Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<p>The Nikkei article regarding NTT buying out Docomo comes out of the blue and seems to have blindsided almost everybody. This is the first really big move following Suga’s ascendance to the Prime Ministership and in our opinion, it signals that things are going to get increasingly tough for Softbank Corp and probably for KDDI. We discuss our reasoning below.</p>

The Nikkei article regarding NTT buying out Docomo comes out of the blue and seems to have blindsided almost everybody. This is the first really big move following Suga’s ascendance to the Prime Ministership and in our opinion, it signals that things are going to get increasingly tough for Softbank Corp and probably for KDDI. We discuss our reasoning below.

NTT – Initial Thoughts Reading Through the Lines of the Shock News

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p style="text-align: justify;"><strong>NTT has confirmed it is considering a bid for the 34% of DoCoMo it does not own in a deal that could be worth ¥3.9 trillion ($37bn).  Press reports cite recent regulatory pressure as a driver but a deal like this is not put together overnight and we think this is secondary to its intention to push more aggressively on 5G and IoT. NTT is paying above the odds, but the strategic rationale makes more sense than investing in ICT/cloud companies outside Japan.  DoCoMo shareholders obviously win here as the expected price is likely to be the highest in 20 years.  Concerns that DoCoMo will have flexibility to price more aggressively will be a drag on KDDI, Softbank and Rakuten although we think those worries are overdone.  Of that group, Softbank (9434) has the strongest support from returns to shareholders with a 7% dividend yield whilst KDDI currently yields 4%. </strong></p>

NTT has confirmed it is considering a bid for the 34% of DoCoMo it does not own in a deal that could be worth ¥3.9 trillion ($37bn).  Press reports cite recent regulatory pressure as a driver but a deal like this is not put together overnight and we think this is secondary to its intention to push more aggressively on 5G and IoT. NTT is paying above the odds, but the strategic rationale makes more sense than investing in ICT/cloud companies outside Japan.  DoCoMo shareholders obviously win here as the expected price is likely to be the highest in 20 years.  Concerns that DoCoMo will have flexibility to price more aggressively will be a drag on KDDI, Softbank and Rakuten although we think those worries are overdone.  Of that group, Softbank (9434) has the strongest support from returns to shareholders with a 7% dividend yield whilst KDDI currently yields 4%. 

Japan Telecom Sector: NTT’s Privatization of DoCoMo Could Be a Long-Term Win

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Quantitative Analysis

<div>
<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/000/160/735/original/2020-09-23_11-03-49.png?1600826665" class="editor-image img-responsive" data-smartkarma-image-id="160735"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>
<p><strong><a href="https://www.dropbox.com/s/6h3m1giwbtzcupg/2020-09-23_11-03-49.png?dl=0" target="_blank" rel="noopener">PEAK OUTLIER</a></strong> - Since the onset of  COVID-19 in March, the degree of polarisation in the Japanese equity market as measured by our Relative Price Score [definition below] has increased significantly. Although only 3.1% and 5.1% of listed companies are Overbought and Oversold, respectively, their market weight represented is 10.8% and 6.2%. Such extreme outlier weightings have not occurred since the technology 'bubble' of 2000, and, since then, only during the 2008/9 financial crisis. Investors have increasingly held and bid up perceived long-term domestic non-manufacturing 'winners' without much regard for valuation while discarding Japan's manufacturers, and transportation, utility and energy companies as well as insurers and banks.  </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/736/original/2020-09-23_11-11-07.png?1600827080" class="editor-image img-responsive" data-smartkarma-image-id="160736"></figure>
</div><p><strong>SECTOR TIMELINE</strong> - The twenty-eight-year history of Sector Relative Price Scores illustrates the ebbs and flows of investment themes in the market, from the 2000 Technology 'bubble' to the REIT and Real Estate peak of 2013/14, the <strong>Healthcare</strong> and <strong>FB&amp;T</strong> market of 2016/17. On the downside, there is greater Oversold 'persistence' in the <strong>Energy</strong>, <strong>Banks</strong>, <strong>Multi-Industry</strong> ( <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post (6178 JP))</a>  and <strong>Utilities</strong> Sectors. Currently, nine Sectors are Overbought, and four are Oversold - thirty-year and twenty-year highs, respectively.  </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/741/original/2020-09-23_11-39-24.png?1600828791" class="editor-image img-responsive" data-smartkarma-image-id="160741"></figure><p>In the<strong> DETAIL</strong> section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific comments.</p><div class="content-highlight"><p style="text-align: left;"><strong>RELATIVE PRICE SCORE OUTLIERS</strong> - The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, <strong>'Overbought'</strong> and <strong>'Oversold' </strong>outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,883 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at <strong>+4</strong> &amp; <strong>-2</strong> for Companies, <strong>+3</strong> &amp; <strong>-1.5</strong> for Peer Groups and<strong> +2</strong> and<strong> -1</strong> for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over <strong>3.2</strong> million observations.</p></div>


