Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>ROE, ROA, and Tobin's Q are significantly higher for the group of companies with major shareholders (a) and (b) than for the group of companies without major shareholders (c).</li>
<li>Yesterday, Toppan Printing (7911) announced that it will make its listed subsidiary Toppan Forms (7862) a wholly owned subsidiary. </li>
<li>Even if the past profit margin of a subsidiary isn't necessarily higher than that of the parent, TOB may be conducted if it's better to include it in the future.</li>
</ul>


ROE, ROA, and Tobin's Q are significantly higher for the group of companies with major shareholders (a) and (b) than for the group of companies without major shareholders (c).
Yesterday, Toppan Printing (7911) announced that it will make its listed subsidiary Toppan Forms (7862) a wholly owned subsidiary. 
Even if the past profit margin of a subsidiary isn't necessarily higher than that of the parent, TOB may be conducted if it's better to include it in the future.


Japan's Governance: Parent-Subsidiary Listing Investment Strategy Update (2)

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>In a parent-sub consolidation which should be no surprise to anyone, today simultaneous to the earnings announcements, <a href="https://www.smartkarma.com/entities/toppan-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:11875:1" rel="noopener">Toppan Printing (7911 JP)</a> announced that it would launch a Tender Offer to buy out minorities in 60%-held subsidiary <a href="https://www.smartkarma.com/entities/toppan-forms-co-ltd" target="_blank" data-smartkarma-citation="entities:5061:1" rel="noopener">Toppan Forms (7862 JP)</a> at ¥1,550/share.</p><p>The deal comes at a 51.7% premium and while not an all-time high, it is a significant jump on recent trading levels, and is reasonably close to book value. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/850/original/Screenshot+2021-11-10+at+4.25.10+PM.png?1636532861" class="editor-image img-responsive" data-smartkarma-image-id="240850"></figure><p>But that doesn't mean it is the the right price. </p>
<p>There are two trades to do, depending on your market outlook near-term.</p>
<p>More details below the fold. </p>
<p>And this is perhaps the last insight with anything colourful or fun above the fold because Smartkarma appears to have changed the formatting while I am writing. </p>
<p>So here's a strange gif from 'Nosferatu' (1929).</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/881/original/nosferatu+gif.gif?1636540714" class="editor-image img-responsive" data-smartkarma-image-id="240881"></figure></section><p></p>
<p></p></section>

In a parent-sub consolidation which should be no surprise to anyone, today simultaneous to the earnings announcements, Toppan Printing (7911 JP) announced that it would launch a Tender Offer to buy out minorities in 60%-held subsidiary Toppan Forms (7862 JP) at ¥1,550/share.The deal comes at a 51.7% premium and while not an all-time high, it is a significant jump on recent trading levels, and is reasonably close to book value. But that doesn't mean it is the the right price. 
There are two trades to do, depending on your market outlook near-term.
More details below the fold. 
And this is perhaps the last insight with anything colourful or fun above the fold because Smartkarma appears to have changed the formatting while I am writing. 
So here's a strange gif from 'Nosferatu' (1929).



Toppan Printing Takes Out Subsidiary Toppan Forms (7862)

Equity Capital Markets

Recruit Holdings / Equity Capital Markets

<p>Today (30 Nov 2020) after the close, <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a><a href="https://recruit-holdings.co.jp/ir/ir_news/20201130_01.html" target="_blank" rel="noopener">announced</a> (Japanese only so far) a selldown of shares by eight different companies with a total share sale amounting to 86.111mm shares (plus greenshoe) for an ex-ante expected Offering size of ¥416.8bn or US$4.0 billion. </p><p>This has happened twice before since IPO as corporate shareholders who owned most of Recruit prior to its IPO sell shares down. </p><p>Like in large secondary share sales conducted in previous years, there is a <a href="https://recruit-holdings.co.jp/ir/ir_news/20201130_02.html" target="_blank" rel="noopener">buyback</a> (Japanese only so far) attached where Recruit will buy back a non-negligible portion of the offering, and having learned from the mini-debacle in 2016, in 2019 the company started its buyback post-offering. This year it is the same.</p><p>There are, as always, interesting investor placement dynamics and buyback and index implications, discussed below, along with the history of the prior events.</p><p>The real difference this year is that pricing happens speedily. This week. Probably on Wednesday. That's fast. The last two were 9 and 13 days after announcement. </p>

Today (30 Nov 2020) after the close, Recruit Holdings (6098 JP)announced (Japanese only so far) a selldown of shares by eight different companies with a total share sale amounting to 86.111mm shares (plus greenshoe) for an ex-ante expected Offering size of ¥416.8bn or US$4.0 billion. This has happened twice before since IPO as corporate shareholders who owned most of Recruit prior to its IPO sell shares down. Like in large secondary share sales conducted in previous years, there is a buyback (Japanese only so far) attached where Recruit will buy back a non-negligible portion of the offering, and having learned from the mini-debacle in 2016, in 2019 the company started its buyback post-offering. This year it is the same.There are, as always, interesting investor placement dynamics and buyback and index implications, discussed below, along with the history of the prior events.The real difference this year is that pricing happens speedily. This week. Probably on Wednesday. That's fast. The last two were 9 and 13 days after announcement. 

