Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Every year, the yukashoken hokokusho shows a breakdown of share ownership by owner category. It only happens once a year for most companies. </li>
<li>It is a crucial input to knowing where the shares are and how people are positioned. It also shows who and how big is Real World Float.</li>
<li>This year's data shows a surprisingly small change year-on-year for Foreign Active Ownership, which is the biggest category. A little musical chairs, but no chairs removed. </li>
</ul>


Every year, the yukashoken hokokusho shows a breakdown of share ownership by owner category. It only happens once a year for most companies. 
It is a crucial input to knowing where the shares are and how people are positioned. It also shows who and how big is Real World Float.
This year's data shows a surprisingly small change year-on-year for Foreign Active Ownership, which is the biggest category. A little musical chairs, but no chairs removed. 


Toshiba (6502) Ownership Structure - "Hostage to Toshiba" Larger Than Real World Float

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> sees its AGM next week with new directors and a possible privatisation process ongoing. But the AGM is a done deal and privatisation is not.</li>
<li>The event-i-ness of Toshiba keeps it "supported" while its better-valued and higher-growth peers fall harder in the face of recent overall market weakness. </li>
<li>Toshiba promised transparency on its privatisation process, and so far, it has delivered everything it promised. The next "transparency" likely comes in November. </li>
</ul>



Toshiba Corp (6502 JP) sees its AGM next week with new directors and a possible privatisation process ongoing. But the AGM is a done deal and privatisation is not.
The event-i-ness of Toshiba keeps it "supported" while its better-valued and higher-growth peers fall harder in the face of recent overall market weakness. 
Toshiba promised transparency on its privatisation process, and so far, it has delivered everything it promised. The next "transparency" likely comes in November. 


Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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 Bottom-Up

<ul>
<li>The shares have rebounded by nearly 30% since the 1st of February. Consolidation seems likely while waiting for evidence that management's sales and profit targets can be met.</li>
<li>As Japan's No. 1 IT services company, Fujitsu should benefit from the ongoing digitalization of Japan's public and private sectors, the roll-out of 5G and the development of 6G.</li>
<li>Risks for investors include the weakening yen and economic slowdown. A history of IT system failures also raises a red flag.</li>
</ul>


The shares have rebounded by nearly 30% since the 1st of February. Consolidation seems likely while waiting for evidence that management's sales and profit targets can be met.
As Japan's No. 1 IT services company, Fujitsu should benefit from the ongoing digitalization of Japan's public and private sectors, the roll-out of 5G and the development of 6G.
Risks for investors include the weakening yen and economic slowdown. A history of IT system failures also raises a red flag.


Fujitsu (6702 JP): At Risk of Short-Term Profit Taking

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/software-service-inc" target="_blank" data-smartkarma-citation="entities:16487:1" rel="noopener">Software Service (3733 JP)</a> business remained resilient to the pandemic. The company reported double-digit growth in top and bottom line in FY21, ahead of its guidance.</li>
<li>Management guided for mid-single-digit growth in revenue for FY22. With the scalability of the business, profit is growing at a faster pace than revenue.</li>
<li>Electronic medical record has a penetration of 45% in Japan’s hospital and Software Service holds second largest market share of 20%.</li>
</ul>



Software Service (3733 JP) business remained resilient to the pandemic. The company reported double-digit growth in top and bottom line in FY21, ahead of its guidance.
Management guided for mid-single-digit growth in revenue for FY22. With the scalability of the business, profit is growing at a faster pace than revenue.
Electronic medical record has a penetration of 45% in Japan’s hospital and Software Service holds second largest market share of 20%.


Software Service (3733 JP): Resilient Business Model; Starting FY22 with a Strong Order Book

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Mizuho Financial Group / Equity Bottom-Up

On Monday 23 August, Mizuho Bank suffered its 6th systems failure so far this year.  This time, some 130 of its around 5,300 ATMs stopped working for about an hour just after noon.  This comes in the wake of last Friday’s débâcle, when the bank opened its doors for business at 09:00am but none of the computer terminals at its counters nationwide would function properly.  Are these repeated systems failures simply a hardware problem, a software problem, or is the fundamental problem a more human one?
While management searches for solutions, and the inevitable finger-pointing continues, the bank’s reputation erodes.  The damage to the share price of parent company Mizuho Financial Group (8411 JP) has so far been comparatively light, but for how much longer?  MHFG has markedly underperformed its two megabank rivals <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a> and <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-group-inc" target="_blank" data-smartkarma-citation="entities:217:1" rel="noopener">Sumitomo Mitsui Financial Group (8316 JP)</a> so far this year in a rising market, with its stock price up just +6.5% YoY against MUFG’s +34.6% and SMFG’s +21.3%, respectively.  Foreign investors still own in aggregate over 22% of MHFG’s stock, but their patience is being sorely tested.  Further revelations of systems mishaps, or punitive actions by the FSA against MHFG, may well lead to a swift exit by some shareholders; a sell-off cannot be ruled out.
Caveat Emptor! (May the Buyer Beware!) remains our advice to would-be investors in this enormous but highly volatile banking group.

On Monday 23 August, Mizuho Bank suffered its 6th systems failure so far this year.  This time, some 130 of its around 5,300 ATMs stopped working for about an hour just after noon.  This comes in the wake of last Friday’s débâcle, when the bank opened its doors for business at 09:00am but none of the computer terminals at its counters nationwide would function properly.  Are these repeated systems failures simply a hardware problem, a software problem, or is the fundamental problem a more human one?
While management searches for solutions, and the inevitable finger-pointing continues, the bank’s reputation erodes.  The damage to the share price of parent company Mizuho Financial Group (8411 JP) has so far been comparatively light, but for how much longer?  MHFG has markedly underperformed its two megabank rivals Mitsubishi UFJ Financial (MUFG) (8306 JP) and Sumitomo Mitsui Financial Group (8316 JP) so far this year in a rising market, with its stock price up just +6.5% YoY against MUFG’s +34.6% and SMFG’s +21.3%, respectively.  Foreign investors still own in aggregate over 22% of MHFG’s stock, but their patience is being sorely tested.  Further revelations of systems mishaps, or punitive actions by the FSA against MHFG, may well lead to a swift exit by some shareholders; a sell-off cannot be ruled out.
Caveat Emptor! (May the Buyer Beware!) remains our advice to would-be investors in this enormous but highly volatile banking group.

Mizuho Financial Group (8411 JP):  Systemic Failures - A Human Factor?

Japan

Fujitsu Ltd manufactures semiconductor, computer, and communication equipment. The Company provides comprehensive information technology, network and telecommunication solutions, and Internet services.

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Fujitsu Ltd (6702 JP)

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Travis Lundy

Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance

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Scott Foster

Software Service (3733 JP): Resilient Business Model; Starting FY22 with a Strong Order Book

Software Service started FY22 with 72% and 99%, y/y increase in monthly revenue and order for November, respectively. 45% EMR penetration in Japan...

Tina Banerjee

Mizuho Financial Group (8411 JP): Systemic Failures - A Human Factor?

Mizuho Bank has now had 6 systems failures so far this year. Are these repeated systems failures simply a hardware problem, a software problem, or...

J. Brian Waterhouse

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