In today’s briefing:
- TOPIX Inclusions: Who Is Ready (Jan 2024)
- T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain
- T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January
- Suruga Bank – Only 33% of Buyback Done, Profit Guidance to Rise a Lot, Credit Saison Support Growth
- All Nippon Airways: Difficult to Outperform Expectations – In Contrast to JAL
- Money Forward (3394) | Looking Forward – Q4 Preview
- Interesting that the Buy Parent Company + Sell Subsidiary Trade Does Not Work
- Rohm (6963 JP): Quantum Process Optimization
TOPIX Inclusions: Who Is Ready (Jan 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
- There are couple of other pre-event names that we have been tracking for the past few months.
T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain
- In August when Bain announced that it would launch a Tender Offer for T&K Toka Co Ltd (4636 JP) I suggested in my first piece it was the wrong price.
- I suggested it needed another ¥1,000 added onto the price. If the ¥1,300 price Dalton initially indicated seemed low to T&K TOKA, another ¥100 doesn’t seem right.
- It took time. Now it looks like a tender offer launch is imminent. The stock has traded through terms for almost 5 months, but not by a lot.
T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January
- T&K Toka Co Ltd (4636 JP) notes that Bain expects to satisfy the pre-condition and launch the JPY1,400 tender offer by mid-January.
- The shares have, on average, traded 1.9% above the offer due to Dalton’s stakebuilding. Bain has three options – unchanged terms, allowing Dalton to roll over its shares, or bumping.
- Bain is likely to bump as satisfying the minimum acceptance condition is challenging. A revised offer price of around JPY1,500 is possible.
Suruga Bank – Only 33% of Buyback Done, Profit Guidance to Rise a Lot, Credit Saison Support Growth
- Only about 1/3 of of the recently announced share buy back is done, the remainder will come from now through end of March 2024.
- Earnings are far higher than the bank’s forecast, and there should be a major revision in coming weeks.
- Credit Saison collaboration and exiting BOJ negative rate policy, should provide a multitude of positives, for revenue growth.
All Nippon Airways: Difficult to Outperform Expectations – In Contrast to JAL
- Our FY24 to March 2024 EBIT forecast for ANA of ¥ 196bn is considerably higher than company guidance of ¥ 140bn, supported by our analysis of historical earnings seasonality.
- However, we are only narrowly above consensus of ¥186bn, and narrowly below consensus of ¥204bn, ¥208bn in FY25, FY26.
- In contrast, we see considerably greater upside to expectations at JAL, where our FY24 EBIT is 27% above consensus.
Money Forward (3394) | Looking Forward – Q4 Preview
- Since releasing Q3 results, Money Forward’s stock price has fallen from 4,800 yen to the present 4,000 yen.
- Results on Friday could herald a stronger outlook for the share price. The market is fixated on quarterly earnings and ad spend – these should improve sequentially.
- Money Forward will release guidance for the coming fiscal year, which could see the company turn profitable at the EBITDA level.
Interesting that the Buy Parent Company + Sell Subsidiary Trade Does Not Work
- It is an expected option for a parent company to make a profitable subsidiary wholly owned by the parent company, an environment that demands improved ROE.
- It is natural that the market would receive a stock offering by a large shareholder with more information than others as the stock price is higher than its fair value.
- It’s not unrelated to the fact that few shareholder proposals are approved and company proposals are rejected at AGMs, and that most domestic investment managers affiliates of major financial institutions.
Rohm (6963 JP): Quantum Process Optimization
- Use of quantum technology expected to improve electrical die sorting (EDS) performance by several percentage points.
- Collaboration with Quanmatic aims at full-scale introduction in April, the first month of FY Mar-25.
- Buy for long-term growth led by power semiconductors with margin expansion from efficiency gains.
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