Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>In early February 2022, Silchester International Investors (according to its website) sent letters to four low-ROE-earning Japanese regional banks proposing a new dividend policy.</li>
<li>The management and boards of each bank rejected the policy proposal though two of the four had upped their proposed dividend or changed policy prior, and two upped it afterwards.</li>
<li>While Bank of Kyoto is the biggest equity portfolio, <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> is a relatively large, provincial, regional bank, with middling equity portfolio. Different shape. Different situation.</li>
</ul>


In early February 2022, Silchester International Investors (according to its website) sent letters to four low-ROE-earning Japanese regional banks proposing a new dividend policy.
The management and boards of each bank rejected the policy proposal though two of the four had upped their proposed dividend or changed policy prior, and two upped it afterwards.
While Bank of Kyoto is the biggest equity portfolio, Chugoku Bank (8382 JP) is a relatively large, provincial, regional bank, with middling equity portfolio. Different shape. Different situation.


JAPAN ACTIVISM: Silchester Goes After Chugoku Bank

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

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.

Equity Capital Markets

Poppins Holdings Inc / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/poppins-holdings-inc" target="_blank" data-smartkarma-citation="entities:31056:1" rel="noopener">Poppins Holdings Inc (7358 JP)</a> , the provider of child and elderly care services in Japan has filed for an IPO to list its shares on the Tokyo Exchange. The company will be issuing 1.1m new shares at the IPO while existing shareholders will issue 2.15m shares, and at the midpoint of the IPO pricing of JPY2,750 per share, the company will raise gross proceeds of JPY8.9bn (US$85.8m).</p><p>In our previous insight on the company’s IPO, we examined the company’s business model, segments and financials. In this insight, we discuss the company’s valuation.</p><p>Read our previous insight on the company's IPO:</p><p><a href="https://www.smartkarma.com/insights/poppins-ipo-well-positioned-to-benefit-from-japanese-demographic-trends" target="_blank" data-smartkarma-citation="insights:46156" rel="noopener">Poppins IPO: Well Positioned to Benefit from Japanese Demographic Trends</a> </p>

Poppins Holdings Inc (7358 JP) , the provider of child and elderly care services in Japan has filed for an IPO to list its shares on the Tokyo Exchange. The company will be issuing 1.1m new shares at the IPO while existing shareholders will issue 2.15m shares, and at the midpoint of the IPO pricing of JPY2,750 per share, the company will raise gross proceeds of JPY8.9bn (US$85.8m).In our previous insight on the company’s IPO, we examined the company’s business model, segments and financials. In this insight, we discuss the company’s valuation.Read our previous insight on the company's IPO:Poppins IPO: Well Positioned to Benefit from Japanese Demographic Trends 

Poppins IPO Valuation: Attractively Priced for a Growing Company

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/111/668/original/image_43774002421577073129098.png?1577073126" class="editor-image img-responsive" data-smartkarma-image-id="111668"></figure>
<div class="content-caption">Source; Capital IQ</div>
<p>In the past, the share price is almost always following analyst recommendation but the most troubling thing about TKP is its high valuation. TKP is not exactly without a competitor in Japan, albeit TKP has the biggest market share. TKP business model is a flexible conference room rental provider in which the management source idle assets in Japan and resell them through the internet started with entrepreneurs and of late to listed corporates as well.</p>
<p>The company's profitability is short of that mind-blowing numbers and it has a massive debt in its balance sheet as well. <strong>Does paying 3x more than its peers justify for a conference room rental business with low profitability? </strong></p>
<p>While investors are happy to pay a premium for its dominant market share in Japan, they should be cautioned if they were to pay the same valuation level for TKP's overseas venture. The flexible working space outside of Japan has been filled with innovative competitors. With a limited success potential for its overseas venture, investors should start to sell/short-sell <a href="https://www.smartkarma.com/entities/tkp-corporation" target="_blank" data-smartkarma-citation="entities:28305:1" rel="noopener"> TKP Corporation (3479 JP)</a> .</p>