A Speedy Recruit Offering (And Slower Buyback)

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<p style="text-align: center;"><strong>• RELATIVE PRICE SCORE</strong> •</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/178/original/2019-09-06_09-42-35.png?1567730614" class="editor-image img-responsive" data-smartkarma-image-id="98178"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>INTRODUCTION </strong>- The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at<strong> +4</strong> &amp; <strong>-2</strong> and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a> has just joined <a href="https://www.smartkarma.com/entities/goldwin-inc" target="_blank" data-smartkarma-citation="entities:410:1" rel="noopener">Goldwin (8111 JP)</a> in being only the second large-cap RPS 'ten-baggers' in the last twenty years. </p><div class="content-highlight"><p><strong>This insight updates our list of Overbought and Oversold companies, reviews the best and worst-performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.</strong></p></div><div></div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/046/original/2019-09-05_12-46-46.png?1567655232" class="editor-image img-responsive" data-smartkarma-image-id="98046"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>STATISTICS</strong> - Currently, of the 3,706 listed companies for which monthly RPS data is available, 81 companies are 'Overbought', and 133 are 'Oversold' - 2.45% and 3.8%, respectively of the total. For the 737 companies with a market capitalisation of over ¥100b, there are 44 'Overbought' and 37 'Oversold' companies, 6% and 5%, respectively.</p><hr><p style="text-align: center;"><strong>• RELATIVE PRICE SCORE 'TOPS' •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/055/original/2019-09-05_13-06-30.png?1567656423" class="editor-image img-responsive" data-smartkarma-image-id="98055"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>RPS 'TOPS'</strong> - In the last two years, 388 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 42 days. 1.26% of the total of 1.94 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 74 days - demonstrating the superior persistence of large capitalisation companies in this regard. The chart above highlights the track record of all 95 large caps which are some point were Overbought in the last twenty-four months and illustrates the extreme outlier status of Goldwin and Lasertec.</p><p><strong>RPS NEGATIVE MEAN REVERSION</strong> - Some examples of RPS mean reversion in the last three months have been <a href="https://www.smartkarma.com/entities/suzuken-co-ltd" target="_blank" data-smartkarma-citation="entities:14996:1" rel="noopener">Suzuken (9987 JP)</a>, <a href="https://www.smartkarma.com/entities/infomart-corp" target="_blank" data-smartkarma-citation="entities:1301:1" rel="noopener">Infomart (2492 JP)</a>, <a href="https://www.smartkarma.com/entities/nichirei-corp" target="_blank" data-smartkarma-citation="entities:7168:1" rel="noopener">Nichirei (2871 JP)</a>, and <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl (4921 JP)</a>. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/096/original/2019-09-05_16-25-39.png?1567668352" class="editor-image img-responsive" data-smartkarma-image-id="98096"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/097/original/2019-09-05_16-27-09.png?1567668441" class="editor-image img-responsive" data-smartkarma-image-id="98097"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/098/original/2019-09-05_16-28-42.png?1567668548" class="editor-image img-responsive" data-smartkarma-image-id="98098"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/099/original/2019-09-05_16-30-29.png?1567668640" class="editor-image img-responsive" data-smartkarma-image-id="98099"></figure><div class="content-caption">Source: Japan Analytics</div><hr><p style="text-align: center;"><strong>• RELATIVE PRICE SCORE 'BOTTOMS' •</strong></p><div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/056/original/2019-09-05_13-12-52.png?1567656806" class="editor-image img-responsive" data-smartkarma-image-id="98056"></figure><div class="content-caption">Source: Japan Analytics</div>
</div><p><strong>RPS 'BOTTOMS'</strong> - 259 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 83 days. 1.46% of the total of 1.94 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 79 companies and 94 days. The chart above highlights the track record of the 79 large caps which are some point were Oversold in the last twenty-four months and illustrates the strong recovery in the<strong> REITs</strong> Sector and the continuing demise of <strong>Regional Banks</strong>.</p><p><strong>RPS POSITIVE MEAN REVERSION</strong> - Some recent examples of positive RPS mean reversions are <a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka Holdings (4578 JP) </a>and <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE (3938 JP)</a>.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/100/original/2019-09-05_16-35-47.png?1567668972" class="editor-image img-responsive" data-smartkarma-image-id="98100"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/102/original/2019-09-05_16-36-50.png?1567669047" class="editor-image img-responsive" data-smartkarma-image-id="98102"></figure><div class="content-caption">Source: Japan Analytics</div><p>As we noted in our June <a href="https://www.smartkarma.com/insights/japan-relative-price-scores-overbought-oversold-companies-june-2019" target="_blank" data-smartkarma-citation="insights:30393" rel="noopener">Insight: -</a></p><blockquote><p><strong><a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE (3938 JP)</a></strong>- Line has performed poorly since being featured in last year's Sohn Conference and has had negative and worsening Operating Income for each of the previous five quarters. Although there is a possibility of a double-bottom RPS 'bounce' and <strong>the company is now the most-Oversold non-financial large-cap over one year,</strong> there are no fundamental reasons to own the shares.   </p></blockquote><p>In the <strong>DETAIL </strong>section below, we list the current<strong> Very Overbought (RPS&gt;5</strong>), <strong>Too-Late-To-Buy (RPS &gt;4&lt;5)</strong> and <strong>Oversold (RPS &lt;-2)</strong> stocks as well as the most substantial three-month positive and negative changes in RPS.</p>

