In today’s briefing:
- Nidec – Machinery and Appliance, Commercial and Industry Segments Rolling Over
- Capcom – In-Line Results Could Drive a Re-Verse in Fortunes
- Fanuc – Big Robot Beat Flops on the Margin Side
- Softbank Group – ARM News, Vision Fund Weakness Highlight That Share Buyback Will Be Back Loaded
- Seven & I: Activist & Long Term Investors Riled Up Yet Again
- Ichigo (2337): Property Sales Finally in Full Swing
- Disco (6146 JP): Valuation Reasonable but Not Compelling
- CyberAgent: Earnings Miss Consensus and No Guidance; Games Growth Is Worrying
- Sawai Pharmaceutical: Big Capacity Expansion Planned Amid Supply Shortages to Drive Market Share
- Makuake (4479): A Further Decline in CVR Is a Negative, but Not a New Factor
Nidec – Machinery and Appliance, Commercial and Industry Segments Rolling Over
- Nidec missed 3Q consensus as OP of ¥44.3bn came in 12.6% below consensus despite a 5.8% beat at the top line.
- The deterioration in profitability across the Existing Auto, Machinery, and Appliance, Commercial and Industry businesses is a significant concern.
- It also suggests that consensus expectations for 22.6% OP growth next year may prove highly optimistic.
Capcom – In-Line Results Could Drive a Re-Verse in Fortunes
- We had expected 3Q results for Capcom to be unsurprising given a lack of new titles and OP of ¥6.17bn was in line with consensus at ¥6.23bn.
- The launch of Monster Hunter Rise for PC did not go as smoothly as we hoped but the trend appears to be improving.
- All in all FY OP looks set to slightly beat consensus and guidance for better than double digit growth is likely in our view.
Fanuc – Big Robot Beat Flops on the Margin Side
- Fanuc results were a little better than the in-line we expected on account of a big jump in Robot segment sales.
- Given relative margins however, the impact at the OP line was limited and Fanuc’s revised guidance is now just under consensus for the year.
- Much of the recent strength in FA and Robots looks unsustainable and we suspect this result may be taken negatively.
Softbank Group – ARM News, Vision Fund Weakness Highlight That Share Buyback Will Be Back Loaded
- Nvidia is reportedly close to throwing in the towel on the acquisition of ARM (although markets have assumed that outcome for awhile)
- Softbank can still monetize the asset through an IPO but most likely at a lower valuation and with much fewer proceeds
- We believe ARM was the primary source of buyback funds and with VF down $13bn QTD prospects for meaningful buybacks have been pushed out
Seven & I: Activist & Long Term Investors Riled Up Yet Again
- Seven & I Holdings (3382 JP) has climbed above the June 2021 peak for the first time in seven months despite weaknesses in the overall market.
- Meanwhile, the Financial Times reported yesterday that 3 of the top 30 long term investors have requested Seven & I to get rid of underperforming businesses.
- Although the company brushed off previous attempts by activist investors, the pressure from long term investors could tip the scales and force Seven & I to focus on convenience stores.
Ichigo (2337): Property Sales Finally in Full Swing
Sold 16 residential properties. Gains on sale far exceeded our expectations
Regarding this transaction, the company will book sales of around 17.7bn yen, RP of around 2.5bn yen, and NP of around 1.7bn yen in 4Q
In 1-3Q FY2/22, the company posted NP of 2.0bn yen. The company appears to be highly confident of achieving its full-year NP guidance of 5.0-8.0bn yen
Disco (6146 JP): Valuation Reasonable but Not Compelling
- 3Q results were above guidance, as expected. Full-year guidance looks conservative, as usual. New orders ahead of sales, pointing to one or two good quarters ahead.
- Shares down 10% since the beginning of January. Valuation reasonable but not compelling given the risk of a cyclical peak in SPE demand this year.
- Uncertainty likely to keep the shares in a trading range.
CyberAgent: Earnings Miss Consensus and No Guidance; Games Growth Is Worrying
- CyberAgent reported 1QFY09/2022 results on Wednesday. Revenue for the quarter increased 30.6% YoY to JPY171.1bn (vs consensus revenue of JPY173.4bn) while OP increased 11.6% YoY to JPY19.8bn (vs consensus JPY24.5bn).
- Games business reported strong growth in revenue, however, OPM continues to decline with increased advertising cost. Some of the older titles which performed strong have started to decline.
- Internet advertising and Media continue to grow, with resurgence of Covid-19 cases, it seems internet ad business will take longer to bounce back to pre-Covid levels.
Sawai Pharmaceutical: Big Capacity Expansion Planned Amid Supply Shortages to Drive Market Share
- Sawai Pharmaceutical’s in-house expansion plan, coupled with its recent acquisition of a production facility will enhance annual production capacity by 48% in multiple stages by 2030.
- Capacity expansion will help the company to achieve its aim of market share expansion amid a shortage of generic drug supply in Japan.
- Through H1 FY22, the company has achieved 51% and 58% of full-year’s revenue and core operating profit target for Japan, respectively.
Makuake (4479): A Further Decline in CVR Is a Negative, but Not a New Factor
CVR declined despite an increase in the number of projects. However, this is not a new negative factor
Makuake (4479, the company) announced 1Q FY9/22 parent results. Total amount of pre-orders (GMV) was 5.369bn yen (+19.0% YoY, -7.5% QoQ)
KPIs: Focus on the effectiveness of CVR measures going forward
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