Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nojima-corp" target="_blank" data-smartkarma-citation="entities:9655:1" rel="noopener">Nojima Corp (7419 JP)</a> is buying out <a href="https://www.smartkarma.com/entities/conexio-corp" target="_blank" data-smartkarma-citation="entities:19064:1" rel="noopener">Conexio Corp (9422 JP)</a> majority owner <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> along with minorities. At a 59% premium, it looks good. </li>
<li>However, in terms of normalised EV/EBITDA or EV/FCF multiple, this is not expensive. </li>
<li>And while the major seller/target and friendlies are oh so close, the register is more interesting than the yuho top 10 shareholder list suggests. </li>
</ul>



Nojima Corp (7419 JP) is buying out Conexio Corp (9422 JP) majority owner Itochu Corp (8001 JP) along with minorities. At a 59% premium, it looks good. 
However, in terms of normalised EV/EBITDA or EV/FCF multiple, this is not expensive. 
And while the major seller/target and friendlies are oh so close, the register is more interesting than the yuho top 10 shareholder list suggests. 


Nojima (7419) Launches Buyout of Conexio (9422)

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<ul>
<li>Consumer electronics retailers and producers benefited a lot from the pandemic, supplying customers stuck at home with kit for work and play. </li>
<li>The Olympics also encouraged people to update their TVs and entertainment systems.</li>
<li>Now, sales are falling to pre-2020 levels due to saturation. Inflationary pressures also mean more people are turning to second-hand options or simply not replacing old appliances at all.</li>
</ul>


Consumer electronics retailers and producers benefited a lot from the pandemic, supplying customers stuck at home with kit for work and play. 
The Olympics also encouraged people to update their TVs and entertainment systems.
Now, sales are falling to pre-2020 levels due to saturation. Inflationary pressures also mean more people are turning to second-hand options or simply not replacing old appliances at all.


Japan's Consumer Electronics Retailers Face Tough Outlook

<ul>
<li>The following is an in-depth review of the Japanese retail sector in 2021-22 and is designed to provide a complete overview for any investor in Japanese retail/consumer markets.</li>
<li>FY2021-22 proved a rebound year for retailers at the sector level. But on a company by company basis, there has been radical divergence between the best and the rest. </li>
<li>We look at the reasons for this divergence and the implications for Japanese retail and consumer firms in the years ahead.</li>
</ul>


The following is an in-depth review of the Japanese retail sector in 2021-22 and is designed to provide a complete overview for any investor in Japanese retail/consumer markets.
FY2021-22 proved a rebound year for retailers at the sector level. But on a company by company basis, there has been radical divergence between the best and the rest. 
We look at the reasons for this divergence and the implications for Japanese retail and consumer firms in the years ahead.


Japanese Retailing 2021-22: What's Really Going on and What's Next?

<ul>
<li>In 2018, Suruga Bank got itself in trouble, the shares fell 80% or more in a year-plus. In 2019 they took a big hit, and the Okano family sold out.</li>
<li>
<a href="https://www.smartkarma.com/entities/nojima-corp" target="_blank" data-smartkarma-citation="entities:9655:1" rel="noopener">Nojima Corp (7419 JP)</a> bought the shares -85% from the peak. Now they are selling those shares, plus the ones they already owned. Down nearly 10% from where they bought. </li>
<li>This is an instant 15+% boost to BVPS and 22+% boost to EPS. That's great. But that may be where greatness stops.</li>
</ul>


In 2018, Suruga Bank got itself in trouble, the shares fell 80% or more in a year-plus. In 2019 they took a big hit, and the Okano family sold out.

Nojima Corp (7419 JP) bought the shares -85% from the peak. Now they are selling those shares, plus the ones they already owned. Down nearly 10% from where they bought. 
This is an instant 15+% boost to BVPS and 22+% boost to EPS. That's great. But that may be where greatness stops.


Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/suruga-bank-ltd" target="_blank" data-smartkarma-citation="entities:6267:1" rel="noopener">Suruga Bank Ltd (8358 JP)</a>has raised its interim guidance for 1H FY3/2022 consolidated net profits for the second time in three months: this time by +78% to ¥17.8 billion, or ¥76.86/share.  Credit costs, initially estimated at ¥2 billion for 1H FY3/2022, are now likely to be negative: a write-back to profits of ‘surplus’ loan loss reserves of as much as ¥6.6 billion, suggesting further progress in cleaning up the balance-sheet after the catastrophic ‘share house’ scandal.  This is significant: back in May this year, Suruga was forecasting an interim net loss of ¥2.3 billion because of further precautionary provisioning expenses.Suruga Bank remains one of the most heavily traded Japanese bank stocks and is regularly one of the Top 5 Japanese bank stocks in terms of daily trading volume behind only the three megabanks and <a href="https://www.smartkarma.com/entities/resona-holdings-inc" target="_blank" data-smartkarma-citation="entities:6841:1" rel="noopener">Resona Holdings (8308 JP)</a>. It is currently trading on a remarkably low PER versus peers of 4.1x (assuming 2H FY3/2022 consolidated net profits are at least ¥8 billion, producing a FY3/2022 EPS of ¥122.2/share or better) and an undemanding PBR of 0.37x.Risks remain, of course, and we continue to warn that this is a stock for players of the Long Game only.  The intended disposal of the 18.5% stake in Suruga held by its largest shareholder, <a href="https://www.smartkarma.com/entities/nojima-corp" target="_blank" data-smartkarma-citation="entities:9655:1" rel="noopener">Nojima Corp (7419 JP)</a>, remains an unresolved issue. Nevertheless, the positives continue to increase while the negatives continue to diminish, and the shares are significantly outperforming the Topix Banks Index for the first time in many months.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/048/original/8358-Suruga-2021-1105-8358vsTPNBNK-CY2021.jpg?1636249764" class="editor-image img-responsive" data-smartkarma-image-id="240048"></figure></section>

Suruga Bank Ltd (8358 JP)has raised its interim guidance for 1H FY3/2022 consolidated net profits for the second time in three months: this time by +78% to ¥17.8 billion, or ¥76.86/share.  Credit costs, initially estimated at ¥2 billion for 1H FY3/2022, are now likely to be negative: a write-back to profits of ‘surplus’ loan loss reserves of as much as ¥6.6 billion, suggesting further progress in cleaning up the balance-sheet after the catastrophic ‘share house’ scandal.  This is significant: back in May this year, Suruga was forecasting an interim net loss of ¥2.3 billion because of further precautionary provisioning expenses.Suruga Bank remains one of the most heavily traded Japanese bank stocks and is regularly one of the Top 5 Japanese bank stocks in terms of daily trading volume behind only the three megabanks and Resona Holdings (8308 JP). It is currently trading on a remarkably low PER versus peers of 4.1x (assuming 2H FY3/2022 consolidated net profits are at least ¥8 billion, producing a FY3/2022 EPS of ¥122.2/share or better) and an undemanding PBR of 0.37x.Risks remain, of course, and we continue to warn that this is a stock for players of the Long Game only.  The intended disposal of the 18.5% stake in Suruga held by its largest shareholder, Nojima Corp (7419 JP), remains an unresolved issue. Nevertheless, the positives continue to increase while the negatives continue to diminish, and the shares are significantly outperforming the Topix Banks Index for the first time in many months.

Suruga Bank (8358 JP):  The Sun Also Rises

Japan

Nojima Corporation operates consumer electronic store chains that specialize in computers and communication products.  The Company also sells entertainment related items such as game software and CDs, and household appliances. The Company operates  and franchises stores in Kanagawa Prefecture.

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Nojima Corp (7419 JP)

Nojima (7419) Launches Buyout of Conexio (9422)

Cheap company Nojima is buying cheap company Conexio, cheaply. Itochu is selling it. It looks like a done deal but there is an outlying chance the...

Travis Lundy

Japan's Consumer Electronics Retailers Face Tough Outlook

Don't expect much growth from Japan's consumer electronics retailers. With market saturation and waning demand, there is trouble ahead and possibly...

Michael Causton

Japanese Retailing 2021-22: What's Really Going on and What's Next?

There is increasing divergence between the winners and losers in Japanese retailing and the following in-depth review looks at performance in the...

Michael Causton

HUGE Suruga Bank (8358 JP) Buyback

Suruga Bank will do a large ToSTNeT-3 Buyback this morning at last trade. It is 15.7% accretive to BVPS and 22.7% accretive to EPS. That's great....

Travis Lundy

Suruga Bank (8358 JP): The Sun Also Rises

Suruga Bank (8358 JP) has raised its interim guidance for the second time in three months to ¥17.8 billion, or ¥76.86/share. The stock is...

J. Brian Waterhouse

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