Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Elliott Management was noted several weeks ago to have bought near 5% of <a href="https://www.smartkarma.com/entities/dai-nippon-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:19388:1" rel="noopener">Dai Nippon Printing (7912 JP)</a>. The stock popped when people found out.  </li>
<li>Then the stock popped when the company said they'd announce the outline for their new Mid-Term Management Plan on 9 March, and that would include more capital allocation measures.</li>
<li>Today we got the Outline. There are more capital allocation measures. The numbers look big. Nuance is required to understand the impacts over time.</li>
</ul>


Elliott Management was noted several weeks ago to have bought near 5% of Dai Nippon Printing (7912 JP). The stock popped when people found out.  
Then the stock popped when the company said they'd announce the outline for their new Mid-Term Management Plan on 9 March, and that would include more capital allocation measures.
Today we got the Outline. There are more capital allocation measures. The numbers look big. Nuance is required to understand the impacts over time.


Dai Nippon Printing (7912) - Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs

<ul>
<li>A little over two weeks ago, western media outlets <a href="https://www.ft.com/content/ac43e9dd-1e83-47c7-9401-112964465545" target="_blank" rel="noopener">reported</a> "sources familiar with the matter" said Elliott Management had built a "significant" stake in <a href="https://www.smartkarma.com/entities/dai-nippon-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:19388:1" rel="noopener">Dai Nippon Printing (7912 JP)</a>. </li>
<li>DNP has been a "value name" for years. And years. Lots of cash, lots of real estate, and lots of cross-holdings. DNP had a plan to sell crossholdings, slowly.</li>
<li>DNP had planned a March 9 presentation of its new MTMP. Elliott, reportedly with a little less than 5%, wanted faster. A few weeks later, DNP has responded with faster. </li>
</ul>


A little over two weeks ago, western media outlets reported "sources familiar with the matter" said Elliott Management had built a "significant" stake in Dai Nippon Printing (7912 JP). 
DNP has been a "value name" for years. And years. Lots of cash, lots of real estate, and lots of cross-holdings. DNP had a plan to sell crossholdings, slowly.
DNP had planned a March 9 presentation of its new MTMP. Elliott, reportedly with a little less than 5%, wanted faster. A few weeks later, DNP has responded with faster. 


Dai Nippon Printing (7912) - Activism Results Going Forward Are Complicated

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.

<ul>
<li>Dai Nippon Printing’s announcement that it would double its RoE target in its next MTP was a pleasant surprise. </li>
<li>Together with saucy hints that future buybacks could be the biggest in its history this has propelled the stock to a post-2007 high. </li>
<li>We think Elliott has found an easy win here and consider this likely to end as a standout success for activism in Japan.</li>
</ul>


Dai Nippon Printing’s announcement that it would double its RoE target in its next MTP was a pleasant surprise. 
Together with saucy hints that future buybacks could be the biggest in its history this has propelled the stock to a post-2007 high. 
We think Elliott has found an easy win here and consider this likely to end as a standout success for activism in Japan.


Dai Nippon Printing – Activism On Easy Street

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Equity Bottom-Up

<ul>
<li>Canon's reported capital spending plan suggest that commercial production of nanoimprint lithography tools could start in time for the next semiconductor up-cycle.</li>
<li>If this is the case, Kioxia is likely to be the main beneficiary. In the meantime, LightStream recommends that investors in Toshiba hedge against tech/semi weakness.</li>
<li>Technical hurdles remain formidable, but nanoimprint lithography has the potential to be much cheaper than EUV.</li>
</ul>


Canon's reported capital spending plan suggest that commercial production of nanoimprint lithography tools could start in time for the next semiconductor up-cycle.
If this is the case, Kioxia is likely to be the main beneficiary. In the meantime, LightStream recommends that investors in Toshiba hedge against tech/semi weakness.
Technical hurdles remain formidable, but nanoimprint lithography has the potential to be much cheaper than EUV.


Toshiba (6502 JP): Kioxia Nanoimprint Update - Look to the Next Cycle

In this morning's news: "Merger talks between Western Digital and Kioxia stall" (Reuters, October 22, 2021, updated 9:07 a.m. JST). It is yet not clear how serious this might be.On October 19, the Nikkei reported that Toshiba affiliate Kioxia, Canon (7751) and Dai Nippon Printing (7912) are aiming to use nanoimprint lithography in Kioxia's NAND flash memory production in 2025.The potential savings in terms of equipment and operational costs could be great enough to give Kioxia a competitive advantage. It would also justify years of development and give Canon and Dai Nippon Printing important new products.But 2025 is a long time from now and technical hurdles remain. For the time being, more immediate issues are likely to move the stocks. LightStream's Mio Kato continues to see upside potential for Toshiba, but primarily as an exit opportunity (see <a href="https://www.smartkarma.com/insights/toshiba-possibility-of-a-kioxia-western-digital-deal" target="_blank" data-smartkarma-citation="insights:56685" rel="noopener">Toshiba – Possibility of a Kioxia-Western Digital Deal</a> )

In this morning's news: "Merger talks between Western Digital and Kioxia stall" (Reuters, October 22, 2021, updated 9:07 a.m. JST). It is yet not clear how serious this might be.On October 19, the Nikkei reported that Toshiba affiliate Kioxia, Canon (7751) and Dai Nippon Printing (7912) are aiming to use nanoimprint lithography in Kioxia's NAND flash memory production in 2025.The potential savings in terms of equipment and operational costs could be great enough to give Kioxia a competitive advantage. It would also justify years of development and give Canon and Dai Nippon Printing important new products.But 2025 is a long time from now and technical hurdles remain. For the time being, more immediate issues are likely to move the stocks. LightStream's Mio Kato continues to see upside potential for Toshiba, but primarily as an exit opportunity (see Toshiba – Possibility of a Kioxia-Western Digital Deal )

Toshiba (6502 JP): Nanoimprint Litho Could Add Value to Kioxia, but Not Soon

Japan

DAI NIPPON PRINTING CO., LTD. offers printing services for commercial and industrial use.  The printing items include information media such as books, periodicals, and text books, wrapping paper and containers, stationeries, and advertising medium.  The Company provides design and production services as well.  Dai Nippon Printing also produces soft drinks including Coca Cola.

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Dai Nippon Printing (7912 JP)

Dai Nippon Printing (7912) - Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs

DNP (7912) has announced the capital allocation measures they said they would. The headline numbers are big. ¥300bn of buybacks over 3yrs. 70+% of...

Travis Lundy

Dai Nippon Printing (7912) - Activism Results Going Forward Are Complicated

Elliott built a stake in perennial deep-value name Dai Nippon Printing. DNP responded by saying it will take more aggressive capital action. The...

Travis Lundy

Dai Nippon Printing – Activism On Easy Street

Elliott's investment in Dai Nippon Printing looks to us like an excellent selection for its high probability of success and the trade is already...

Mio Kato

Toshiba (6502 JP): Kioxia Nanoimprint Update - Look to the Next Cycle

Commercial production of nanoimprint lithography tools could begin in time for the next semiconductor up-cycle. That main beneficiary would be...

Scott Foster

Toshiba (6502 JP): Nanoimprint Litho Could Add Value to Kioxia, but Not Soon

Merger talks between Kioxia and Western Digital have reportedly stalled. This should be the focus of investor attention, not the recent Nikkei...

Scott Foster

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