Source; Capital IQ
In the past, the share price is almost always following analyst recommendation but the most troubling thing about TKP is its high valuation. TKP is not exactly without a competitor in Japan, albeit TKP has the biggest market share. TKP business model is a flexible conference room rental provider in which the management source idle assets in Japan and resell them through the internet started with entrepreneurs and of late to listed corporates as well.
The company's profitability is short of that mind-blowing numbers and it has a massive debt in its balance sheet as well. Does paying 3x more than its peers justify for a conference room rental business with low profitability? 
While investors are happy to pay a premium for its dominant market share in Japan, they should be cautioned if they were to pay the same valuation level for TKP's overseas venture. The flexible working space outside of Japan has been filled with innovative competitors. With a limited success potential for its overseas venture, investors should start to sell/short-sell  TKP Corporation (3479 JP) .

'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

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/087/536/original/2019-05-12_08-28-48.png?1557617338" class="editor-image img-responsive" data-smartkarma-image-id="87536"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/087/537/original/2019-05-12_08-29-53.png?1557617406" class="editor-image img-responsive" data-smartkarma-image-id="87537"></figure><p>Source: Japan Analytics</p>
</div><p><strong>SLIP-SLIDIN' AWAY</strong> - Japanese equities have lost 3.9% in the last holiday-shortened week and 4.6% or ¥30t since the bear-market rally peak on 17th April. The new Reiwa 令和 era has yet to see a positive close and the Bank of Japan has intervened to buy ETFs on three out of the last six trading days. A ¥2 appreciation in the Yen has cushioned the blow for non-resident/unhedged investors. For the first time since October 2018, the 50-day moving average of Total Market Value has been decisively breached. The remaining bulls will now be looking for a 'higher low' between ¥600t and ¥625t. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/087/533/original/2019-05-12_08-13-49.png?1557616440" class="editor-image img-responsive" data-smartkarma-image-id="87533"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/087/538/original/2019-05-12_08-38-11.png?1557617904" class="editor-image img-responsive" data-smartkarma-image-id="87538"></figure><p>Source: Japan Analytics</p>
</div><p><strong>BOUNCE AHEAD</strong> - The 5-day Relative Strength Index suggests a short-term recovery in the coming week, or until China announces its 'retaliation' measures to counter the recently-expanded US tariffs. 'Japan Inc.' is now voicing concerns about Japan's trade practices becoming the next focus for the US Trade Representative. Our Value Traded Ratio has also seen the strongest upward move- from 28 (the lowest level in nine months) to 53 (the highest since 21st December) in only eight trading days. Such sharp moves usually mark short-term low points.</p><p><strong>RESULTS &amp; REVISIONS</strong> - In the last four trading days, 1,153 Japanese companies have reported quarterly results, and there have been 855 initial forecasts for FY2020, 101 revision to annual forecasts, 598 initial interim estimates and ten revisions to interim forecasts. We are now at the halfway point of the Spring results announcements.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/087/539/original/2019-05-12_11-25-42.png?1557627962" class="editor-image img-responsive" data-smartkarma-image-id="87539"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>RESULTS &amp; REVISION SCORE</strong> - Our scoring methodology continues to have a reasonable correlation (0.79) with the Total Market Value. In the DETAIL section below we will analyse the breakdown the three components of the score, update our Sector Scores and look at the best and worst large-cap company results over the week. In the meantime, Simon &amp; Garfunkel can provide some light relief.</p><center><iframe src="https://www.youtube.com/embed/ZNt5FnMK2sM" width="854" height="480" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="allowfullscreen"></iframe></center><div class="content-caption">Simon &amp; Garfunkel: Slip-Slidin' Away - The Concert in Central Park, September 19, 1981</div>


