In today’s briefing:
- Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio
- Merger Arb Mondays (17 Mar) – Seven & I, Tenma, Proto, OneConnect, Vesync, Tam Jai, Insignia
- Retail Media Can Help Pay for a ¥2 Trillion Buyback
- ECM Weekly (17th Mar 2025) -JPB, Recruit, Austal, BoB, Chifeng, Guarantee, Anjoy, Softcare, AvePoint
- Canon (7751) | The Cash Printer
- Nikkei Index Options Weekly (Mar 10–14): Assessing Long Vs. Short Vol Strategies & Returns Vs. SPX
Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio
- Tsuruha and Welcia are on the road to a merger, where Tsuruha takes over Welcia but Aeon ends up owning “more than 50% but less than 51%” of Tsuruha.
- The Price Ratio is now 4.24x. Trailing EPS ratios is >5. Forward EPS ratios are further above 5. BVPS ratio? Near 5. Welcia grows storecount. Tsuruha makes more money/store.
- Tsuruha changed its FY-end to match that of Welcia/Aeon so both will report earnings/guidance in just over 3 weeks. That will likely influence the ratio.
Merger Arb Mondays (17 Mar) – Seven & I, Tenma, Proto, OneConnect, Vesync, Tam Jai, Insignia
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Tenma Corp (7958 JP), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Soundwill Holdings (878 HK), Insignia Financial (IFL AU).
- Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Domain Holdings Australia (DHG AU), Proto Corp (4298 JP), PointsBet Holdings (PBH AU).
Retail Media Can Help Pay for a ¥2 Trillion Buyback
- Seven & I continues to seek shareholder approval for its own path, offering not just improved efficiency but a massive ¥2 trillion buyback albeit one over a long time frame.
- This is a lot, especially when the core Seven Eleven chain in Japan is still struggling to keep up with its peers on monthly growth rates.
- But this forgets retail media which is set to become a major new income stream for CVS and, judging by forecasts, would help pay for a chunk of that buyback.
ECM Weekly (17th Mar 2025) -JPB, Recruit, Austal, BoB, Chifeng, Guarantee, Anjoy, Softcare, AvePoint
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, we had a look at a few of the upcoming listings in Hong Kong.
- On the placements front, Japan Post Bank (7182 JP) managed to do better than its last deal while Austal Ltd (ASB AU) didn’t do too well.
Canon (7751) | The Cash Printer
- Earnings Momentum in 2025 – Canon expects 5% revenue growth and 17% EBIT expansion this year, driven by high-margin segments like semiconductor lithography, medical devices, and network cameras.
- Aggressive Shareholder Returns – With ¥350 billion in planned buybacks and dividends in 2024, Canon’s 6.8% TSR and strong free cash flow offer a compelling value proposition.
- De-Risked Upside – 2025 guidance provides earnings visibility, while valuation suggests ~40% upside, supported by resilient end-markets and an under-leveraged balance sheet.
Nikkei Index Options Weekly (Mar 10–14): Assessing Long Vs. Short Vol Strategies & Returns Vs. SPX
- We assess the effectiveness of short volatility versus long volatility positioning.
- Nikkei’s performance relative to SPX is analyzed across three distinct time frames.
- Volatility remained muted ahead of next week’s Bank of Japan meeting, while option volumes increased week over week.
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