In today’s briefing:
- TOPIX-Nikkei Skew Trade – Updates Factoring in Ukraine
- Bank of Kyoto (8369) – A Complicated Risk Model Clarified
- Yamazaki Baking: As Margins Double, 100% Upside Is Possible
- Torikizoku Holdings (3193): February Sales Affected by Omicron
TOPIX-Nikkei Skew Trade – Updates Factoring in Ukraine
- The Nikkei is now down 9.57% vs. when we first recommended our skew trade (now up 0.40%).
- Despite some frustrating idiosyncratic moves which have prevented the skew trade from outperforming more it has mostly held up.
- Looking forward, we believe it is worthwhile assessing upside and downside macro risks for the components of the trade.
Bank of Kyoto (8369) – A Complicated Risk Model Clarified
- Last May I proposed a model for thinking about the appropriate discount of Bank of Kyoto (8369 JP) vs its giant equity portfolio and small operations. It was a sell.
- In December, the bank changed its shareholder return ratio, which indicated less value destruction, and tighter appropriate discount. The shares rallied and discount narrowed.
- Now the Shares Adjusted for Banking Ops Valuation have seen the discount to After-Tax Equity Portfolio Valuation widen sharply in the past 10 days. So here’s the hedging model.
Yamazaki Baking: As Margins Double, 100% Upside Is Possible
- Yamazaki Baking (2212 JP) raised prices in January 2022 due to rising oil prices. We are expecting another price hike very soon to reflect the 60% increase in wheat prices.
- These price hikes may not increase Yamazaki Baking’s 2022 OP margin significantly above the guided level.
- However, once input prices normalise following the Russia Ukraine war, we could see Yamazaki Baking’s OP margin reaching 4.0% in the medium term.
Torikizoku Holdings (3193): February Sales Affected by Omicron
February SSS 112.8% vs. 2021, 39.1% vs. 2019 (pre-pandemic)
The number of stores at the end of February was 615 (unchanged MoM). The number of directly owned stores was 384 (unchanged MoM).
Second Toriki Burger store to open in Shibuya on March 10
Before it’s here, it’s on Smartkarma
