JPY119bn).
- Growth in sales was driven by Takeda’s blockbuster drug Entyvio (+36.6% YoY), Takhzyro (+75.8%) and immunoglobulin products (HYQVIA in particular).
- The company also has raised its peak sales estimate for Entyvio to US$7.5-9.0bn (from US$5.5-6.5bn) driven by further market growth and market share expansion.
Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23
- Asahi Intecc (7747 JP) reported better-than-expected FY22 results, driven by overseas sales primarily in Europe and China mainly due to market recovery and a weaker yen versus other major currencies.
- Asahi has raised FY23 revenue guidance to ¥89.3 billion (+15% y/y) from ¥83.5 billion earlier. However, with weakening yen, another beat is on card.
- Although Asahi shares have strong upside potential, continued hospital staff shortages in the U.S. and COVID-related restrictions in China are the main downside risks.
SoftBank Robotics: Robotics Arm of Japanese Conglomerate SoftBank
- SoftBank Robotics is a pioneer in the industry of service robots and human-robot interactions. The company unveiled the world’s first social humanoid robot Pepper in 2014.
- Alibaba Group and Foxconn Technology have invested $118M each in SoftBank Robotics: 5%+ investor shareholders include Alibaba (20%), Foxconn (20%), and SoftBank holds a 60% stake.
- The company is struggling to grow revenues, and the business is structurally unprofitable. However, SoftBank Robotics announced RI strategy with plans to introduce a new series of smart robots.
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