In today’s briefing:
- Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail
- Toshiba – Both Proposals Voted Down
- Yamaha Motors Buyback (7272) – Medium-Bigly Buyback Complicated by TOPIX FFW and Cross-Holdings
- MonotaRo: A Rare Winner in E-Commerce
- Shimadzu (7701 JP): Excessive Valuation Gone, Business Doing Well
- Nikkei 27k Pivot Hangs in the Balance – Fresh Buy/Sell Levels
Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail
- Toshiba EGM fails to provide a positive result as both Toshiba’s own Separation Plan and 3D Investment’s proposal to enhance privatisation bidder engagement and transparency fail.
- Activists are stuck. Management is too. 3+ years since the last big buyback and 3 new CEOs and we are back to the drawing board for both management and activists.
- But both have a head start. The Shareholder Return Plan, eventual disposition of Kioxia, and non-core asset sales would be a start. And Raymond Zage’s letter is worth a re-read.
Toshiba – Both Proposals Voted Down
- Votes at Toshiba’s EGM ended up being cast in the most likely fashion with both management’s and 3D’s proposals being voted down.
- There was nevertheless considerable uncertainty and it will be interesting to see what the voting breakdowns were.
- For now, however, this just pushes out the prospect of any true resolution and we view that as negative.
Yamaha Motors Buyback (7272) – Medium-Bigly Buyback Complicated by TOPIX FFW and Cross-Holdings
- Yamaha Motor (7272 JP) announced a short-term buyback. 3 months, 3%. It isn’t huge but it helps with the TOPIX FFW changes to come in two weeks.
- It also helps with the extra overhang from last year’s selldown and the significant cross-holding overhang which exists.
- But the shares are very inexpensive vs peers when one looks at consensus forward earnings and EBIT, and better growth is expected too.
MonotaRo: A Rare Winner in E-Commerce
- Among many e-commerce names, MonotaRO Co Ltd (3064 JP) is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.
- Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.
- At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.
Shimadzu (7701 JP): Excessive Valuation Gone, Business Doing Well
- Sales of analytical and measuring instruments, medical systems and industrial machinery are all doing well. Aircraft equipment lags, but should improve next fiscal year.
- Guidance has been raised three times and now calls for an 8% increase in sales and a 23% increase in operating profit in FY Mar-22.
- Not compellingly cheap, but worth looking at from a long-term perspective.
Nikkei 27k Pivot Hangs in the Balance – Fresh Buy/Sell Levels
- Japan’s Nikkei pushed above out 27k pivot and is now tactical buy support with 28,200-400 the fresh sell zone. Impulsive squeeze needs the dust to settle.
- Fresh sell/short resistance lies at 28,200/500 where price, trendline and the 50 dma coincide. Expect a dip and rally sequence in order to build a secondary top.
- The impulsive rise from 25k to current levels was stronger than we expected and got this rally extension wrong.
Before it’s here, it’s on Smartkarma