• RELATIVE PRICE SCORE •Source: Japan AnalyticsINTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. Lasertec (6920 JP) has just joined Goldwin (8111 JP) in being only the second large-cap RPS 'ten-baggers' in the last twenty years. This insight updates our list of Overbought and Oversold companies, reviews the best and worst-performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.Source: Japan AnalyticsSTATISTICS - Currently, of the 3,706 listed companies for which monthly RPS data is available, 81 companies are 'Overbought', and 133 are 'Oversold' - 2.45% and 3.8%, respectively of the total. For the 737 companies with a market capitalisation of over ¥100b, there are 44 'Overbought' and 37 'Oversold' companies, 6% and 5%, respectively.• RELATIVE PRICE SCORE 'TOPS' •Source: Japan AnalyticsRPS 'TOPS' - In the last two years, 388 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 42 days. 1.26% of the total of 1.94 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 74 days - demonstrating the superior persistence of large capitalisation companies in this regard. The chart above highlights the track record of all 95 large caps which are some point were Overbought in the last twenty-four months and illustrates the extreme outlier status of Goldwin and Lasertec.RPS NEGATIVE MEAN REVERSION - Some examples of RPS mean reversion in the last three months have been Suzuken (9987 JP), Infomart (2492 JP), Nichirei (2871 JP), and Fancl (4921 JP). Source: Japan Analytics• RELATIVE PRICE SCORE 'BOTTOMS' •
Source: Japan Analytics
RPS 'BOTTOMS' - 259 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 83 days. 1.46% of the total of 1.94 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 79 companies and 94 days. The chart above highlights the track record of the 79 large caps which are some point were Oversold in the last twenty-four months and illustrates the strong recovery in the REITs Sector and the continuing demise of Regional Banks.RPS POSITIVE MEAN REVERSION - Some recent examples of positive RPS mean reversions are Otsuka Holdings (4578 JP) and LINE (3938 JP).Source: Japan AnalyticsAs we noted in our June Insight: -LINE (3938 JP)- Line has performed poorly since being featured in last year's Sohn Conference and has had negative and worsening Operating Income for each of the previous five quarters. Although there is a possibility of a double-bottom RPS 'bounce' and the company is now the most-Oversold non-financial large-cap over one year, there are no fundamental reasons to own the shares.   In the DETAIL section below, we list the current Very Overbought (RPS&gt;5), Too-Late-To-Buy (RPS &gt;4&lt;5) and Oversold (RPS &lt;-2) stocks as well as the most substantial three-month positive and negative changes in RPS.

