In today’s briefing:
- Comany (7945) – Another Ridiculously Low-Priced MBO
- Chiyoda – Just Getting Started
- Daikin (6367 JP) | Blowing Cold Air on the Guidance
- Aristotle Capital Management Small Cap Equity Q1 2022 Commentary
- Aristotle Capital Management Small/Mid Cap Equity Q1 2022 Commentary
- Aristotle Capital Management Corporate Credit Q1 2022 Commentary
Comany (7945) – Another Ridiculously Low-Priced MBO
- Comany Inc (7945 JP)‘s Chairman Tsukamoto is 71. Together with younger Tsukamoto family members he is conducting an MBO to buy out minorities at a 76% premium.
- This most likely gets done, and it is tough to trade anyway because it is horribly illiquid.
- But it is another example of an MBO done at the wrong price. TOB PER is low. But the entire thing is financed by net receivables. Ex-receivables, EV is zero.
Chiyoda – Just Getting Started
- Chiyoda results were slightly weak driven by a poor gross margin in the fourth quarter but revenue guidance was punchy at ¥500bn vs. consensus at ¥354bn.
- We had flagged previously that Chiyoda would be moving to the favourable portion of the construction s-curve shortly and that appears to be coming through.
- That drove OP guidance of ¥20bn which is far above consensus at ¥14bn and could eventually help Chiyoda reduce potential dilution.
Daikin (6367 JP) | Blowing Cold Air on the Guidance
- Daikin reported FY3/22 OP ¥316 bn, in-line with guidance and Nikkei preview. The company guided for FY3/23 OP of ¥340 billion (+7.5% yoy) on a 9% rise in projected sales
- Guidance seems conservative as the company is using a USD/JPY rate of ¥116 and EUR/JPY ¥126. We highlight sales/margin risks making guidance a stretch
- Daikin’s premium valuation multiple will come under pressure in a rising interest rate environment. We would sell into today’s bounce.
Aristotle Capital Management Small Cap Equity Q1 2022 Commentary
- For Q1 2022, the Aristotle Small Cap Equity Composite generated a total return of -5.77% gross of fees.
- While near-term price movements and volatility continue to be driven by macroeconomic and geopolitical issues in the short term, we believe business fundamentals will ultimately determine equity values in the long run.
Aristotle Capital Management Small/Mid Cap Equity Q1 2022 Commentary
- For the first quarter of 2022, the Aristotle Small/Mid Cap Equity Composite generated a total return of -4.38% gross of fees.
- We remain optimistic about the prospects for small/mid cap equities going forward, according to the company.
- The Aristotle Small and Mid Cap Equity composite generated atotal return of 4.
Aristotle Capital Management Corporate Credit Q1 2022 Commentary
- The Aristotle Investment Grade Corporate Bond Composite returned -7.34% gross of fees in the first quarter.
- Despite the increase in uncertainties, we continue to believe there are opportunities in U.S.
- corporate credit markets and maintain a positive outlook, especially for shorter duration high yield bonds.
- The Aristotle Strategic Credit composite returned -3.
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