In today’s briefing:
- JAPAN PASSIVE – The GPIF in FY2021
- PipeDo Holdings (3919) MBO – Advantest Again, This Time It’s a Stitch-Up
- GPIF Investment In Startup Funds Marks A Cultural Shift
- KDDI (Buy) – Network Outage Is a Bad Look but Concerns Should Fade over Time
- Skylark Holdings (3197): Solid Guest Count Recovery Due to Promotions
- Z Holdings (4689) | SOTP Reveals Huge Upside
JAPAN PASSIVE – The GPIF in FY2021
- The GPIF reported its annual investment results for the FY to March 2022 last Friday. The investment report makes for interesting reading.
- The GPIF made 5.42% but alpha was negative 6bp vs time-weighted and money-weighted benchmarks.
- The re-allocations amongst asset classes now means more money tracks TOPIX, and it means active managers have their work cut out for them going forward.
PipeDo Holdings (3919) MBO – Advantest Again, This Time It’s a Stitch-Up
- Last autumn, Advantage Partners launched an MBO on Pipedo HD Inc (3919 JP) where an activist/y presence threatened to be able to block it. Partway through, shares popped.
- The MBO was unsuccessful. Now they are back, at the same price, and now they have arranged a side deal with the activist-y holder. So now it is stitched up.
- There could easily be people unhappy with the structure of this deal, especially as book value is up 16%, and projected cashflows 8-10% higher than last time.
GPIF Investment In Startup Funds Marks A Cultural Shift
- The Nikkei reported today that the GPIF would be investing in a startup fund for the first time.
- The move is significant more for its signalling effect than the actual size of the investment which will do little to address the startup funding shortage in Japan.
- Nevertheless it is important as it marks a change in direction and while it may go quietly unnoticed now, the follow-through is likely to be moderate but consistent and lasting.
KDDI (Buy) – Network Outage Is a Bad Look but Concerns Should Fade over Time
- KDDI’s entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints
- There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)
- Looking past near-term weakness, KDDI remains an attractive defensive play
Skylark Holdings (3197): Solid Guest Count Recovery Due to Promotions
- With the recovery of foot traffic, the company stepped up its promotional activities since late May, which had a positive effect on the guest count in June
- In June, the company opened no new store. The number of stores at the end of June was 3,085 (-5 MoM)
- According to the June 26 Nikkei, Skylark Holdings plans to 1) raise menu prices at its mainstay ” Gusto” restaurants at the end of July, and 2) abolish uniform pricing nationwide and limit price hikes for some products at suburban restaurants
Z Holdings (4689) | SOTP Reveals Huge Upside
- Z HD’s stock has been heavily sold with other tech stocks amid a rising interest rate environment
- However, we believe that the 3 core business segments are all performing strongly and will continue to gain share
- Using global comps, we believe that Z HD has more than 100% upside and is the top pick in the online space in Japan
Before it’s here, it’s on Smartkarma
