In today’s briefing:
- Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
- Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
- Quiddity Primer for HSCEI Rebalance Events
- TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap
- WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement
- OASIS IPO Pricing Is Not Even Worth Reviewing: Strongly Recommend Avoiding It
- Hong Kong Aerospace Tech’s (1725 HK) US$1bn Rocket-Launch Site
- Meritz Fire & Marine Insurance: Treasury Shares Cancellation of 5.9% of Outstanding Shares
- Gap Trades in Korean Prefs Vs Common Share Pairs in 1Q 2023
- Good Morning Japan |Rally Sputters as Earnings in Focus; GS Misses; BOJ – DAY OF RECKONING
Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
- Japanese Banks have had a good run recently. From the day before the BOJ changed the 10yr yield target in December in its YCC programme to today, +30% vs TOPIX.
- The question is how that is spread out. There are lots of banks. Some are cheaper than others. Some are better than others. Can we draw conclusions to trade better?
- If you are looking at Japanese Banks to play a change in BOJ policy when Governor Kuroda’s term ends shortly, there are definitely conclusions one can draw. I offer comments.
Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
- Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
- They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
- This is one of those times when I can reiterate, Japan Needs More Cowbell.
Quiddity Primer for HSCEI Rebalance Events
- The Hang Seng China Enterprises Index (HSCEI INDEX) is one of the most widely discussed indices in the Hang Seng Indices family.
- The HSCEI serves as a benchmark to reflect the overall performance of “Mainland” Securities listed in Hong Kong.
- In this insight, we take a brief look at the selection criteria and the historical price performance of past Rebalance Events.
TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap
- Last April I wrote about Tsi Holdings (3608 JP) which was trading at 0.5x EV/EBITDA and where I suggested it could double in 2-3yrs.
- The day after I wrote, the stock closed at ¥312/share, briefly touched ¥480 before ending the year at ¥444. On Friday they announced Q3 earnings, now TTM EV/EBITDA is 2.5x.
- They also announced a buyback, and the stock is up further. It is worth looking into the details both near-term and what they mean longer-term.
WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement
- On 11th Jan 2023, WM Motor Technology Co Ltd announced its intention to merge with Apollo Future Mobility (860 HK) .
- WM Motor failed to list in Hong Kong last year and this is essentially its attempt to undertake a reverse merger at a valuation well below its previous funding rounds.
- In this note, we will talk about the deal dynamics and take an early look at its implications.
OASIS IPO Pricing Is Not Even Worth Reviewing: Strongly Recommend Avoiding It
- Of the four peers, only Coupang adopts the gross method. Since the others adopt the net method, it is impossible to compare PSR with OASIS, which uses the gross method.
- If they really want to use PSR, it should only be compared with Coupang. Even if we apply CPNG’s current EV/Sales multiple (1.36x), it would only slightly exceed ₩0.5T.
- A more logical way would be to use EV/GMV. Even in this case, it wouldn’t be easy to expect a valuation higher than ₩0.5T.
Hong Kong Aerospace Tech’s (1725 HK) US$1bn Rocket-Launch Site
- On the 9th of January, 2023, the Republic of Djibouti signed an MOU with Hong Kong Aerospace Technology (1725 HK) (HKAT) to develop a (reported) US$1bn international commercial “spaceport”.
- In the middle of last year, Djibouti announced plans to launch two nanosatellites to facilitate farming and other related activities.
- HKAT, a recent back-door listing, has a market cap of US$258mn. Wholly-owned subsidiary Gang Hang Ke (Shenzhen) Space Technology, has been successfully involved in the launch of ten satellites.
Meritz Fire & Marine Insurance: Treasury Shares Cancellation of 5.9% of Outstanding Shares
- After the market close today, Meritz Fire & Marine Insurance announced that it will cancel 6.57 million treasury shares, representing 5.9% of its outstanding shares.
- This treasury shares cancellation by Meritz F&M Insurance should have a continued positive impact on its share price.
- Share cancellation by Meritz F&M Insurance and the need to adjust to higher merger ratio are likely to lead to Meritz F&M Insurance outperforming MFG in the next few days.
Gap Trades in Korean Prefs Vs Common Share Pairs in 1Q 2023
- In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 1Q 2023.
- The pref/common shares ratio of the 28 companies in this insight declined from 68.9% on 16 July 2022 to 65% on 16 January 2023, which is a short term reversal.
- We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuel Cell, LG H&H, and LG Chem, which have high discounts for the preferred shares versus their counterpart common shares.
Good Morning Japan |Rally Sputters as Earnings in Focus; GS Misses; BOJ – DAY OF RECKONING
- OVERSEAS: SPX snapp rally; Eearnings refocus as GS misses; Tech bid continues; TELSA +7% as analysts see merits of price cuts; Japan’s BOJ in focus.
- JAPAN: NKY Futs +0.4% vs Cash; USDJPY flat at 129.16. BOJ Day -this is all that matters.
- DAILY NUGGET: Sustainable Aviation Fuel thematic is ramping up. ANA and JAL recent annoucements highlight the commercial potential for the supply chain.
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