Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Two days ago, real estate firm <a href="https://www.smartkarma.com/entities/hoosiers-holdings" target="_blank" data-smartkarma-citation="entities:9163:1" rel="noopener">Hoosiers Holdings (3284 JP)</a> announced an increase in their <a href="https://pdf.irpocket.com/C3284/HTFv/flrZ/POPX.pdf" target="_blank" rel="noopener">forecast</a> for OP, and net income in the year to 31 March 2021. Revenue was expected unchanged from the previous forecast at ¥80bn, OP is up 20% to ¥4.2bn, and net income is forecast to be ¥2.4bn, up one-third. They also increased a forecast dividend increase. lifting the H2 dividend from ¥7/share to ¥11/share. The stock opened up 6% the next day, but fell during the day and then fell some more today so the stock is only 1.5% higher than that news.Today after the close, the company released a revised Shareholder Returns Policy (<a href="https://pdf.irpocket.com/C3284/HTFv/lQzd/kIav.pdf" target="_blank" rel="noopener">Japanese</a>), which lifts the payout ratio to 40%, or more, and the Distribution of Equity rate to 4%, or more, per year. There is a longer <a href="https://pdf.irpocket.com/C3284/HTFv/lQzd/Llxd.pdf" target="_blank" rel="noopener">presentation</a> explaining the policy, including a large buyback. The company also <a href="https://pdf.irpocket.com/C3284/HTFv/lQzd/o1s4.pdf" target="_blank" rel="noopener">finalised</a> plans to get out of the biomass renewable energy operations.The company also released a big picture <a href="https://pdf.irpocket.com/C3284/HTFv/lQzd/CCy7.pdf" target="_blank" rel="noopener">summary</a> of its next Mid Term Management Plan which goes from April 1 to March 2026, including plans to lift revenues about 15% but to improve profitability by 150-200%, depending on the measure.<div class="content-highlight">
The company also <a href="https://pdf.irpocket.com/C3284/HTFv/lQzd/niZK.pdf" target="_blank" rel="noopener">announced</a> a plan to conduct a buyback of 21,637,500 of its own shares (37.6% of shares out) in a tender offer at ¥684/share, with the intention to cancel ~95% of the shares it buys back. 
This is big news.
</div>Not coincidentally, this is quite similar to the size of the position held by entities controlled by activist Yoshiaki Murakami, which was 21,570,200 shares as of most recently according to the announcement. Nota Bene: for most investors, you won't want to consider this a partial put option. There's a reason for that.More below.

Two days ago, real estate firm Hoosiers Holdings (3284 JP) announced an increase in their forecast for OP, and net income in the year to 31 March 2021. Revenue was expected unchanged from the previous forecast at ¥80bn, OP is up 20% to ¥4.2bn, and net income is forecast to be ¥2.4bn, up one-third. They also increased a forecast dividend increase. lifting the H2 dividend from ¥7/share to ¥11/share. The stock opened up 6% the next day, but fell during the day and then fell some more today so the stock is only 1.5% higher than that news.Today after the close, the company released a revised Shareholder Returns Policy (Japanese), which lifts the payout ratio to 40%, or more, and the Distribution of Equity rate to 4%, or more, per year. There is a longer presentation explaining the policy, including a large buyback. The company also finalised plans to get out of the biomass renewable energy operations.The company also released a big picture summary of its next Mid Term Management Plan which goes from April 1 to March 2026, including plans to lift revenues about 15% but to improve profitability by 150-200%, depending on the measure.
The company also announced a plan to conduct a buyback of 21,637,500 of its own shares (37.6% of shares out) in a tender offer at ¥684/share, with the intention to cancel ~95% of the shares it buys back. 
This is big news.
Not coincidentally, this is quite similar to the size of the position held by entities controlled by activist Yoshiaki Murakami, which was 21,570,200 shares as of most recently according to the announcement. Nota Bene: for most investors, you won't want to consider this a partial put option. There's a reason for that.More below.

Hoosiers (3284) Tender Offer Buyback To Buy Out Activist Murakami

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

All Inspire Development PCL / Equity Bottom-Up

We maintain our BUY recommendation on ALL but revise down our target price to Bt4.00 (previously Bt4.39), implying an upside of 23% from the current price. We derive our target price from a 20% discount to the 2021E PE ratio of Asia ex Japan Real Estate and apply a 15% small-cap discount.
Investment thesis:
<ul>
<li>Recent investment in shopping mall diversifies revenue stream</li>
<li>Partnership with Japanese firms as a gateway to efficient residential development</li>
<li>Pipeline residential projects ensure constant near-term growth</li>
</ul>
Interim: Third-quarter revenue was down 55% YoY, and ALL made a net loss before unusual items. Overall, the 3Q20 results make us revise down our 2020E forecast significantly. We expect a slowdown in sales and recognition of current projects.
Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.