🇯🇵 Japan • September Relative Price Scores - Life at the Poles Part 2: Companies

<p>On 13 May 2019, along with earnings, <a href="https://www.smartkarma.com/entities/11875" target="_blank" data-smartkarma-citation="entities:11875:1">Toppan Printing (7911 JP)</a> and subsidiary <a href="https://www.smartkarma.com/entities/2119" target="_blank" data-smartkarma-citation="entities:2119:1">Tosho Printing (7913 JP)</a> announced a merger where Toppan will acquire Tosho this summer, with completion scheduled for August 1st - a mere 11 weeks away. </p><p>Shareholders of Tosho Printing are scheduled to receive 0.8 shares of Toppan Printing for every Tosho share held, meaning the deal was announced at a 41.2% premium to last. Tosho Printing was therefore limit up today and may not open til Thursday. Toppan Printing was up 4.4% in addition.</p><p>The blue/red candlesticks are Tosho (the black/yellow are Toppan (with black prices)) and the red/yellow dot is where the Merger Ratio would value Tosho shares if they had traded today.  </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/087/841/original/Screenshot%202019-05-14%20at%207.33.55%20PM.png?1557833677" class="editor-image img-responsive" data-smartkarma-image-id="87841"></figure><div style="text-align: left;" class="content-caption">data source: investing.com, company filings, Quiddity</div><p>That shows Tosho at the best ratio in five years and the highest outright price in five years. You'd have to go back 23 years to find a time when Tosho Printing shares traded higher. </p><p>The deal is short-dated (EGM record date was 31 March, vote is in 6 weeks, and merger four weeks after that), and on the face of it, this would normally appear pretty easy to clear because of Toppan's 51% stake and the presence of significant cross-holders and similar bringing likely FOR votes to well above 60% without thinking about it. </p><div class="content-highlight">
<p>However, with Japanese small cap subsidiary situations, one always has to look behind the curtain. This case is no exception. </p>
<p>In this case one has to look behind the curtain at the parent too.</p>
<p>This deal is more complicated than it looks. </p>
<p>But it may not be.</p>
</div><p><em>For other insights on Japanese M&amp;A please check the list of Japan-related Event-Driven insights <a href="https://www.smartkarma.com/insights?collection=all-insights&amp;filters=countries%3AJapan%7Cverticals%3A29" target="_blank">here</a>. As a reference to Japan M&amp;A rules and practices, please see the <a href="https://www.smartkarma.com/insights/quiddity-japan-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:28911">Quiddity Japan M&amp;A Guide 2019</a>. </em></p>

On 13 May 2019, along with earnings, Toppan Printing (7911 JP) and subsidiary Tosho Printing (7913 JP) announced a merger where Toppan will acquire Tosho this summer, with completion scheduled for August 1st - a mere 11 weeks away. Shareholders of Tosho Printing are scheduled to receive 0.8 shares of Toppan Printing for every Tosho share held, meaning the deal was announced at a 41.2% premium to last. Tosho Printing was therefore limit up today and may not open til Thursday. Toppan Printing was up 4.4% in addition.The blue/red candlesticks are Tosho (the black/yellow are Toppan (with black prices)) and the red/yellow dot is where the Merger Ratio would value Tosho shares if they had traded today.  data source: investing.com, company filings, QuiddityThat shows Tosho at the best ratio in five years and the highest outright price in five years. You'd have to go back 23 years to find a time when Tosho Printing shares traded higher. The deal is short-dated (EGM record date was 31 March, vote is in 6 weeks, and merger four weeks after that), and on the face of it, this would normally appear pretty easy to clear because of Toppan's 51% stake and the presence of significant cross-holders and similar bringing likely FOR votes to well above 60% without thinking about it. 
However, with Japanese small cap subsidiary situations, one always has to look behind the curtain. This case is no exception. 
In this case one has to look behind the curtain at the parent too.
This deal is more complicated than it looks. 
But it may not be.
For other insights on Japanese M&amp;A please check the list of Japan-related Event-Driven insights here. As a reference to Japan M&amp;A rules and practices, please see the Quiddity Japan M&amp;A Guide 2019. 

Toppan Printing Bid To Take Over Subsidiary Tosho Printing

Japan

Toppan Printing Co., Ltd. is a printing company that provides commercial and publication printing services. The Company also prints securities paper, packaging products, and electronic related products such as photomasks and colorfilters. Toppan Printing also produces inks and operates a text book publication business.

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Toppan Printing (7911 JP)

Japan's Governance: Parent-Subsidiary Listing Investment Strategy Update (2)

Even if the past profit margin of a subsidiary is not necessarily higher than that of the parent company, a TOB may be conducted if it is better to...

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Toppan Printing Takes Out Subsidiary Toppan Forms (7862)

Toppan Printing (7911) is finally taking out Toppan Forms (7862). It may be a 51% premium to last and the highest price in quite a while, but it...

Travis Lundy

A Speedy Recruit Offering (And Slower Buyback)

A Large and Speedily-Executed Secondary Offering by Recruit may test investor appetite. The reaction could be sharp in the next two days, leading...

Travis Lundy

🇯🇵 Japan • September Relative Price Scores - Life at the Poles Part 2: Companies

• RELATIVE PRICE SCORE •INTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by...

Campbell Gunn

Toppan Printing Bid To Take Over Subsidiary Tosho Printing

On 13 May 2019, along with earnings, Toppan Printing (7911 JP) and subsidiary Tosho Printing (7913 JP) announced a merger where Toppan will acquire...

Travis Lundy

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