• RELATIVE PRICE SCORE •
Source for all charts &amp; tables: Japan Analytics
PEAK OUTLIER - Since the onset of  COVID-19 in March, the degree of polarisation in the Japanese equity market as measured by our Relative Price Score [definition below] has increased significantly. Although only 3.1% and 5.1% of listed companies are Overbought and Oversold, respectively, their market weight represented is 10.8% and 6.2%. Such extreme outlier weightings have not occurred since the technology 'bubble' of 2000, and, since then, only during the 2008/9 financial crisis. Investors have increasingly held and bid up perceived long-term domestic non-manufacturing 'winners' without much regard for valuation while discarding Japan's manufacturers, and transportation, utility and energy companies as well as insurers and banks.  

SECTOR TIMELINE - The twenty-eight-year history of Sector Relative Price Scores illustrates the ebbs and flows of investment themes in the market, from the 2000 Technology 'bubble' to the REIT and Real Estate peak of 2013/14, the Healthcare and FB&amp;T market of 2016/17. On the downside, there is greater Oversold 'persistence' in the Energy, Banks, Multi-Industry ( Japan Post (6178 JP))  and Utilities Sectors. Currently, nine Sectors are Overbought, and four are Oversold - thirty-year and twenty-year highs, respectively.  In the DETAIL section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific comments.RELATIVE PRICE SCORE OUTLIERS - The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,883 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.

🇯🇵 JAPAN • September Relative Price Scores - Profiting from Outlier Mean Reversion

