In today’s briefing:
- Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
- MHI (7011) | The Time to Act on Energy Transition
- KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate
- SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily
- Japanese Cosmetics: Trading Around Q3 Earnings
Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
- Ad sales were weaker than we expected and the company has revised full-year guidance for that business down. That is not surprising in light of the macro environment
- But it also implies potential ad revenue erosion YoY in H2 which we have never seen before. Even at the worst of the Covid crisis, ad revenue growth was positive
- Management appears more confident in hitting FY22 EBITDA targets as it has room to maneuver on the timing of investment spending but we think FY23 targets are looking tougher
MHI (7011) | The Time to Act on Energy Transition
- It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
- Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
- MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize
KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate
- KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins
- On balance, the print is positive and management remains confident on full-year targets
- There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten’s rebound from peak losses is modest
SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily
- In March, SanBio Co Ltd (4592 JP) completed the application filing for approval for its investigational product SB623, as a treatment for chronic motor deficit from traumatic brain injury.
- With a priority review designation, SB623 approval was expected in September. SanBio is expecting a delay in the approval. SB623 is now expected to be approved next year.
- For FY23, the company is now expecting operating expenses of ¥8.1 billion, which exceeds the earlier expectations by ¥2.2 billion due to an anticipated increase in manufacturing-related expenses.
Japanese Cosmetics: Trading Around Q3 Earnings
- A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses
- Kao Corp (4452 JP) fell 8.5% today following a 40% OP miss while Pola Orbis Holdings (4927 JP) was flat after a narrow miss of 2% from a relatively low consensus estimate.
- If the two reports released this week are something to go by, we could expect large misses, for Fancl Corp (4921 JP) and Kose Corp (4922 JP) next week.
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