In this briefing:
- NTT DoCoMo: Sale of HTHK Mobile Stake Is the End of an Era (Thankfully)
- Smartkarma’s Week that Was in JP/KR: Nexon, Japan Post, Toyota and Doosan Heavy
- Rakuten IPO Redux: Pinterest Surfaces More Liquidity but Not Paper Profits
- AGC Placement Quick Take – Relatively Smaller Deal, Share Price Correction Should Help
- Nikkei Pressing on Intermediate Rejection Resistance
1. NTT DoCoMo: Sale of HTHK Mobile Stake Is the End of an Era (Thankfully)
NTT Docomo Inc (9437 JP) recently announced it would sell its 25% stake in Hutchinson Telecom Hong Kong’s ( Hutchison Telecommunications Hk Hld (215 HK) mobile unit for US$60mn with closing expected at the end of May. This ends a 20-year association with Hutchinson forged in the initial excitement over 3G in 1999 but it hasn’t been a good ride for DoCoMo which lost close to 90% on its Hutchison investments and its other international forays were not much better. On a related note, the HK mobile sale follows soon after DoCoMo’s exit from its credit card joint venture with Sumitomo Mitsui but we would not read anything into this beyond a rationalization of its non-core investments.
2. Smartkarma’s Week that Was in JP/KR: Nexon, Japan Post, Toyota and Doosan Heavy
Below is the list of the Japan/Korea-related posts put on the Smartkarma platform during the week of April 01st:
Insight | Insight Provider | Published |
Japan | ||
1/4/2019 | ||
1/4/2019 | ||
1/4/2019 | ||
1/4/2019 | ||
2/4/2019 | ||
2/4/2019 | ||
3/4/2019 | ||
3/4/2019 | ||
3/4/2019 | ||
3/4/2019 | ||
4/4/2019 | ||
4/4/2019 | ||
5/4/2019 | ||
5/4/2019 | ||
7/4/2019 | ||
7/4/2019 | ||
7/4/2019 | ||
South Korea | ||
3/4/2019 | ||
8/4/2019 | ||
3. Rakuten IPO Redux: Pinterest Surfaces More Liquidity but Not Paper Profits
Rakuten Inc (4755 JP) investee Pinterest Inc (PINS US) has filed its IPO prospectus implying a lower valuation than its last venture round but a robust increase in value since Rakuten led the Series C round in May 2012. We think an initial ¥4bn investment could be worth ¥25-30bn at the midpoint of the suggested IPO range.
- As with Lyft, the absolute value again and shift to greater liquidity are positive as it gives Rakuten more financial flexibility as it ramps up investments in the mobile business.
- Unlike Lyft, the Pinterest IPO value is down from the latest funding round which impacts paper profits that provide cover for spending on mobile albeit at a fraction of the upside from Lyft.
Pinterest doesn’t generate the same headlines as Lyft but a second IPO of a Rakuten investment as its cash needs expand can only be good news
4. AGC Placement Quick Take – Relatively Smaller Deal, Share Price Correction Should Help
AGC Inc (5201 JP) plans to raise US$215m (including over allotment) via a secondary offering of share, this represents 2.9% of the outstanding shares.
The deal scores a mixed score on our framework, aided by its cheaper valuation while it scoring is hampered by its under performance versus it regional peers. However, the shares have been correcting since the deal was announced and the deal represents just a few days of ADV.
5. Nikkei Pressing on Intermediate Rejection Resistance
Japan has been a favored pair short bet against the likes of China. The standout chart feature is the rising wedge break of support and reaction rise to test the elevated underside of this trendline (backswing resistance). Very often backswing resistance points are not surpassed and act as a cycle turn point. Yesterday’s Nikkei price reversal favors this outcome.
We anticipate risk appetite to exhaust for US equities and the China complex once a trade deal is locked in (with drawn out conditions for the market to digest). This would leave the fragile Nikkei technical posture vulnerable to a hard correction cycle. The overall major trend still remains down for Japan (and Korea) unlike China.
A higher conviction USD/JPY peak will unfold at noted RSI and MACD resistance points that are expected to make peaks and a bearish turn cycle.
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