In today’s briefing:
- Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later
- Sony – PSVR2 On the Horizon
- Japan’s Boycott of Winter Olympics Could Be the Tipping Point
- Very Large Keiyo (8168 JP) Buyback NOT Necessarily Bullish
- Japan Prime Realty Placement – Expected Deal, Has Corrected in the past Month
- Adastria to Expand Beyond Fashion with Zetton Acquisition
- Japan’s Governance: About the Article on Capital Increase in 2021
- Kura Sushi (2695): Significant Sales Growth Due to “Demon Slayer” Effect
Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later
- The Katakura Industries (3001 JP) MBO was launched in early November at a price which was too light but activist/long-time holder Oasis agreed to sell (with an up-and-out exception).
- Another would-be activist bought Oasis’ shares at a premium to the Tender, encouraging hopes of a bump in the Tender Offer Price.
- Yesterday, the bidder dashed those hopes, and today the shares fell, but not to the TOB Price. This has longer-term designs.
Sony – PSVR2 On the Horizon
- Sony announced details for the PlayStation VR2 today confirming many rumoured specifications.
- In addition, it announced that a title from its key Horizon franchise would be coming to VR.
- This points to a commitment from Sony to support AAA VR titles and should allow it to once again dominate VR.
Japan’s Boycott of Winter Olympics Could Be the Tipping Point
- Considering the geopolitical relationship over the last 100 years, it doesn’t take much for Chinese people to start developing an anti-Japan sentiment.
- The relationship between the two countries was already reaching nervy levels, before Tokyo’s decision to snub the 2022 Winter Olympics.
- We think the Japanese government’s decision to not send a government delegation to the Winter Olympics could be all that is needed to spark an anti-Japan sentiment among Chinese consumers.
Very Large Keiyo (8168 JP) Buyback NOT Necessarily Bullish
- Keiyo announced a large (9.2% of shares out) ToSTNeT-3 buyback for tomorrow morning at JPY 855/share.
- Normally this would be an occasion for looking at the significant accretion.
- This time there are possible offsets which are less encouraging.
Japan Prime Realty Placement – Expected Deal, Has Corrected in the past Month
- Japan Prime Realty Investment (8955 JP) aims to raise around US$130m in its Primary Offering, to fund its acquisition of the Tokyo Tatemono Higashi Shibuya Building and repay borrowings.
- The deal is somewhat anticipated, given that the REIT’s asset replacement strategy has been in the works for a couple of months now.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Adastria to Expand Beyond Fashion with Zetton Acquisition
- For a decade Adastria Co Ltd (2685 JP) was the fastest growing fashion retailer but, as it matured and the apparel market stagnated, growth rates declined.
- The company now wants to become a diversified lifestyle retailer with food as a major element so, to speed things along, it will acquire restaurant business Zetton Inc (3057 JP).
- It is also investing in overseas retailers to spearhead expansion abroad, a strategy that will include Zetton’s leading chain, Aloha Table.
Japan’s Governance: About the Article on Capital Increase in 2021
- The Nikkei newspaper reported that “Equity financing in 2021 is expected to triple from the previous year to 3.7 trillion yen, the highest level in 11 years since the GFC.
- The increase in the number of public offerings by Japanese companies to foreign investors could be a reflection of the declining demand from Japanese investors to invest in Japanese companies.
- The inability to find investment opportunities is the essence of the problem for Japanese companies. More importantly, they need to find and invest in investment opportunities for sustainable growth.
Kura Sushi (2695): Significant Sales Growth Due to “Demon Slayer” Effect
- December SSS: Powerful “Demon Slayer” effect continues. Same-store sales were 117.5% vs. December 2020
- The number of stores at the end of December was as follows: 501 stores in Japan (+3 MoM); 35 stores in the U.S. (+2 MoM); and 42 stores in Taiwan (+/-0 MoM)
- The company plans to run the “BT21 campaign” in January and February. BT21 is a globally popular character brand
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