In today’s briefing:
- TOPIX-Nikkei Skew Trade Looking Increasingly Juicy
- Nippon Building Fund (8951) – Calculating Passive Tracking of J-REITs and Index Events Around Offers
- Monex – Bitcoin Breakdown Means This Needs a Hedge
- Nippon Building Fund (8951): Offering Could Trigger Outperformance Vs TSEREIT Index
- Fast Retailing: An Earnings Miss Could Be Around the Corner
- Comforia Residential REIT (3282 JP): Offering Could Trigger Outperformance Vs Comps
- Japan’s Governance: Corporate Governance Evaluation of Pharmaceutical Companies
TOPIX-Nikkei Skew Trade Looking Increasingly Juicy
- Our suggested TOPIX-Nikkei skew trade continues to grind out positive returns with relatively low volatility.
- With Nikkei starting to noticeably underperform over the last few days we believe faster outperformance could be ahead.
- In particular we believe two of the worst performing legs here could start to contribute.
Nippon Building Fund (8951) – Calculating Passive Tracking of J-REITs and Index Events Around Offers
- Nippon Building Fund (8951 JP) announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.
- That is an occasion to look at how much of float is held by passive trackers.
- A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.
Monex – Bitcoin Breakdown Means This Needs a Hedge
- We said previously that we would remain positive on Monex until there were signs of a crypto currency breakdown.
- That now appears to be happening and we are thus leery of the pure long trade here.
- However, earnings trends are reasonable and we still like the name so we would examine hedging options.
Nippon Building Fund (8951): Offering Could Trigger Outperformance Vs TSEREIT Index
- Today after the close, Nippon Building Fund (8951 JP)(“NBF”) announced a follow-on equity offering to fund part of their recently announced property acquisition.
- The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,500 units. The total size of this offering could be roughly ¥33bn (~US$285mn).
- Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.
Fast Retailing: An Earnings Miss Could Be Around the Corner
- It is going to be challenging for Fast Retailing (9983 JP) to meet the 1QFY22 consensus revenue and OP, when it releases the first quarter results next week.
- Comps were quite strong in the last year, driven by pent-up demand and consensus is expecting 1QFY22 to be marginally higher than the same period of the previous year.
- We think there could be a substantial miss in 1QFY22, driven by lower than expected performance in Uniqlo’s Japan and Chinese businesses.
Comforia Residential REIT (3282 JP): Offering Could Trigger Outperformance Vs Comps
- Yesterday after the close, Comforia Residential REIT (3282 JP) (“CRR”) announced a follow-on equity offering to fund part of their recently announced property acquisition.
- The primary offer quantity is 22,960 units. In addition, there will also be an over-allotment quantity of 1,140 units. The total size of this offering could be roughly ¥7.4bn (~US$64mn).
- Below, we take a look at the attractiveness of CRR’s latest offering with greater emphasis on the potential for strong post-offering secondary market performance.
Japan’s Governance: Corporate Governance Evaluation of Pharmaceutical Companies
- Since I am interested in Eisai’s corporate governance initiatives, this article would like to analyze them in conjunction with the situation of pharmaceutical companies.
- Eisai has an outstandingly high rating, except for the fact that it has anti-takeover measures. The other 3 companies that have anti-takeover will need to improve corporate governance practices considerably.
- The growth policy is reasonable and clearly explained, but there is still room for improvement in the use of the retained cash and disclosures in English for Eisai.
Before it’s here, it’s on Smartkarma
