Daily JAPAN: Softbank Corp, Takeda, and Newton’s Three Laws of Motion and more

In this briefing:

1. Softbank Corp, Takeda, and Newton’s Three Laws of Motion
2. Last Week in Event SPACE: ANTA, Japan Display, Pioneer, Naspers, Huatai, Red Hat
3. ECM Weekly (15 December 2018) – Wanka, Alpha Smart, CMGE Tech, Junshi Science, Xinyi Energy.
4. SMC (6273 JP): Profits Start to Decline
5. Independent Director Is a Great Way to Supplement Retirement in Japan….

1. Softbank Corp, Takeda, and Newton’s Three Laws of Motion

It has been a huge Q4 for Japan capital markets and banking, and the result is some fat fees for global investment bankers on the Takeda/Shire deal, and a Softbank Corp IPO which I’d be totally OK not owning. A result of this activity is the fun in index land.

And there is a lot of fun to be had.

Some of that fun has been described in Softbank Corp IPO – Dividends, Index Buying, and Offer Structure. More was described in the various insights in the Takeda/Shire series, most recently in Takeda/Shire VI: Now For The Real Fun.

But it is worth revisiting because it involves, over the five weeks starting just before the Christmas holidays, across the two deals, probably…

US$35 billion of index flows…

Timing and impact is discussed herein.

2. Last Week in Event SPACE: ANTA, Japan Display, Pioneer, Naspers, Huatai, Red Hat

 Last Week in Event SPACE …

• The reward/risk is pretty decent on the Anta Sports Products (2020 HK) /Amer Sports Oyj (AMEAS FH) trade.
• A rumoured Chinese partner would quickly help resolve Japan Display (6740 JP)‘s battered balance sheet.
• After being under the cosh for years, Pioneer Corp (6773 JP)‘s investors are being asked to approve a cramdown where they themselves are the victims.
• Naspers Ltd (NPN SJ)‘s risk profile appears attractive as the company continues to take steps to narrow the valuation gap.
• For the Huatai Securities Co Ltd (H) (6886 HK) GDRs, it all boils down to fungibility. 
• Red Hat Inc (RHT US) sets a January shareholder meeting, while the HSR U.S. antitrust 30 day waiting period expires this week.
• Travis discusses Newton’s Three Laws of Motion and their relevance to the Softbank Corp (9434 JP) IPO and Takeda Pharmaceutical (4502 JP) / Shire PLC (SHP LN) merger situations.
• Australian Pharma Indus (API AU) tilts at Sigma Healthcare (SIG AU) and the result after a 40+% pop is probably still a mismatch in terms and value.
• Plus a swag of share classification insights on A/H, dual class and ADRs. 

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events – or SPACE – in the past week)

ANTA Sports Products (2020 HK) (Mkt Cap: $12.8bn; Liquidity: $28mn)

Amer Sports Oyj (AMEAS FH) announced (ANTA’s is here) an Offer at €40/share (a 39% premium to the undisturbed price of 10 September 2018), and announced that the Board of Directors of Amer Sports has decided to unanimously recommend that Amer Sports’ shareholders accept the Tender Offer. Several major shareholders holding 7.91% have irrevocably undertaken to tender, and Maa-ja vesitekniikan tuki r.y., who hold ~4.29%, have expressed that they view the Tender Offer positively. ANTA indirectly holds 1,679,936 shares (1.4%) as well.

• As noted in Travis Lundy‘s first insight ANTA (2020 HK) Lobs Possible €40/Share Bid for Amer, this is a relatively full bid. It has a fair bit of promise though as it gets a bunch of new brands into new stores. 
• ANTA and consortium appear to have the funding. As suspected and discussed in the original doc, FountainVest is a fair bit smaller than 50%. The equity stakes are, indirectly, 57.95% ANTA, 15.77% FountainVest, 5.63% Tencent Holdings (700 HK), and 20.65% Anamered Investments (Chip Wilson’s vehicle). There is a Shareholders’ Agreement which allows FountainVest the right to effect a Trade Sale if a “Qualified IPO does not take place within 5 years”, which seems reasonable. This effectively means that the company will be put up for sale in 5yrs.
• It should be 11.5 weeks from Monday to Tender Offer completion, with 81-83 days between trade settlement and payment for Tender shares. That is ~27.1% annualized as of Friday’s close. This spread should drop at least by half after the Tender Launch scheduled for 20 December. Anti-trust and other authorities’ approval will be required. If ANTA gets over 90% of the shares, they intend to commence mandatory redemption (squeezeout) proceedings.
• It should be noted that this deal offers significant leverage to ANTA and even more to the minority investors. ANTA is effectively collateralizing some LBO debt with its own earnings. As ANTA will not consolidate, the only way to see the numbers will be to look through the affiliate income. The saving grace here for everyone may be that it is remote from ANTA, which means transfer pricing will be carefully watched.

