In today’s briefing:
- Topix FFW Transition – Insurance Sector a Big Net Sell
- Strong Telecom Flows in TOPIX FFW Transition Months
- PHC Holdings IPO Lock-Up – Stock Might Be Cheap but It’s Stuck with a US$1bn Overhang
- Kohnan Shoji (7516) Buyback – Shareholder Return? Activist Defense? Future MBO? All of the Above?
- MonotaRO (3064): Neutral Impression on March Sales; Effects of Price Hikes Appearing
- Monogatari Corporation (3097): Signs of Recovery Among Senior Customers at Yuzuan
- Komeda Holdings (3543): Wholesale Sales on a Recovery Track in March; Food Service Industry Update
Topix FFW Transition – Insurance Sector a Big Net Sell
- The TOPIX Insurance Sector sees the worst net flows as a percentage of index weight among the 33 sectors in the April-June FFW Transition.
- On a net basis, rebalance flows favour Japan Post Insurance (7181 JP) vs T&D Holdings (8795 JP) (finishing a buyback) and Dai Ichi Life Insurance (8750 JP) (just finished).
- JPI has underperformed both over the last three years despite growing BVPS by more. And earnings should be a blowout.
Strong Telecom Flows in TOPIX FFW Transition Months
- The April-June TSE FFW Methodology Revision moves favour certain sectors over others. There is nearly ¥500bn of telecom stocks to buy with 60+% of that in four names.
- Other factors may support some of the names as well.
- There is enough excess buying to warrant trading tilts and keeping fundamental positions even as forward earnings multiples have expanded to multi-year highs.
PHC Holdings IPO Lock-Up – Stock Might Be Cheap but It’s Stuck with a US$1bn Overhang
- PHC Holding had raised US$645m in its Japan IPO in Oct 2021, after the deal was downsized and priced at the low-end.
- PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management; Healthcare Services; and Diagnosis/Life Science.
- The pre-IPO shareholders will be released from the lockup today on 11th Apr 2022. Its largest shareholder is KKR, who still owns a 39% stake in the company.
Kohnan Shoji (7516) Buyback – Shareholder Return? Activist Defense? Future MBO? All of the Above?
- Yesterday after the close, 500+ store home centre operator Kohnan Shoji (7516 JP) announced full-year earnings (revs -0.2%, OP -16.6%, NP -16.4%yoy) and a buyback.
- The buyback is for up to 1.2mm shares and up to ¥4bn to spend from here to end Sep 2022.
- The shareholder register is interesting, diverse, and makes one wonder whether the buyback is to soften the blow of lower income, defence against an activist, or something else.
MonotaRO (3064): Neutral Impression on March Sales; Effects of Price Hikes Appearing
- Parent company sales in March were 19.771bn yen (+17.4% YoY), slightly below the company’s monthly target
- The number of business days was 22, one day less than in March 2021. The sales growth rate per business day was +22.7% YoY (+21.4% for February).
- Sales to SMEs (monotaro.com) increased by around +13% YoY, below the company’s target.
Monogatari Corporation (3097): Signs of Recovery Among Senior Customers at Yuzuan
- Same-store sales for directly-owned stores were 108.2% vs. March 2021 (102.9% for February), 94.0% vs. March 2020 (70.2% for February)
- The business environment was unfavorable for the company which mainly operates all- you can-eat restaurant formats, as requests for shorter operating hours continued until mid-March
- However, we have the impression that the company did well despite the difficult business environment
Komeda Holdings (3543): Wholesale Sales on a Recovery Track in March; Food Service Industry Update
- Wholesale sales to franchisees (same-store basis) in March were 103.0% vs. March 2021 (97.2% for February)
- We have the impression that in-store dining sales have been improving generally due to lifting of the shorter operating hours requests
- It appears that the market responded positively to the lifting of the shorter operating hour requests in late March
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