In today’s briefing:
- Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback
- A Word on The Capcom (9697) Buyback
- Japan Post Holdings – Silly Guidance And A Not So Silly Buyback
- Kintetsu World Express (9375 JP) Tender Offer by Parent – Too Cheap But Tough To Block
- Yamaguchi Financial (8418) – Big On-Market Buyback for Middling Not Too Expensive Regional Bank
- Horiba (6856 JP): Semiconductor Division Leads Upward Revision for FY Dec-22
- JTower Q4 21 Results Reaction: Impact of Tower Deals Encouraging
- Japan’s Governance: About an Article on the ESG Code of Conduct
- W Scope (6619): More yet to Come
Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback
- Japan Post Holdings (6178 JP) and its two main components Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP) reported excellent earnings for the year to March 2022…
- ….but not so excellent forecasts for the year to March 2023. Some of that is conservative. Some is “finger-in-the-air”, and some of it is the vagaries of insurance sales accounting.
- But they all pay high dividends and Japan Post Holdings announced a ¥200bn buyback. And remember, there will likely Never Be Another JPH Equity Offering, Ever Again. Ever.
A Word on The Capcom (9697) Buyback
- On Friday 13 May, two days after earnings, Capcom Co Ltd (9697 JP) announced a share buyback via Tender Offer from its CEO.
- The Announcement talks about how buying the shares back “contributes to the improvement of capital efficiency such as earnings per share (EPS) and return on equity (ROE) of the Company.”
- Then another company announcement erases 99% of that accretion, and money out the door. ROE goes up because cash goes out, and pro-forma EPS rises from ¥161.59 to ¥161.61. Whoopee!
Japan Post Holdings – Silly Guidance And A Not So Silly Buyback
- Japan Post Holdings beat by 1.5% at the revenue line and 1% at the NP line with each of the three major businesses beating guidance slightly.
- Guidance was, as usual, for NP to decline YoY and at ¥400bn was slightly below consensus at ¥428bn.
- The more important news was a buyback for ¥200bn or 7.6% of outstanding shares.
Kintetsu World Express (9375 JP) Tender Offer by Parent – Too Cheap But Tough To Block
- Kintetsu Group Holdings Co L (9041 JP) has announced a Tender Offer to acquire the shares in Kintetsu World Express (9375 JP) that it doesn’t hold (it controls 47%)
- This is not a done deal, but they only need about 20% of the remaining 53%.
- At a 40% premium to last after a great year, this is still being done at the wrong price. But it will likely get done
Yamaguchi Financial (8418) – Big On-Market Buyback for Middling Not Too Expensive Regional Bank
- Yamaguchi Financial Group In (8418 JP) is the holding company for three western Japan regional banks. Cheapish/overcapitalised, restructuring painfully, but aimed at 5% ROE and capital efficiency.
- To that end, it is buyback back a lot of stock.
- Compared to its Real World Float, it really is a lot of stock, and it is on-market.
Horiba (6856 JP): Semiconductor Division Leads Upward Revision for FY Dec-22
- Sales of semiconductor equipment are running ahead of guidance. Management now sees a considerably stronger 2H and 19% operating profit growth in FY Dec-22 as a whole.
- In the longer term, Japan – U.S. semiconductor cooperation should benefit Horiba and other companies in the Japanese semiconductor industry.
- Selling at 10.5x new EPS guidance for FY Dec-22. Not meaningfully cheap if a down-cycle is coming, but attractive if it is not imminent and security concerns support demand.
JTower Q4 21 Results Reaction: Impact of Tower Deals Encouraging
- Q4 and FY21 results released Thursday were largely in-line with forecasts although guidance for FY22 missed consensus as upfront costs for entering the tower business ramp up
- For FY22, JTower will compete the transfer of 2,000 DoCoMo towers (c. one-third) and 90% of NTT East/West towers with the handover starting in Q3
- By FY26, JTower expects annual revenue of ¥30bn (+51% CAGR from ¥6bn in FY22) and EBITDA margins of 60% (¥18bn in EBITDA v ¥ 1.6bn)
Japan’s Governance: About an Article on the ESG Code of Conduct
- I have considered the Nikkei article on “FSA to create ‘Code of Conduct’ for Institutions evaluating corporate ESG Initiatives by the end of 2022.”
- FSA will align itself with the moves of regulators around the world who believe that ESG evaluation has become more influential in the market as ESG investing is expanding globally.
- Since IOSCO has already set forth specific disclosure items related to ESG evaluation, the FSA will compile these items in a future Council meeting going forward.
W Scope (6619): More yet to Come
- FY 22 Q1 result was good although not unexpected thanks to mgt guidance.
- Cash on hand may be reduced but it counts a very big Korean EV battery makers as the top customers thus some safety is in place.
- W Scope Corp (6619 JP) should be able to expand its customer base beyond the big Korean battery maker.
Before it’s here, it’s on Smartkarma
