The ideal vs reality - what Sharp's Q1 tells us?

Independent Insight Provider

Hao Wang, CFA

Equity Bottom-Up

<p>Sharp (6753 JP), one of world's largest LCD panel makers, was reported on April 17th to be close a deal with its main banks (MUFG and Mizuho) on debt-for-equity swap. If the deal is agreed, it would boost Sharp's&nbsp;equity by adding Y200bn preferred shares and reduce its liability to about Y1,700bn. However, I still see ZERO or negative long term value in Sharp's common stock despite its&nbsp;temporary relief of liquidity crisis, which could be a good chance to dispose your holdings for three reasons I would like to discuss below.</p><ul><li>Structurally high risk but&nbsp;low return LCD business</li><li>Insolvent&nbsp;balance sheet, even after&nbsp;debt-for-equity swap (DES)</li><li>Long and uncertain journey of restructuring</li></ul>

Sharp (6753 JP), one of world's largest LCD panel makers, was reported on April 17th to be close a deal with its main banks (MUFG and Mizuho) on debt-for-equity swap. If the deal is agreed, it would boost Sharp's&nbsp;equity by adding Y200bn preferred shares and reduce its liability to about Y1,700bn. However, I still see ZERO or negative long term value in Sharp's common stock despite its&nbsp;temporary relief of liquidity crisis, which could be a good chance to dispose your holdings for three reasons I would like to discuss below.Structurally high risk but&nbsp;low return LCD businessInsolvent&nbsp;balance sheet, even after&nbsp;debt-for-equity swap (DES)Long and uncertain journey of restructuring

Sharp Corp

Is there value in Sharp's common stock?