links to:
Travis’ insight: ANTA (2020 HK) Angling on Amer Apparent
Arun’s insight: ANTA/Amer: Good Deal for Amer and FountainVest, a Poor Deal for ANTA 

Japan Display (6740 JP) (Mkt Cap: $520mn; Liquidity: $15mn)

NHK reported JDI was in talks to sell about a 33% stake to a Chinese consortium for $440m (probably ¥50bn) which would value the company at about 3.5x (at the time) its current market cap. INCJ is also, apparently, considering support. These moves would go a long way toward restoring the company’s beaten-up balance sheet and the cost cuts should allow the company to survive – although Apple’s struggles still cast a shadow on a return to a strong level of profitability. JDI’s share price shot up 34.6% on the news on Friday. 

• JDI’s massive share price drop since its listing has been due to its weakened balance sheet and a slow shift to OLED, which this reported funding will go some way to addressing. Mio Kato, CFA‘s view is that JDI has some very promising businesses and the company is undervalued.
• JDI still has an unhealthy over-dependence on Apple but they are doing everything they can to dilute the influence, increasing automotive display sales at double-digit rates and maintaining and growing their top market share in that segment, as well as producing more VR and notebook LTPS screens.
• There still remains excess capacity in the industry due to Chinese government subsidies for display panel manufacturers and an over-ambitious build-out of both LTPS and OLED capacity. This is not going to improve drastically anytime soon but some of the planned OLED capacity expansions are being pushed out and much of the LTPS capacity increases have already been completed.

(link to Mio’s insight: Japan Display: Squeezing Up 36% As Chinese Investment Could Solve Balance Sheet) 

Pioneer Corp (6773 JP)(Mkt Cap: $210mn; Liquidity: $4.2mn)

After Pioneer revealed in September it had sold its Tohoku Pioneer subsidiary to Denso Corp (6902 JP) for ¥10.9bn, it announced an MOU with Barings and went into debt to them. That seemed like “the end of the line” for the company. Pioneer needed a sponsor, but it was going to stay listed. Last week, Pioneer announced a “Partnership” with Baring Private Equity Asia which is a revitalization plan of ¥102bn. The deal offers minority shareholders an exit. The announcement does not mention investors are effectively being asked to approve their own squeezeout at 25% below the last price.

• In the deal as presented, shareholders are being asked to approve an exit price 75% below 52-week highs which came AFTER the capital reduction in summer 2017, and after the sale of assets earlier this year, sell their shares at roughly one-third of existing book value per share, and sell its 3D LiDAR business and technology for… zero.
• There are caveats. ALL of Pioneer’s net equity is intangibles. It has payables higher than receivables as of the end of September, and ¥25bn in net debt (increased by the ¥25bn lent by Baring).  The company has roughly 2.5x EBITDA in inventory, and in a company which is losing money by being in business, inventory as marked is not as good as cash. The company has close to ~¥30bn in underfunded pension liabilities. 
• Travis does not expect a public activist outcry. Activists who wanted to buy into this have already done so.  Any who do going forward have no vote because the record date for the vote was 7 December.

(links to Travis’ insights: Barring Beleaguered Booster Boldness, Baring Buys Pioneer (In a Takeunder))  

On December 3^rd, the boards of both Hindustan Unilever (HUVR IN) (“HUL”) and GlaxoSmithKkine (“GSKCH”) approved a merger (subject to regulatory and shareholder approval) – at an exchange ratio of 4.39 HUL shares for every 1 GSKCH share – in a £3.1 bn deal.  Combining with GSKCH should see HUL leapfrog both Britannia Industries (BRIT IN) and Nestle India (NEST IN) in food and refreshment revenue, and put it roughly on level pegging with ITC Ltd (ITC IN).