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a>, <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> and <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a>, while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan Dianping (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a> and <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing (981 HK)</a>. Shorts increased in Industrials and Energy and were covered in Consumer Discretionary, Information Technology, Communication Services and Financials.</p></div><div><p>Japan saw an increase in shorts on <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a>, <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>, <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a> and <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-group-inc" target="_blank" data-smartkarma-citation="entities:217:1" rel="noopener">Sumitomo Mitsui Financial Group (8316 JP)</a> and a reduction in shorts on <a href="https://www.smartkarma.com/entities/tokyo-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:2332:1" rel="noopener">Tokyo Gas (9531 JP)</a>, <a href="https://www.smartkarma.com/entities/rohm-co-ltd" target="_blank" data-smartkarma-citation="entities:2953:1" rel="noopener">ROHM Co Ltd (6963 JP)</a>, <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a> and <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a>. Sectorally, shorts increased in almost all sectors led by Communication Services, Consumer Discretionary, Financials, Information Technology, Industrials and Consumer Staples. With the September ex-dividend date coming up, a large part of the increase in short interest could be due to dividend enhancement trades.</p></div><div><p>Stocks in Korea that saw the most short covering were <a href="https://www.smartkarma.com/entities/s-oil-corp" target="_blank" data-smartkarma-citation="entities:1667:1" rel="noopener">S Oil Corp (010950 KS)</a>, <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a>, <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/alchip-technologies-ltd" target="_blank" data-smartkarma-citation="entities:20219:1" rel="noopener">Alchip Technologies (3661 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/genius-electronic-optical-co-ltd" target="_blank" data-smartkarma-citation="entities:9632:1" rel="noopener">Genius Electronic Optical (3406 TT)</a> and <a href="https://www.smartkarma.com/entities/txc-corp" target="_blank" data-smartkarma-citation="entities:5212:1" rel="noopener">Txc Corp (3042 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">Au Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/asmedia-technology-inc" target="_blank" data-smartkarma-citation="entities:15732:1" rel="noopener">Asmedia Technology (5269 TT)</a>, <a href="https://www.smartkarma.com/entities/elan-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:19789:1" rel="noopener">Elan Microelectronics (2458 TT)</a> and <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on AIA Group Ltd (1299 HK), China Merchants Bank H (3968 HK), CNOOC Ltd (883 HK) and ESR Cayman (1821 HK), while there was short covering on Meituan Dianping (3690 HK), Ping An Insurance (H) (2318 HK), JD.com (HK) (9618 HK) and Semiconductor Manufacturing (981 HK). Shorts increased in Industrials and Energy and were covered in Consumer Discretionary, Information Technology, Communication Services and Financials.Japan saw an increase in shorts on Softbank Corp (9434 JP), Fast Retailing (9983 JP), Mitsubishi UFJ Financial (MUFG) (8306 JP) and Sumitomo Mitsui Financial Group (8316 JP) and a reduction in shorts on Tokyo Gas (9531 JP), ROHM Co Ltd (6963 JP), Kao Corp (4452 JP) and Fancl Corp (4921 JP). Sectorally, shorts increased in almost all sectors led by Communication Services, Consumer Discretionary, Financials, Information Technology, Industrials and Consumer Staples. With the September ex-dividend date coming up, a large part of the increase in short interest could be due to dividend enhancement trades.Stocks in Korea that saw the most short covering were S Oil Corp (010950 KS), Netmarble Corporation (251270 KS), Shinpoong Pharmaceutical (019170 KS) and LG Display (034220 KS). Stocks in Taiwan that saw the highest increase in shorts were Alchip Technologies (3661 TT), TSMC (2330 TT), Genius Electronic Optical (3406 TT) and Txc Corp (3042 TT) while shorts were covered on Au Optronics (2409 TT), Asmedia Technology (5269 TT), Elan Microelectronics (2458 TT) and Yageo Corporation (2327 TT).

Asia Short Interest Weekly: Meituan, JD, PingAn, SMIC, Japan Divs, Netmarble, Shinpoong, Genius, TXC

