In today’s briefing:
- Toshiba – The Nikkei Finally Speaks
- Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part
- Tokyo Electron (8035) | MAGIC Drivers
- Renesas – Good Results, Great Cashflow, Another Buyback, But Drift.
- NTT (Buy) – Q3 22 Results Reaction: Mixed Quarter but Solid Mobile/Data Performance
- Quality Issues Are a Common Challenge for TSE Market Restructuring and Corporate Governance Reform
- PPIH – Consensus Is Discounting Personal Brands Potential
Toshiba – The Nikkei Finally Speaks
- The Nikkei was out this morning with its belated take on JIP securing financing.
- The article was nevertheless rather negative in its tone causing Toshiba to drop as much as 3.6% before recovering most of those losses.
- We aren’t entirely sure it should have but Toshiba Tec does pique our interest.
Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part
- The Nikkei reports that Japan Industrial Partners (JIP), the preferred bidder, has finally secured financing and submitted a final offer to Toshiba Corp (6502 JP)’s Board.
- Nikkei notes that JIP expects to spend about JPY2 trillion on the acquisition suggesting an offer price around JPY4,750 per share, -4% below the undisturbed price of JPY4,957.60 (21 April).
- The hard part now is getting the Board to accept the unremarkable offer and the banks’ conditions. If the Board succumbs, the next challenge is to get shareholders to accept.
Tokyo Electron (8035) | MAGIC Drivers
- TEL 3QF23 operating profit -26% YoY to Y115b, beating analyst estimates
- Full year operating profit guidance revised up Y546->Y580b, ahead of Street estimates
- MAGIC – Metaverse, Autonomous mobility, Greentech, IoT, Communication Services – to drive long-term semicon demand
Renesas – Good Results, Great Cashflow, Another Buyback, But Drift.
- Renesas Electronics (6723 JP) today reported full-year 2022 earnings with revenues 0.032% higher than the high end of guidance, which was better than consensus. OP was not as good.
- They have guided Q1 only, with revenues up 0.2-4.6%, and non-GAAP GPM -3.9% to 54.5%, and OPM -6.6% to 32.5%. But they also announced a Tender Offer Buyback.
- The buyback is smaller than I’d like, but the company has added cash despite last year’s tender offer and repaying bank borrowings. Lots to like here.
NTT (Buy) – Q3 22 Results Reaction: Mixed Quarter but Solid Mobile/Data Performance
- Segment results for DoCoMo and NTT Data were impressive as NTT plans to restructure both businesses start to bear fruit
- DoCoMo is also leading MNOs in moving past the impact of regulatory driven price reductions with Q3 service revenue largely flat YoY supported by 5G upsell and subscriber wins
- Rising utility costs have had a material impact on profitability for NTT East and West but management believes upside in other areas and cost discipline provides some offset
Quality Issues Are a Common Challenge for TSE Market Restructuring and Corporate Governance Reform
- There seems to be consensus on the end of the transitional measures in 3 years. Even if this issue is finally settled, the issue of prime market quality will remain.
- There’s no better solution to raise stock price than for companies to develop their own strategies and expand corporate value. TSE should promote metabolism and improve quality of the market.
- If the quality of corporate governance is an issue, it is necessary to encourage change in boards that are dominated by male internal executive directors and lack diversity.
PPIH – Consensus Is Discounting Personal Brands Potential
- Pan Pacific International Holdings (7532 JP)’s 2QFY23 was a touch above consensus with revenue at ¥504.8bn (consensus: ¥497.6bn) and OP at ¥33.6bn (consensus: ¥30.3bn).
- With consensus cautious about personal brands potential, earnings have beaten consensus in each of the past five quarters.
- Having already proven the personal brands earnings potential, we think it is unwarranted for consensus to discount PPIH’s personal brands growth.
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