Source: Japan Analytics
SLIP-SLIDIN' AWAY - Japanese equities have lost 3.9% in the last holiday-shortened week and 4.6% or ¥30t since the bear-market rally peak on 17th April. The new Reiwa 令和 era has yet to see a positive close and the Bank of Japan has intervened to buy ETFs on three out of the last six trading days. A ¥2 appreciation in the Yen has cushioned the blow for non-resident/unhedged investors. For the first time since October 2018, the 50-day moving average of Total Market Value has been decisively breached. The remaining bulls will now be looking for a 'higher low' between ¥600t and ¥625t. 
Source: Japan Analytics
BOUNCE AHEAD - The 5-day Relative Strength Index suggests a short-term recovery in the coming week, or until China announces its 'retaliation' measures to counter the recently-expanded US tariffs. 'Japan Inc.' is now voicing concerns about Japan's trade practices becoming the next focus for the US Trade Representative. Our Value Traded Ratio has also seen the strongest upward move- from 28 (the lowest level in nine months) to 53 (the highest since 21st December) in only eight trading days. Such sharp moves usually mark short-term low points.RESULTS &amp; REVISIONS - In the last four trading days, 1,153 Japanese companies have reported quarterly results, and there have been 855 initial forecasts for FY2020, 101 revision to annual forecasts, 598 initial interim estimates and ten revisions to interim forecasts. We are now at the halfway point of the Spring results announcements.Source: Japan AnalyticsRESULTS &amp; REVISION SCORE - Our scoring methodology continues to have a reasonable correlation (0.79) with the Total Market Value. In the DETAIL section below we will analyse the breakdown the three components of the score, update our Sector Scores and look at the best and worst large-cap company results over the week. In the meantime, Simon &amp; Garfunkel can provide some light relief.Simon &amp; Garfunkel: Slip-Slidin' Away - The Concert in Central Park, September 19, 1981

🇯🇵 Japan • Spring Results & Revisions & Market Update - Slip-Slidin' Away

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<p><a href="https://www.smartkarma.com/entities/1099" target="_blank" data-smartkarma-citation="entities:1099:1">Navitas Ltd (NVT AU)</a>, an Australian-listed education company, entered into a binding agreement to be acquired by the BGH Consortium. As a reminder on 15 January 2019, the BGH Consortium bid against itself by offering a revised proposal of A$5.825 cash per share, 6% higher than its previous rejected offer.</p><div class="content-highlight"><p>Navitas’ board have unanimously recommended the scheme. We believe that BGH Consortium’s proposal is attractive and shareholders should accept the offer.</p></div>

Navitas Ltd (NVT AU), an Australian-listed education company, entered into a binding agreement to be acquired by the BGH Consortium. As a reminder on 15 January 2019, the BGH Consortium bid against itself by offering a revised proposal of A$5.825 cash per share, 6% higher than its previous rejected offer.Navitas’ board have unanimously recommended the scheme. We believe that BGH Consortium’s proposal is attractive and shareholders should accept the offer.

Navitas (NVT AU): BGH Heads Towards Its First Major Acquisition

Japan

Benesse Holdings, Inc. provides correspondence educational services to a range of age groups from toddlers to high-school students. Benesse HD also operates English language schools and senior care homes.

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Benesse Holdings (9783 JP)

JAPAN ACTIVISM: Silchester Goes After Chugoku Bank

Silchester's letter to Chugoku Bank is similar to the others, but rejection count/order is different. A small ask on a large balance sheet but...

Travis Lundy

Poppins IPO Valuation: Attractively Priced for a Growing Company

Poppins, the provider of child and elderly care services in Japan has filed for an IPO to list its shares on the Tokyo Exchange. In this insight,...

Shifara Samsudeen, FCMA, CGMA

TKP (3479) - A Working Wework?

In the past, the share price is almost always following analyst recommendation but the most troubling thing about TKP is its high valuation. TKP...

Henry Soediarko

🇯🇵 Japan • Spring Results & Revisions & Market Update - Slip-Slidin' Away

SLIP-SLIDIN' AWAY - Japanese equities have lost 3.9% in the last holiday-shortened week and 4.6% or ¥30t since the bear-market rally peak on 17th...

Campbell Gunn

Navitas (NVT AU): BGH Heads Towards Its First Major Acquisition

Navitas Ltd (NVT AU), an Australian-listed education company, entered into a binding agreement to be acquired by the BGH Consortium. As a reminder...

Arun George

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