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>The life of <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE Corp (3938 JP)</a> as a listed entity with a listed future is now entering its Zombie Twilight. The Tender Offer by <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> to buy out minorities has ended and we now move on to the next stage. </p><p>Today the results of the Tender Offer for LINE were <a href="https://d.line-scdn.net/stf/linecorp/en/ir/all/LINE_20200916_EN_3.pdf" target="_blank" rel="noopener">announced</a> and the Offerors managed to acquire a sum total of 31,234,670 shares leaving about 25,000,000 shares left over un-tendered (plus options and converts un-converted). That is 25,000,000 million shares worth of zombie shareholders who will roam the markets until the shares' final retirement after the EGM. </p><p>That is $1.25bn+ worth of zombies at the Tender Offer Price. </p><p>The now-zombies defended their boundary, keeping the shares above the ¥5380 Tender Offer Price line from late June until the day before the Tender Offer went ex-.</p><p> </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/159/330/original/Screenshot%202020-09-16%20at%204.03.18%20PM.png?1600243413" class="editor-image img-responsive" data-smartkarma-image-id="159330"></figure><p></p><p>The period between now and the delisting of LINE could be 4-5 months. It could take 5-6 months to get one's money, unless one is going after appraisal rights. Then it will take a little longer, unless it takes a lot longer. </p><p>This situation is different from the post-Tender trading situation of <a href="https://www.smartkarma.com/entities/familymart-co-ltd" target="_blank" data-smartkarma-citation="entities:320:1" rel="noopener">FamilyMart Co Ltd (8028 JP)</a> and one should not expect the squeeze which happened there. </p><div>
<hr>
<p>Previous insights related to this situation and the names involved are listed below.</p>
</div><div><table class="table table-striped"><tbody>
<tr><td colspan="3" style="width: 724px;"><h2>Relevant Insights</h2></td></tr>
<tr>
<td style="width: 122px;"><strong>Date</strong></td>
<td style="width: 97px;"><strong>Author</strong></td>
<td style="width: 463px;"><strong>Title</strong></td>
</tr>
<tr><td colspan="3" style="width: 724px;"><h3>About Cashless Payments</h3></td></tr>
<tr>
<td style="width: 122px;">13 Mar 2019</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/loyalty-points-in-japan-more-loyalty-more-points-and-the-conduit-to-cashless-payments" target="_blank" data-smartkarma-citation="insights:28547" rel="noopener">Loyalty Points In Japan: More Loyalty, More Points and the Conduit to Cashless Payments</a> </td>
</tr>
<tr>
<td style="width: 122px;">2 Apr 2019</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/mio-kato-cfa" target="_blank" data-smartkarma-citation="accounts:713" rel="noopener">Mio Kato, CFA</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/mercari-why-mercari-is-likely-to-be-a-winner-in-the-cashless-wars" target="_blank" data-smartkarma-citation="insights:28946" rel="noopener">Mercari: Why Mercari Is Likely to Be a Winner in the Cashless Wars</a> </td>
</tr>
<tr>
<td style="width: 122px;">28 Jun 2019</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/supun-walpola" target="_blank" data-smartkarma-citation="accounts:1650" rel="noopener">Supun Walpola</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/paying-with-paypay-a-deep-dive-into-yahoo-japan-s-mobile-payment-business" target="_blank" data-smartkarma-citation="insights:30750" rel="noopener">Paying with PayPay: A Deep Dive into Yahoo! Japan’s Mobile Payment Business</a> </td>
</tr>
<tr>
<td style="width: 122px;">6 Jan 2020</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/lawson-and-kddi-join-forces-in-cashless-payments-war" target="_blank" data-smartkarma-citation="insights:35596" rel="noopener">Lawson and KDDI Join Forces in Cashless Payments War</a> </td>
</tr>
<tr>
<td style="width: 122px;">24 Jan 2020</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/mercari-merpay-acquisition-of-origami-pay-continues-cashless-consolidation" target="_blank" data-smartkarma-citation="insights:36051" rel="noopener">Mercari – Merpay Acquisition of Origami Pay Continues Cashless Consolidation</a> </td>
</tr>
<tr>
<td style="width: 122px;">15 Feb 2020</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/japan-payment-wars-ntt-docomo-and-merpay-origami-to-attempt-catch-up-with-paypay-and-rakuten" target="_blank" data-smartkarma-citation="insights:36609" rel="noopener">Japan Payment Wars: NTT Docomo and Merpay/Origami to Attempt Catch up with PayPay and Rakuten</a> </td>