• Approvals should be a foregone conclusion. With neither Unilever or GSK required to abstain, the 75% shareholder approval threshold is all but a lock.  GSKCH’s shareholders get the benefit of HUL’s vast distribution network, while HUL gets a better understanding of the pharma channel. 
• Regulatory approval should not be an issue. 90% of cases handled by India’s anti-trust body CCI have been approved without the requirement for any modification. There is minimal overlap here – this is HUL’s big splash to build a sustainable and profitable food and refreshment business in India. Greater opposition would be expected if either BRIT, NEST or ITC made a tilt for GSKCH.
• The transaction should be completed in one year, subject to regulatory and shareholder approvals. It’s a long-dated, but low-risk deal. Expect the tight spread to remain tight – this deal may close faster than the “expected” one-year timeframe. 

(link to my insight: Hindustan And GSK In The Pursuit of Happiness)  

Red Hat Inc (RHT US) (Mkt Cap: $31bn; Liquidity: $485mn)

Red Hat has set a meeting date of January 16, 2019 for shareholders to vote on the merger agreement with Intl Business Machines (IBM US), and related matters. Red Hat also set a record date of December 11th, 2018 for shareholders entitled to vote on the deal. 

• The fact the meeting date has been set means the SEC chose not to review the merger proxy (a less common occurrence than a review) and notified the companies of this decision within the expected 10 calendar days. 
• While the Company issued the press release, a new proxy has not yet been filed. John DeMasi expects we will see a definitive merger proxy filed within the next few days. Since the HSR U.S. antitrust 30 day waiting period will not expire until December 21st, he doesn’t expect an update on HSR in the definitive proxy, and it still appears the EC Competition filing has not been made according to the EC website.
• John believes the deal is still on track for a Q2/Q3 2019 close and believes the risk/reward looks attractive here.

(link to John’s insight: Red Hat Sets January 16, 2019 Special Meeting Date to Vote on IBM Deal)  

Macquarie Radio Network (MRN AU) (Mkt Cap: $235mn; Liquidity: $0.1mn)

Reportedly, preliminary discussions are underway between Nine Entertainment Co Holdings (NEC AU) and MRN’s second-largest shareholder, John Singleton. This development is not entirely unsurprising; it appears formal discussions were deferred until the Nine/Fairfax Media (FXJ AU) merger was formally completed (which occurred on 7 December). Nine acquired Fairfax’s 54.5% stake in MRN in the merger, discussed in my insight Nine & Fairfax – Integrated Advertising.

• Also reported in the press, Nine has offered $2/share (a 9.3% premium to the closing price of A$1.83 on December 4^th), with Singleton (a willing seller) believed to be holding out for $2.15/share. In a further twist, Alan Jones, with 1.27% of MRN, is understood to have certain conditions/clauses attached to that stake, which may make an offer tabled by Nine potentially untenable.  
• MRN was trading between A$1.20 and A$1.60 during the first half of the year. Following the announcement of the Nine-Fairfax merger in July, the share price reached a high of A$2.18. While the expected offer price of A$2.00 is 8.3% lower than this lifetime high, it is still 26% higher than the stock’s undisturbed price of A$1.59 before the Nine-Fairfax merger deal was announced.
• Nine is interested in mopping up shares in MRN it does not already own. John Singleton is a seller, at the right price. Nine’s CEO Hugh Marks is keen to move quickly, not just taking full control of MRN, but also divesting assets that do not focus on digital subscriptions, mass audiences and national advertisers. It’s now a question of how much Nine is willing to pay, and the added benefits therein to Nine from a privatisation compared to its current majority and consolidating stake.

(link to my insight: Macq Media In The Crosshairs As Fairfax Merger Completes)  

Celltrion Inc (068270 KS) / Celltrion Healthcare (091990 KS)

While Inc and Healthcare are not cross-linked by any shareholding, Healthcare is ostensibly Celltrion’s internal sales arm. Their fundamentals and prices should be (& are) highly correlated.

