In today’s briefing:
- Softbank (9984 JP): Adding a Strengthening JPY to the Mix
- Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid
- 2Q Follow-Up – Torex Semiconductor (6616 JP)
- Closing HOLI, PBR-A and 1669
- 4Q Follow-Up – Japan Business Systems (5036 JP)
Softbank (9984 JP): Adding a Strengthening JPY to the Mix
- In 1HFY23, a weak JPY – with it having depreciated from JPY132 to JPY149 to the USD – has actively supported the group’s valuation, contributing 12% to SoftBank group’s NAV
- The BoJ is looking to tighten monetary policy, whilst all other major central banks are set to cut rates; under this scenario, it is likely for the JPY to strengthen
- Softbank shares trade at a 51%+ stated NAV discount yet we believe that there is downside risk to at least Arm’s high valuations, which could tighten the discount significantly
Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid
- Hollysys Automation Technologies (HOLI US) has agreed to be acquired by Ascendent Capital, the largest shareholder, for US$26.50, a 16.7% premium to the last close.
- The Board’s claims of realising the highest shareholder value are not credible. The Board fails to explain why Ascendent’s offer is superior to Recco’s, although both have the same value.
- Deal fatigue (the process first started in December 2020) and the 42% premium to the undisturbed price suggests meeting the simple majority threshold for a statutory merger is achievable.
2Q Follow-Up – Torex Semiconductor (6616 JP)
- Multiple signs are flashing that the reset phase of the silicon cycle is beginning to rebound.
- On November 28, WSTS (World Semiconductor Trade Statistics) announced its Fall forecast for 2023 and 2024, marking the first upward revision in the current down cycle, revising up both 2023 to a single-digit decline, and revising up 2024 growth to +13.1%, due to better-than-expected demand in Apr-Jun and Jul-Sep.
- Quarterly worldwide billings data shows the YoY percentage decline marked the bottom in Jan- Mar at -21.3% YoY, shrinking to only -4.5% in the Jul-Sep quarter.
Closing HOLI, PBR-A and 1669
- News came out today that Hollysys (HOLI) is being acquired by Ascendant for $26.5/share . So I sold my shares for $24.74 today.
- And closing this at $24.88. Only a 7% spread, and there could be some delays before this closes.
- Was a nice trade and a 43% gain since dedicating a full write-up to it in July this year.
4Q Follow-Up – Japan Business Systems (5036 JP)
- Among priority measures for FY24/9, JBS management is particularly focused on rolling out global licensing business for major enterprise customers, as well as strengthening cloud AI proposal capabilities.
- The strategic business alliance concluded with Crayon Group at the end of August enables JBS to offer global support services to customers outside the coverage of JBS overseas offices.
- The two partners will also collaborate on developing AI and security solutions mainly for Microsoft Products.
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