Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Silchester aimed at four mid-sized regional banks and one tiny one. All four efforts failed, but two of the four banks are probably worth looking at. </li>
<li>
<a href="https://www.smartkarma.com/entities/bank-of-iwate-ltd" target="_blank" data-smartkarma-citation="entities:6171:1" rel="noopener">Bank Of Iwate (8345 JP)</a> is the small one (tiny) worth looking at. It is 0.17x book, &lt;7x earnings, 1.2x market cap in equity holdings, and better-than-average NIM.</li>
<li>Over time, value will out. And while not multi-bagger compelling, the mechanical value arithmetic is interesting.</li>
</ul>


Silchester aimed at four mid-sized regional banks and one tiny one. All four efforts failed, but two of the four banks are probably worth looking at. 

Bank Of Iwate (8345 JP) is the small one (tiny) worth looking at. It is 0.17x book, &lt;7x earnings, 1.2x market cap in equity holdings, and better-than-average NIM.
Over time, value will out. And while not multi-bagger compelling, the mechanical value arithmetic is interesting.


JAPAN ACTIVISM:  Silchester AGM Effort Fails But Bank of Iwate (8345) Is Cheap As Chips

<ul>
<li>In April, Silchester went after <a href="https://www.smartkarma.com/entities/shiga-bank-ltd" target="_blank" data-smartkarma-citation="entities:18665:1" rel="noopener">Shiga Bank (8366 JP)</a>(<a href="https://www.smartkarma.com/insights/japan-activism-silchester-goes-after-shiga-bank" target="_blank" data-smartkarma-citation="insights:69339" rel="noopener">JAPAN ACTIVISM:  Silchester Goes After Shiga Bank</a>), with an open letter decrying destruction of shareholder value, asking for a special dividend. </li>
<li>They said Shiga Bank had excess cross-holdings and perennially low ROE (it does). Silchester asked for a minimal special div as a signal. Shareholders dinged their request at the AGM. </li>
<li>Shiga Bank had a decent runup in the last several months - far outstripping its peers. Now it is rich. Time to take the trade off.</li>
</ul>


In April, Silchester went after Shiga Bank (8366 JP)(JAPAN ACTIVISM:  Silchester Goes After Shiga Bank), with an open letter decrying destruction of shareholder value, asking for a special dividend. 
They said Shiga Bank had excess cross-holdings and perennially low ROE (it does). Silchester asked for a minimal special div as a signal. Shareholders dinged their request at the AGM. 
Shiga Bank had a decent runup in the last several months - far outstripping its peers. Now it is rich. Time to take the trade off.


JAPAN ACTIVISM:  Silchester Target Shiga Bank Dings the Div Proposal Badly

<ul>
<li>Silchester International Investors targeted the AGMs of four Japanese regional banks in which it had held shares for 12-17yrs writing open letters, and asking each for a small special dividend.</li>
<li>One was heavily over-capitalised and significant cross-holding owning <a href="https://www.smartkarma.com/entities/chugoku-bank-ltd" target="_blank" data-smartkarma-citation="entities:11177:1" rel="noopener">Chugoku Bank (8382 JP)</a> </li>
<li>Their Shareholder Proposal flopped badly. The shareholder structure isn't there to support it, now or in future, and among regional banks, this is on the "less attractive" side valuation-wise.</li>
</ul>


Silchester International Investors targeted the AGMs of four Japanese regional banks in which it had held shares for 12-17yrs writing open letters, and asking each for a small special dividend.
One was heavily over-capitalised and significant cross-holding owning Chugoku Bank (8382 JP) 
Their Shareholder Proposal flopped badly. The shareholder structure isn't there to support it, now or in future, and among regional banks, this is on the "less attractive" side valuation-wise.


JAPAN ACTIVISM:  Silchester's Chugoku Bank AGM Ploy Fails - Won't Be an Activism Target

<ul>
<li>Silchester, after holding <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> shares 16 years, becoming the largest investor, FINALLY publicly asked the bank to make a gesture to pay out a tiny special div. </li>
<li>The bank rejected them, but they took it to to the AGM. And there Silchester got rejected by the shareholders. Soundly. Hostile activism is not going to be easy here. </li>
<li>But all is not lost. Since December, the bank has raised its payout ratio to 50% and has promised to cut a piece of its cross-holdings in the MTMP.</li>
</ul>


Silchester, after holding Bank of Kyoto (8369 JP) shares 16 years, becoming the largest investor, FINALLY publicly asked the bank to make a gesture to pay out a tiny special div. 
The bank rejected them, but they took it to to the AGM. And there Silchester got rejected by the shareholders. Soundly. Hostile activism is not going to be easy here. 
But all is not lost. Since December, the bank has raised its payout ratio to 50% and has promised to cut a piece of its cross-holdings in the MTMP.


JAPAN ACTIVISM:  Silchester's Bank of Kyoto AGM Results - Activism Still Failing

David Blennerhassett

<ul>
<li>
<a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> selling its <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a> shares was expected. The beginning of an open-ended share repurchase programme of Prosus and <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> shares was a welcome surprise.</li>
<li>Dye &amp; Durham has reduced its Offer price for <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration (LNK AU)</a> to $4.30/share, down from $5.50/share. It still may get board support.</li>
<li>A 40-45% discount is about the narrowest <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> should get to. For that, there is probably 15-20% upside. But like all holdco trades, trade the range.</li>
</ul>



Prosus (PRX NA) selling its JD.com (9618 HK) shares was expected. The beginning of an open-ended share repurchase programme of Prosus and Naspers (NPN SJ) shares was a welcome surprise.
Dye &amp; Durham has reduced its Offer price for Link Administration (LNK AU) to $4.30/share, down from $5.50/share. It still may get board support.
A 40-45% discount is about the narrowest Bank of Kyoto (8369 JP) should get to. For that, there is probably 15-20% upside. But like all holdco trades, trade the range.


Last Week in Event SPACE: Prosus/Naspers, Link Admin, Bank of Kyoto, Tassel, Toshiba

Japan

The Bank of Kyoto, Ltd. is a regional bank in Kyoto.  The Bank provides banking services including deposits, savings, loans, foreign exchange transactions, and securities investments.  The Bank of Kyoto also provides financial services such as letter of credit, leasing, loans, and credit cards.

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Bank of Kyoto (8369 JP)

JAPAN ACTIVISM: Silchester AGM Effort Fails But Bank of Iwate (8345) Is Cheap As Chips

Bank of Iwate did not see Silchester succeed at the AGM. None of Silchester's AGMs were successful. But this one is cheap, and decent. It will...

Travis Lundy

JAPAN ACTIVISM: Silchester Target Shiga Bank Dings the Div Proposal Badly

Silchester launched a small activist action against four banks this spring. Shiga Bank was one. They asked for a special div at the AGM. Rebuffed....

Travis Lundy

JAPAN ACTIVISM: Silchester's Chugoku Bank AGM Ploy Fails - Won't Be an Activism Target

Silchester targeted Chugoku Bank for cross-holdings. CB rejected them. Silchester asked the AGM for a small div, shareholders rejected them. It's...

Travis Lundy

JAPAN ACTIVISM: Silchester's Bank of Kyoto AGM Results - Activism Still Failing

Bank of Kyoto saw Silchester propose a special dividend at the AGM. It got fewer FOR votes than the president got AGAINST votes. Activism is tough...

Travis Lundy

Last Week in Event SPACE: Prosus/Naspers, Link Admin, Bank of Kyoto, Tassel, Toshiba

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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