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

<p>Toshiba and Fujitsu have lagged Hitachi in addressing their listed subsidiaries and have followed weaker processes in their resolution in our view. As the two conglomerates move forward we wonder whether it might make sense for Toshiba to acquire Fujitsu General and for Fujitsu to acquire Toshiba Tec.</p>

Toshiba and Fujitsu have lagged Hitachi in addressing their listed subsidiaries and have followed weaker processes in their resolution in our view. As the two conglomerates move forward we wonder whether it might make sense for Toshiba to acquire Fujitsu General and for Fujitsu to acquire Toshiba Tec.

Toshiba Tec – Thinking About a Toshiba Tec for Fujitsu General Swap

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE:  Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Index Rebalance

<div><p>JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.</p></div><div><p>A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. </p></div><div><p>Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio for the 2021 Rebalance based on April-end data. </p></div>

JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio for the 2021 Rebalance based on April-end data. 

JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End

<p>We had previously suggested that Fujitsu General might significantly beat earnings given past seasonality trends. It actually missed with OP of ¥18.4bn undershooting guidance of ¥19bn. However, that is due to a ¥3.6bn impact from volume shortfalls that appear to have been caused by semiconductor shortages and supply constraints for container shipping. We believe the recent weakness in the stock could thus be an opportunity.</p>

We had previously suggested that Fujitsu General might significantly beat earnings given past seasonality trends. It actually missed with OP of ¥18.4bn undershooting guidance of ¥19bn. However, that is due to a ¥3.6bn impact from volume shortfalls that appear to have been caused by semiconductor shortages and supply constraints for container shipping. We believe the recent weakness in the stock could thus be an opportunity.

Fujitsu General – Earnings Miss Is an Opportunity

<p>The Nikkei reported today that Bain Capital’s bidding consortium has received preferential negotiating rights from Hitachi. The rumoured valuation is above ¥800bn which would put the premium at just 3.2% above the last close. As we said previously, the potential for a large hike to those terms seems limited and better returns may be on offer in trying to identify other potential buyout targets.</p>

The Nikkei reported today that Bain Capital’s bidding consortium has received preferential negotiating rights from Hitachi. The rumoured valuation is above ¥800bn which would put the premium at just 3.2% above the last close. As we said previously, the potential for a large hike to those terms seems limited and better returns may be on offer in trying to identify other potential buyout targets.

Hitachi Metals – Limited Upside Despite Bain Capital News But Let’s Find the Offshoot Ideas

Japan

Fujitsu General Ltd. manufactures air-conditioning units, refrigerators, and information-communication equipment. The products include air conditioners, and purifiers. The Company also manufactures computer software and electronic devices.

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Fujitsu General (6755 JP)

Toshiba Tec – Thinking About a Toshiba Tec for Fujitsu General Swap

With Fujitsu and Toshiba still having to address their listed subsidiaries we wonder whether it might make sense for Toshiba to acquire Fujitsu...

Mio Kato

Last Week in Event SPACE: Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

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

JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End

JPX Nikkei 400 2021 Rebal Pre-Event L/S Basket +2.9% in April (thru the 28th). The 30th is rebal day for readers. 2 potential deletes and 7...

Janaghan Jeyakumar, CFA

Fujitsu General – Earnings Miss Is an Opportunity

Volume shortfalls due to semiconductor and container capacity shortages caused a miss for Fujitsu General but conservative 1H guidance could create...

Mio Kato

Hitachi Metals – Limited Upside Despite Bain Capital News But Let’s Find the Offshoot Ideas

A rumoured ¥800bn valuation for Hitachi Metals would offer just 3.2% upside from current prices as we previously warned, but there may be other...

Mio Kato

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