• Sanghyun initiated a pair trade (short Celltrion / long Healthcare) on Oct 22. The ongoing FSS investigation is hammering both, Healthcare more so as it is more directly exposed. But given what happened to Samsung Biologics Co., (207940 KS), it is very unlikely that this will be a serious risk.

(link to Sanghyun’s insight: Celltrion / Celltrion Healthcare Pair Trade: Ratio Should Move in Favor of Healthcare)  

• The deal is at a nice premium – 46.8% to the one-month average, and 69% to the day before. It was about 10% better than where API started buying.
• But it may not be good enough. The deal offers some cash, but also offers expensive scrip. API appears to need this deal as much as some would say Sigma does.
• Sigma is in the process of doing a zero-based full business review with Accenture and indications are that everyone thinks the company is worth a lot more than where it was trading last week.
• This deal looks like it has a big premium but it may not be enough.

(link to Travis’ insight: API Tilts at Sigma Healthcare: Expect More)

• Assuming the GDRs trade similarly to the Hs, or even 1% of their maximum issuance quantity, and assuming they have a similar discount to the As as do the Hs, the GDRs will not likely trade more volume than the H Shares.
• It is not clear WHY the GDRs would, over time, maintain a tighter discount to the A Shares than the H Shares would …. Except for the fungibility. Which may be the only reason to hold the GDRs at a 20% discount when you can get the H-shares at a 30+% discount. But the system may not be ready to handle GDR creation by mainland domestic investors trying to export capital, even at a discount. 
• The whole deal comes across as somewhat iffy. It is not clear why the deal needs to be done other than to fill a political need to get the ball rolling. But one wonders why the London-Shanghai Connect ball actually needs to be rolled. 

(link to Travis’ insight: Huatai Securities GDR Gets The Green Light, Taps Brakes) 

Naspers Ltd (NPN SJ)/Tencent Holdings (700 HK)

Naspers’ recent underperformance against Tencent has resulted in the discount to NAV widening to near-on 12 months lows. While Naspers remains a function of what happens to Tencent, it offers potentially interesting long-term prospects.    

• This pseudo-venture capital company is taking steps to narrow the valuation gap via the reduction in its Tencent stake, the sale of successful investments (Flipkart and tbogroup), the listing of profitable entities (Multichoice), the investment in specific areas (classifieds, online retail, payments businesses and food delivery), working to reduce its exposure to the Johannesburg Stock Exchange, and perhaps pursue a dual listing outside of SA, such as Hong Kong. To me, Naspers’ risk profile appears attractive here.
• New Street Research‘s Alastair Jones views the most recent Naspers results as broadly positive with continued progress in profitability from its e-commerce assets. He also believes that, given moves to unbundle the pay-TV assets in 2019, there is scope for the NAV discount to narrow.  The current low/negative valuation for the unlisted assets ignores their significant value.

links to:
my insight: StubWorld: Naspers And The Valuation Gap.
Alastair’s insight: Naspers: Profitability Improvements Continue

Toyota Industries (6201 JP) / Toyota Motor (7203 JP)

Curtis Lehnert recommends a Toyota Industries’ set-up at current levels which are in excess of -2 Standard Deviations below the long-term average, while Toyota Industries is trading at a 35% discount to his NAV – Toyota Industries’ stake in Toyota Motor accounts for 60%).

• The group boasts the #1 global market share in forklifts with an estimated 20% market share. Toyota Industries’ closest competitor in the materials handling business is KION Group AG (KGX GR); however, Curtis estimates the market is implying 0.83x for these ops, 28% lower than Kion’s 1.15x.

(link to Curtis’s insight: TRADE IDEA – Toyota Industries (6201 JP) Stub: Riding the Automation Wave)  

Newton’s Three Laws of Motion And How They Pertain to Index Inclusions

Travis Lundy noted that Newton’s Third Law, commonly understood that for every action there is always an equal and opposed reaction, applies in some measure to index inclusions.

• For every index upweight, there is an equal and opposite downweight.
  
• Because of the listing of Softbank Corp (9434 JP) and the closing of the Takeda Pharmaceutical (4502 JP) / Shire PLC (SHP LN) merger, there will be roughly ¥1.35 trillion of index selling to make room for those two stocks.
• Read his insight for more.