We maintain our BUY recommendation on ALL but revise down our target price to Bt4.00 (previously Bt4.39), implying an upside of 23% from the current price. We derive our target price from a 20% discount to the 2021E PE ratio of Asia ex Japan Real Estate and apply a 15% small-cap discount.
Investment thesis:

Recent investment in shopping mall diversifies revenue stream
Partnership with Japanese firms as a gateway to efficient residential development
Pipeline residential projects ensure constant near-term growth

Interim: Third-quarter revenue was down 55% YoY, and ALL made a net loss before unusual items. Overall, the 3Q20 results make us revise down our 2020E forecast significantly. We expect a slowdown in sales and recognition of current projects.
Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.

ALL: Slowing Down but There Is Still Upside

We have a BUY recommendation on ALL based on a target price of Bt4.39, implying an upside of 31% from the current price. We derive our target price from a 20% discount to the PE ratio of Asia ex Japan Real Estate and apply a 15% small-cap discount.
Investment thesis:
<ul>
<li>Recent investment in shopping mall diversifies revenue stream</li>
<li>Partnership with Japanese firms as a gateway to efficient residential development</li>
<li>Pipeline residential projects ensure constant near-term growth</li>
</ul>
Interim: Although the real estate sector is severely affected by the COVID-19 pandemic, ALL has delivered strong results. The high backlog of projects and demand recovery for residential projects should unlock further upside potential.
Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.

We have a BUY recommendation on ALL based on a target price of Bt4.39, implying an upside of 31% from the current price. We derive our target price from a 20% discount to the PE ratio of Asia ex Japan Real Estate and apply a 15% small-cap discount.
Investment thesis:

Recent investment in shopping mall diversifies revenue stream
Partnership with Japanese firms as a gateway to efficient residential development
Pipeline residential projects ensure constant near-term growth

Interim: Although the real estate sector is severely affected by the COVID-19 pandemic, ALL has delivered strong results. The high backlog of projects and demand recovery for residential projects should unlock further upside potential.
Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.

ALL: Valuation Remains Undemanding, Expect Further Upside

We initiate coverage on ALL with a BUY recommendation based on a target price of Bt4.39, implying an upside of 25% from the current price. We derive our target price from a 20% discount to the PE ratio of Asia ex Japan Real Estate, and apply a 15% small-cap discount.Investment thesis:<ul>
<li>Recent investment in shopping mall diversifies revenue stream</li>
<li>Partnership with Japanese firms as a gateway to efficient residential development</li>
<li>Pipeline residential projects ensure constant near-term growth</li>
</ul>Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.

We initiate coverage on ALL with a BUY recommendation based on a target price of Bt4.39, implying an upside of 25% from the current price. We derive our target price from a 20% discount to the PE ratio of Asia ex Japan Real Estate, and apply a 15% small-cap discount.Investment thesis:
Recent investment in shopping mall diversifies revenue stream
Partnership with Japanese firms as a gateway to efficient residential development
Pipeline residential projects ensure constant near-term growth
Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.

ALL: Undemanding Valuation and Good Growth Prospects in Shunned Sector

Japan

Hoosiers Holdings provides real estate services. The Company offers real estates sales, brokerage commissions, investment, real estate consulting, and management services to individuals and businesses.

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Hoosiers Holdings (3284 JP)

Hoosiers (3284) Tender Offer Buyback To Buy Out Activist Murakami

Hoosiers (3284) buying back 37% of shares out in an own-share tender offer. This is Murakami-san getting out of a stock he quasi-controls. At last....

Travis Lundy

ALL: Slowing Down but There Is Still Upside

We maintain our BUY recommendation on ALL but revise down our target price to Bt4.00, implying an upside of 23%. We derive our target price from a...

A. Stotz Investment Research

ALL: Valuation Remains Undemanding, Expect Further Upside

We have a BUY recommendation on ALL based on a target price of Bt4.39, implying an upside of 31% from the current price. We derive our target price...

A. Stotz Investment Research

ALL: Undemanding Valuation and Good Growth Prospects in Shunned Sector

We initiate coverage on ALL with a BUY recommendation based on a target price of Bt4.39, implying an upside of 25% from the current price. We...

A. Stotz Investment Research

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