Daily Brief Japan: ZOZO Inc, Advantest Corp, Asahi Broadcasting and more

In today’s briefing:

Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
Advantest (6857) | Time to Cash in the Chips?
4Q Follow-Up – Asahi Broadcasting Group Holdings Corporation (9405 JP)

Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes

The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade.
There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.

Advantest’s stock has doubled in the past two months, outperforming even Nvidia, indicating a potential peak in momentum
Near term technical indicators suggest the stock could be running out of steam, with few catalysts ahead of July Q1 earnings
The stock is trading at a significant premium to Japanese-listed SPE peers and its historical EV/EBIT multiple of 15x

Over the last 5 years, share prices of major terrestrial TV broadcasters have substantially underperformed TOPIX, in large part due to the unprecedented, challenging environment as annual data by Dentsu showed total internet advertising expenditures exceeded total television media advertising expenditures in 2019 for the first time ever, and the annual MIC survey on average time spent using main media showed internet usage time exceeded TV real-time viewing in 2020.
However, this underperformance trend has begun to change in 2023, as the stock market begins to discount the potential to commercialize the IP value of broadcaster content libraries.
In February, USEN-NEXT HOLDINGS announced plans to acquire Premium Platform Japan, Inc. (PPJ), the operator of “Paravi” subscription video distribution service.

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