(link to Travis’ insight: Softbank Corp, Takeda, and Newton’s Three Laws of Motion)

Briefly …

• The HDC Holdings (012630 KS) / HDC-OP (294870 KS) price ratio is close to a year low. The Holdco discount now stands at 47.92% to NAV.  The major shareholder Chung Mong-kyu bought an additional 0.63% stake in HDC Holdings for ₩16.1bn from Dec 6~10, however that selling now appears to be over.
  (link to Sanghyun’s insight: HDC Holdings Holdco Trade: Status Update & Recommended Action)
• The BGF Co Ltd (027410 KS) / Bgf Retail (282330 KS) price ratio is at a new yearly low. The Holdco discount now stands at 48.55% to NAV. There is now an estimated 1.5~2% difference in dividend yield. 
  (link to Sanghyun’s insight: BGF Holdo Trade: Status Update & Recommended Action)

Travis published his H/A Spread Monitor Project offering a brief look at recent changes in H-Share and A-Share spreads, Southbound flow and impact, and where the spreads are trading within their own historical ranges. My share class monitor provides a snapshot of the premium/discounts for 215 share classifications around the region. Ke Yan, CFA, FRM issued his Discover HK Connect series, to help understand the flow of southbound trades via the Hong Kong Connect.

• The largest net buys this week were generally in healthcare and IT, and consumers. Large net buys were seen in Yichang Hec Changjiang Pharm (1558 HK), Tingyi (Cayman Islands) Holding Corp (322 HK), Semiconductor Manufacturing (981 HK) , BYD Co Ltd (H) (1211 HK), and Sands China Ltd (1928 HK). The largest net sells this past week were Tencent Holdings (700 HK), and several banks, real estate developers, and then Sunny Optical Tech (2382 HK). 

• For liquid Korean prefs, Samsung Electronics Pref Shares (005935 KS), which trades $36m a day, is at a 36% discount, which compares with its annual range of -42%/+36%.

links to:
Travis’ insight: H/A Spread & Southbound Monitor – Going Into Year End
my insight: Share Classifications: Mid-December 2018 Snapshot   
Ke Yan’s insight: Discover HK Connect: Mainlanders Are Buying Shandong Gold, Tingyi, YiChang HEC (2018-12-10)  

Hyundai Motor Co (005380 KS) (Mkt Cap: $20.7bn; Liquidity: $64mn)

The 1P (005385 KS) / 2P (005387 KS) dividend yield difference of 0.53% is close to a year high. Of interest is the recently announced hydrogen cell investment, which may be considered a signal that the HMG-government relation has vastly improved. This potentially suggests that any HMG restructuring may get accelerated, which would be positive for 1P. (link to Sanghyun’s insight: Hyundai Motor Share Class: Time for 1P to Catch Up)  

• Trade Me (TME NZ) and Apax Partners have entered into a scheme implementation agreement. Apax Funds have increased their offer price to $6.45/share (from $6.40) since the indicative proposal, following the completion of their due diligence. The Board has unanimously backed the offer.  A booklet containing information relating to the scheme is expected to be mailed to Trade Me shareholders in March 2019. The Board expects that Trade Me shareholders will have the opportunity to vote on the scheme at a meeting in April 2019. If all the conditions are satisfied, the scheme is expected to be implemented in the second quarter of 2019. Hellman & Friedman was not expected to materially counter and promptly pulled out of the race. 
• Cityneon Holdings (CITN SP).  West Knighton now has 98.6% of shares out and will move to compulsory acquire shares it does not own. The closing date has been extended until the 26 December. 
• Sinotrans Shipping (368 HK). As expected from the onset, shareholders approved the privatisation. Turnout was low – around 47.6% of shareholders entitled to vote, did so. Friday was the last day of trading. Cheques are expected to be dispatched on or before the 22 Jan 2019. 
• Stanmore Coal (SMR AU)‘s has released the Target Statement. The board continues to recommend shareholders reject the $0.95/share unsolicited Golden Investments. The IFA  has a fair value range of $1.48-$1.90/share. Shares closed at A$1.04 on Friday.