</tr>
<tr>
<td style="width: 122px;">20 Mar 2020</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/some-resistance-to-cashless-payments-in-japan" target="_blank" data-smartkarma-citation="insights:37629" rel="noopener">Some Resistance to Cashless Payments in Japan</a> </td>
</tr>
<tr>
<td style="width: 122px;">28 Apr 2020</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/z-holdings-and-yamato-create-fulfilment-service-for-all-to-rival-rakuten-and-amazon" target="_blank" data-smartkarma-citation="insights:38797" rel="noopener">Z Holdings and Yamato Create Fulfilment Service for All to Rival Rakuten and Amazon</a> </td>
</tr>
<tr>
<td style="width: 122px;">29 Jul 2020</td>
<td style="width: 97px;">
<a href="https://www.smartkarma.com/profiles/supun-walpola" target="_blank" data-smartkarma-citation="accounts:1650" rel="noopener">Supun Walpola</a> </td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/z-holdings-alt-data-paypay-mall-and-paypay-flea-market-continue-to-disappoint" target="_blank" data-smartkarma-citation="insights:41671" rel="noopener">Z Holdings [Alt Data]: PayPay Mall and PayPay Flea Market Continue to Disappoint</a> </td>
</tr>
<tr><td colspan="3" style="width: 724px;"></td></tr>
<tr><td colspan="3" style="width: 724px;"><h3>About This Deal</h3></td></tr>
<tr>
<td style="width: 122px;">14 Nov 2019</td>
<td style="width: 97px;">Travis Lundy</td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/z-and-line-sitting-in-a-tree-m-e-r-g-i-n-g" target="_blank" data-smartkarma-citation="insights:34463" rel="noopener">Z and LINE, Sitting in a Tree... M.E.R.G.I.N... G...?</a> </td>
</tr>
<tr>
<td style="width: 122px;">18 Nov 2019</td>
<td style="width: 97px;">Travis Lundy</td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/line-and-z-sitting-in-a-tree-m-e-r-g-i-n-g-and-a-tender-offer" target="_blank" data-smartkarma-citation="insights:34560" rel="noopener">LINE and Z, Sitting in a Tree... M.E.R.G.I.N.G! And a Tender Offer!</a> </td>
</tr>
<tr>
<td style="width: 122px;">26 Dec 2019</td>
<td style="width: 97px;">Travis Lundy</td>
<td style="width: 463px;"><a href="https://www.smartkarma.com/insights/new-deal-for-line-a-lot-like-the-old-deal" target="_blank" rel="noopener">NEW Deal for LINE (A Lot Like the Old Deal)</a></td>
</tr>
<tr>
<td style="width: 122px;">6 July 2020</td>
<td style="width: 97px;">Travis Lundy</td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/market-is-pricing-a-line-bump-should-it" target="_blank" data-smartkarma-citation="insights:40976" rel="noopener">Market Is Pricing a LINE Bump - Should It?</a> </td>
</tr>
<tr>
<td style="width: 122px;">22 July 2020</td>
<td style="width: 97px;">Travis Lundy</td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/a-line-bump-the-other-argument-against" target="_blank" data-smartkarma-citation="insights:41419" rel="noopener">A LINE Bump - The Other Argument Against</a> </td>
</tr>
<tr>
<td style="width: 122px;">29 July 2020</td>
<td style="width: 97px;">Travis Lundy</td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/line-3938-this-is-not-the-kitchen-sink-you-are-looking-for" target="_blank" data-smartkarma-citation="insights:41674" rel="noopener">LINE (3938) - This Is Not the Kitchen Sink You Are Looking For</a> </td>
</tr>
<tr>
<td style="width: 122px;">3 August 2020</td>
<td style="width: 97px;">Travis Lundy</td>
<td style="width: 463px;">
<a href="https://www.smartkarma.com/insights/the-end-of-the-line-3938" target="_blank" data-smartkarma-citation="insights:41828" rel="noopener">The End of the LINE (3938)</a> </td>
</tr>
</tbody></table></div><div><p><em>In addition to the above insights, Michael Causton's <a href="https://www.smartkarma.com/insights/the-zozo-revival-a-new-private-brand-of-many-names-category-expansion-merchants-return" target="_blank" data-smartkarma-citation="insights:41520" rel="noopener">The Zozo Revival: A New Private Brand of Many Names, Category Expansion, Merchants Return</a> is worth a read to know more about Z Holdings going forward and <a href="https://www.smartkarma.com/profiles/mio-kato-cfa" target="_blank" data-smartkarma-citation="accounts:713" rel="noopener">Mio Kato, CFA</a>'s <a href="https://www.smartkarma.com/insights/zozo-nice-results-but-it-s-just-a-covid-bump" target="_blank" data-smartkarma-citation="insights:41718" rel="noopener">Zozo – Nice Results but It’s Just a COVID Bump</a> takes the view that results announced last week were less impressive than the headline numbers.</em></p></div>

