In today’s briefing:
- Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t
- Toshiba Tec – All-Time Highs
- Meitetsu Transport (9077) Takeover – Parent “Stealing” Logistics Assets at 0.55x Book
- Daikin – Material Costs Look to Be Impacting Margins
- NTT (Buy) – Q3 21 Results Reaction: NTT Data Drives Beat and Raise with Dividend Boost
- Subaru – Improvement in Margins Despite Revenue Decline
- Money Forward (3994): SaaS & Fintech Combined. Initiating Coverage with a Hold
- Japan’s Governance: Considerations Regarding Retirement of Treasury Stock
- Mitsubishi Estate Logistics (3481 JP): Offering Could Trigger Outperformance Vs Peers
- Torikizoku Holdings (3193): January Sales; Second Toriki Burger Store to Open in Shibuya
Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t
- Another quarter, another Toshiba Medium Term Plan as activist investors keep sending management back to the drawing board until they come back with a privatisation.
- Except there is still no sign of any significant appetite among buyers and no sign that they would be allowed to go through with it even if there was.
- So Toshiba management shuffled a few deck chairs and the market yawned.
Toshiba Tec – All-Time Highs
- Toshiba Tec is one of our favourite small caps in Japan with a strong fundamental story and upside event risks from the Toshiba soap opera.
- The name was up 14.3% today despite middling earnings released mid-day on its designation as non-core by parent Toshiba.
- That puts it at an all-time high and within a whisker of ¥5,000 with the event risk now clearly visible.
Meitetsu Transport (9077) Takeover – Parent “Stealing” Logistics Assets at 0.55x Book
- This should come as no surprise. Nagoya Railroad (9048 JP) is buying out minorities in logistics unit Meitetsu Transport (9077 JP).
- Given the shareholder structure, this can be done and squeezed out with not a single share tendered, but it’s ugly.
- Logistics REITs trade at 1.3-1.5x book. This is being done at 0.55x book where just 1.0x book for the warehouse assets would be more than the EV at Takeover Price.
Daikin – Material Costs Look to Be Impacting Margins
- Daikin 3Q results were mixed with revenue of ¥743bn (-2.2% QoQ, 21.3% YoY) looking strong but OP of ¥66.8bn, implying an OPM decline to 9.0% from 10.3% last quarter.
- Reported revenue was 6.0% higher than consensus while OP was 4.2% lower.
- The company revised its FY22 revenue guidance to ¥3,050bn (+4.1%) but OP was raised just ¥10bn to ¥310bn (+3.3%) which may disappoint.
NTT (Buy) – Q3 21 Results Reaction: NTT Data Drives Beat and Raise with Dividend Boost
- NTT has raised financial guidance by 1-2% on upside at subsidiary NTT Data
- A corresponding increase in the FY21 dividend from ¥110 to ¥115 provides a near-term reward for shareholders
- We are raising our target price from ¥3,600 to ¥4,000 and remain at Buy
Subaru – Improvement in Margins Despite Revenue Decline
- Subaru’s 3QFY22 missed consensus with revenue of ¥666bn (-5.8% QoQ, -22.3% YoY) and OP of ¥42.0bn (6.3% OPM) both looking weak.
- The reported revenue and OP were 11.2% and 2.8% lower than consensus estimates respectively.
- The company revised OP guidance to ¥100bn from 2Q’s ¥150bn which itself was lowered from ¥200bn but this should be the last of the bad news.
Money Forward (3994): SaaS & Fintech Combined. Initiating Coverage with a Hold
We initiate coverage of Money Forward, Inc. (3994, Money Forward, the company) with a target price of 5,650 yen and a Hold rating.
We forecast sales of 20.6bn yen for FY11/22 (+32.1% YoY) and 26.4bn yen for FY11/23 (+27.7% YoY)
Our target price is based on a target EV/Sales multiple of 10.5x for FY11/23
Japan’s Governance: Considerations Regarding Retirement of Treasury Stock
- The frequency of share repurchases is highly correlated not only with ROE and ROA, but also with changes in market capitalization, regardless of whether the stock is undervalued or not.
- Since the frequency of share retirements was found to be correlated with key board practices, I examined hypothesis that an improvement in board practices would have positive impact on actions.
- As a result of focusing on ％ independent directors, key to ensuring the transparency of board, it was confirmed that ％ independent directors has significant positive correlation with many actions.
Mitsubishi Estate Logistics (3481 JP): Offering Could Trigger Outperformance Vs Peers
- After the close on 7th February 2022, logistics JREIT Mitsubishi Estate Logistics (3481 JP) (“MEL”) announced a follow-on equity offering to fund part of their recently announced property acquisition.
- The primary offer quantity is 56,000 units. In addition, there will also be an over-allotment quantity of 2,800 units. The total size of this offering could be roughly ¥24.5bn (~US$213mn).
- 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.
Torikizoku Holdings (3193): January Sales; Second Toriki Burger Store to Open in Shibuya
- Same-store sales were 200.1% vs. January 2021 (155.0% for December), 56.2% vs. January 2020, and 60.4% vs. January 2019
- Despite the expansion of the area requesting shorter hours during January, the company did relatively well, in our view, to secure a SSS of 60% vs. pre-pandemic period.
The number of stores at the end of December was 615 (unchanged MoM). The number of directly-owned stores was 384 (unchanged MoM).
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