My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions.  These may be indicative of share pledges.  Or potential takeovers. Or simply help understand volume swings. 

Often these moves can easily be explained – the placement of new shares, rights issue, movements subsequent to a takeover, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.   

3. ECM Weekly (15 December 2018) – Wanka, Alpha Smart, CMGE Tech, Junshi Science, Xinyi Energy.

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72% for IPOs and 64% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings this week

• Shanghai Henlius Biotech (Hong Kong, ~US$500m)
• Ingrid Millet (Hong Kong, re-filed)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Chat-service firm Slack taps Goldman Sachs to lead IPO: sources
• Kyobo Life Insurance to seek IPO next year
• Uber has confidentially filed to go public
• London billionaire Michael Spencer boosts stake in Singapore Life, considers IPO
• Brokerages scramble on tepid investor response over SoftBank IPO
• After delivering 24 electric cars, this Chinese startup has IPO dreams
• Solar energy firm Xinyi said to postpone up to $582m Hong Kong IPO

Smartkarma Community’s this week Analysis on Upcoming IPO

• Alpha Smart – Pre-IPO – PE Investors Recovered 56% of Their Cost in Two Years but Left It in Debt
• Xinyi Energy IPO Valuation: Asking More Than What It Is Paying to Acquire Target Portfolio
• CMGE Tech (中手游) Pre-IPO Review – Unfortunate Timing
• Junshi Bioscience (君实医药) IPO: Rich Is Valuation, but Catalyst Ahead
• Junshi Biosciences IPO Valuation: Sensibly Priced with Upside at the Low-End
• Wanka Online IPO – Quick Note – Even After the Downsize Its Still Too Expensive
• Xinyi Energy (信义能源) IPO: High Dividend Yield but Depreciating Asset
• Softbank IPO: Signs Point to Risk of Early IPO Price Break
• WuXi AppTec IPO Valuation: Bull/Bear Case DCF Scenarios
• Wuxi Apptec (药明康德) IPO: What You Need to Know Before the Trading Debut

List of pre-IPO Coverage on Smartkarma

4. SMC (6273 JP): Profits Start to Decline

SMC’s year-on-year profit comparisons have turned negative. In the three months to September (Q2 of FY Mar-19), gross profit was down 3.7% year-on-year, operating profit was down 8.8% and net profit was down 9.6%. Operating profit was down 15.1% from Q1. Sales were up only 0.4% year-on-year in Q2, compared with 29.0% growth a year earlier, and down 7.5% from Q1. Management responded by cutting full-year guidance, implicitly changing anticipated 2H operating profit growth from +3.0% to -9.3% year-on-year.

This has all been discounted. The share price dropped 43% from its 52-week and all-time high of ¥55,830 on January 18 to a 52-week low of ¥31,580 on October 28, then rebounded to ¥40,000 in early December. Last Friday, December 14, it closed at ¥34,840. 

What happens next? The share price trend suggests that because year-on-year profit comparisons have finally turned negative, it’s time to start anticipating recovery. But the  fundamentals indicate that profit comparisons are likely to remain very difficult and most probably negative for at least three more quarters. Management reports that semiconductor-related demand is down in all markets and that auto-related demand is down in the U.S. Auto sales are also declining in China. The length and depth of the downturn and the timing and strength of recovery are both unclear. Any positive news on the trade front should support the share price, but while trade friction aggravates the cyclical downturns in the semiconductor and auto industries, it is not their cause.

At ¥34,840, the shares are selling at 17.0x our EPS estimate for FY Mar-19 and 17.7x our estimate for FY Mar-20. These multiples compare with a 5-year historical range of 13.8x – 28.5x. Our projected EV/EBITDA multiples for the same two years are 8.7x and 8.1x, which compare with a 5-year historical range of 7.0x – 15.1x. This should help put a floor under the share price. Interestingly, Japan Analytics’ chart analysis indicates that SMC has never been seriously overbought (see chart below).

5. Independent Director Is a Great Way to Supplement Retirement in Japan….

We all know that Japan has tried to give the impression that they are improving corporate governance. However, when you start to dig into the numbers you see that it is basically just window dressing. We looked at the ages of the Independent Directors and they are not young…. Most should be gardening somewhere in Shizuoka.