In today’s briefing:
- TOPIX April Rebalance – Two Days To Go
- Seven & I Investor Activism Update
- Shimano (7309 JP) | EU Tax Cuts Keep Cycle Boom Rolling
- Valorant Is Good For Japanese Esports and Bad for Krafton
- Japan’s Governance: About the Article on Outside Directors (2)
- Tosho (8920): Acquires Large-Scale Property in Suzuka. Warehousing for Tosho REIT
TOPIX April Rebalance – Two Days To Go
- There are two days to go until the TOPIX April-end rebalance.
- On an average-weighted, sector-neutral basis, the “announcement to event” trade is -0.3% from 7 April to 25 April. The rest of the buy vs sell basket is doing worse.
- There should be ¥740bn-ish to buy and sell (each) on Wednesday at the close. If you have trades to execute in Japan, the attached spreadsheet shows where there is opportunity.
Seven & I Investor Activism Update
- Value Act’s investor activism campaign has already made more progress than any other investor activism campaign in the recent past.
- There are many similarities between ValueAct’s transformation plan and Seven & I Holdings (3382 JP)‘s letter to its shareholders, one might think the letter could be minutes from a meeting.
- Therefore, we see no reason to get frustrated over the lack of tangible developments, as the management is fully on board and things are moving on nicely behind the scenes.
Shimano (7309 JP) | EU Tax Cuts Keep Cycle Boom Rolling
- The drivers of bike demand are structural and have nothing to do with Covid. We expect the company to beat numbers this year.
- EU regulation will drive huge growth in the bike market over the next several years and Shimano is uniquely positioned to benefit.
- The stock price decline from over ¥35k to under ¥25k has brought valuations down to the bottom of the historical range.
Valorant Is Good For Japanese Esports and Bad for Krafton
- Valorant’s Masters 1 Tournament concluded today in Iceland with North America’s Optic Gaming defeating Brazil’s Loud, leaving Japan’s Zeta Division in third place.
- These are three key regions for viewership and Japan’s surprising performance bodes well for the esports scene in the country.
- Gameplay for Valorant Mobile has also leaked and early indications are that Krafton could be cannibalised here.
Japan’s Governance: About the Article on Outside Directors (2)
- In Japanese companies, where the overwhelming majority of directors are internal executive directors, independent directors who are in the minority tend to be referred to as outside directors.
- There are concerns about whether a company’s board that doesn’t embrace diverse values can sustain growth, and whether there is risk that growth will be hampered by lack of diversity.
- The tendency of companies to hire friends as outside directors and to require them to play role in endorsing the executive’s-management shows an aspect of reluctance to embrace diverse values.
Tosho (8920): Acquires Large-Scale Property in Suzuka. Warehousing for Tosho REIT
- On April 22, Tosho (8920, the company) announced that it would acquire a fixed asset (trust beneficiary certificate) under a sponsor support agreement with Tosho REIT Investment Corporation (Tosho REIT)
- Based on the announced location, we confirmed the map and found that Aeon Town Suzuka is located in the same area
- The company sold 9.8bn yen in fixed assets (sports clubs, rental housing, and hotels) to Tosho REIT in March 2020 and 7.5bn yen in fixed assets (rental housing) to Tosho REIT in February 2022
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