The life of LINE Corp (3938 JP) as a listed entity with a listed future is now entering its Zombie Twilight. The Tender Offer by Softbank Corp (9434 JP) and Naver Corp (035420 KS) to buy out minorities has ended and we now move on to the next stage. Today the results of the Tender Offer for LINE were announced and the Offerors managed to acquire a sum total of 31,234,670 shares leaving about 25,000,000 shares left over un-tendered (plus options and converts un-converted). That is 25,000,000 million shares worth of zombie shareholders who will roam the markets until the shares' final retirement after the EGM. That is $1.25bn+ worth of zombies at the Tender Offer Price. The now-zombies defended their boundary, keeping the shares above the ¥5380 Tender Offer Price line from late June until the day before the Tender Offer went ex-. The period between now and the delisting of LINE could be 4-5 months. It could take 5-6 months to get one's money, unless one is going after appraisal rights. Then it will take a little longer, unless it takes a lot longer. This situation is different from the post-Tender trading situation of FamilyMart Co Ltd (8028 JP) and one should not expect the squeeze which happened there. 

Previous insights related to this situation and the names involved are listed below.

Relevant Insights

Date
Author
Title

About Cashless Payments

13 Mar 2019

Michael Causton 

Loyalty Points In Japan: More Loyalty, More Points and the Conduit to Cashless Payments 


2 Apr 2019

Mio Kato, CFA 

Mercari: Why Mercari Is Likely to Be a Winner in the Cashless Wars 


28 Jun 2019

Supun Walpola 

Paying with PayPay: A Deep Dive into Yahoo! Japan’s Mobile Payment Business 


6 Jan 2020

Michael Causton 

Lawson and KDDI Join Forces in Cashless Payments War 


24 Jan 2020

Michael Causton 

Mercari – Merpay Acquisition of Origami Pay Continues Cashless Consolidation 


15 Feb 2020

Michael Causton 

Japan Payment Wars: NTT Docomo and Merpay/Origami to Attempt Catch up with PayPay and Rakuten 


20 Mar 2020

Michael Causton 

Some Resistance to Cashless Payments in Japan 


28 Apr 2020

Michael Causton 

Z Holdings and Yamato Create Fulfilment Service for All to Rival Rakuten and Amazon 


29 Jul 2020

Supun Walpola 

Z Holdings [Alt Data]: PayPay Mall and PayPay Flea Market Continue to Disappoint 


About This Deal

14 Nov 2019
Travis Lundy

Z and LINE, Sitting in a Tree... M.E.R.G.I.N... G...? 


18 Nov 2019
Travis Lundy

LINE and Z, Sitting in a Tree... M.E.R.G.I.N.G! And a Tender Offer! 


26 Dec 2019
Travis Lundy
NEW Deal for LINE (A Lot Like the Old Deal)


6 July 2020
Travis Lundy

Market Is Pricing a LINE Bump - Should It? 


22 July 2020
Travis Lundy

A LINE Bump - The Other Argument Against 


29 July 2020
Travis Lundy

LINE (3938) - This Is Not the Kitchen Sink You Are Looking For 


3 August 2020
Travis Lundy

The End of the LINE (3938) 

In addition to the above insights, Michael Causton's The Zozo Revival: A New Private Brand of Many Names, Category Expansion, Merchants Return is worth a read to know more about Z Holdings going forward and Mio Kato, CFA's Zozo – Nice Results but It’s Just a COVID Bump takes the view that results announced last week were less impressive than the headline numbers.

Japan

Softbank Corporation provides mobile phone telecommunication and networking services. The Company offers mobile communication opening, short messaging function opening, video function opening, and other services. Softbank also provides mobile phones.

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Softbank Corp (9434 JP)

NTT – Initial Thoughts Reading Through the Lines of the Shock News

The Nikkei article regarding NTT buying out Docomo comes out of the blue and seems to have blindsided almost everybody. This is the first really...

Mio Kato

Japan Telecom Sector: NTT’s Privatization of DoCoMo Could Be a Long-Term Win

NTT has confirmed it is considering a bid for the 34% of DoCoMo it does not own in a deal that could be worth ¥3.9 trillion ($37bn). Press reports...

Kirk Boodry

🇯🇵 JAPAN • September Relative Price Scores - Profiting from Outlier Mean Reversion

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

Campbell Gunn

Asia Short Interest Weekly: Meituan, JD, PingAn, SMIC, Japan Divs, Netmarble, Shinpoong, Genius, TXC

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong...

Brian Freitas

LINE: The Zombie Twilight Begins

LINE

Travis Lundy

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