Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX  up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data;  Musk jump's into Generative AI; Boeing Production Woes</li>
<li>JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed;  Panasonic to build 3rd US batt plant; JT ramps up heated stick products</li>
<li>NUGGET. Elon Musk's aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan's Advantest(6857)</li>
</ul>


OVERSEAS. SPX  up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data;  Musk jump's into Generative AI; Boeing Production Woes
JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed;  Panasonic to build 3rd US batt plant; JT ramps up heated stick products
NUGGET. Elon Musk's aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan's Advantest(6857)


Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Two weeks ago, <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> released a new Mid-Term Management Plan with a new investment plan, and a new capital plan (100% payout, ¥50/share minimum div til Mar-2026).</li>
<li>Obvious goal: get the stock above ¥1,000/share so YFO's ¥1,000 bid looks unattractive. Then they attacked on a FEFTA basis, saying YFO's foreign entities need permission to go over 10%.</li>
<li>Now Toyo has released a March 2024 forecast, with a ¥63/share dividend and 105% guided payout. The stock popped. LOTS of shares trading. Now only up small. </li>
</ul>


Two weeks ago, Toyo Construction (1890 JP) released a new Mid-Term Management Plan with a new investment plan, and a new capital plan (100% payout, ¥50/share minimum div til Mar-2026).
Obvious goal: get the stock above ¥1,000/share so YFO's ¥1,000 bid looks unattractive. Then they attacked on a FEFTA basis, saying YFO's foreign entities need permission to go over 10%.
Now Toyo has released a March 2024 forecast, with a ¥63/share dividend and 105% guided payout. The stock popped. LOTS of shares trading. Now only up small. 


Toyo Construction FY23 Profit Forecast - 105% Payout = 6.5%, Lots of Shares Changing Hands

Equity Bottom-Up

<ul>
<li>The balance sheet is in great shape and could fund a much more aggressive growth strategy (or higher shareholder returns)</li>
<li>JT lags peers in the higher growth vape &amp; oral markets. <em>Ploom X</em> needs investment to be a global hit. The balance sheet can easily fund both</li>
<li>Why bullish? The stock is trading cheap and offering a higher yield than its five-year average</li>
</ul>


The balance sheet is in great shape and could fund a much more aggressive growth strategy (or higher shareholder returns)
JT lags peers in the higher growth vape &amp; oral markets. Ploom X needs investment to be a global hit. The balance sheet can easily fund both
Why bullish? The stock is trading cheap and offering a higher yield than its five-year average


Japan Tobacco (2914) | Time to Work the Balance Sheet

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>LIM Japan Event Master Fund sent a document to <a href="https://www.smartkarma.com/entities/torii-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:3253:1" rel="noopener">Torii Pharmaceutical (4551 JP)</a> requesting the company to distribute 100% of its surplus to shareholders and conduct a drastic share buyback.</li>
<li>LIM is of view that Torii has excess cash balances, which is more than the market cap of the company. Inefficient use of capital has led to low single-digit ROE.</li>
<li>Torii opposes the proposal, as the company thinks it needs adequate cash to pursue business development aka in-licensing of new drugs.  </li>
</ul>


LIM Japan Event Master Fund sent a document to Torii Pharmaceutical (4551 JP) requesting the company to distribute 100% of its surplus to shareholders and conduct a drastic share buyback.
LIM is of view that Torii has excess cash balances, which is more than the market cap of the company. Inefficient use of capital has led to low single-digit ROE.
Torii opposes the proposal, as the company thinks it needs adequate cash to pursue business development aka in-licensing of new drugs.  


Torii Pharmaceutical (4551 JP): Board Opposes Shareholder Proposal for Appropriation of Surplus

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/japan-tobacco-inc" target="_blank" data-smartkarma-citation="entities:13498:1" rel="noopener">Japan Tobacco (2914 JP)</a>’s 4Q22 results were stronger than anticipated yet again with revenue and OP surpassing consensus by 4.3% and 35.2% respectively through selling price increments.</li>
<li>2023 guidance looks a bit disappointing, with the company guiding adjusted OP at ¥667bn in 2023 compared to ¥729bn in the previous year, expecting an unfavourable foreign exchange movement.</li>
<li>But the highlight these days was the proposal by the activist investor LIM Advisors to dispose JT’s share ownership in <a href="https://www.smartkarma.com/entities/torii-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:3253:1" rel="noopener">Torii Pharmaceutical (4551 JP)</a>.</li>
</ul>



Japan Tobacco (2914 JP)’s 4Q22 results were stronger than anticipated yet again with revenue and OP surpassing consensus by 4.3% and 35.2% respectively through selling price increments.
2023 guidance looks a bit disappointing, with the company guiding adjusted OP at ¥667bn in 2023 compared to ¥729bn in the previous year, expecting an unfavourable foreign exchange movement.
But the highlight these days was the proposal by the activist investor LIM Advisors to dispose JT’s share ownership in Torii Pharmaceutical (4551 JP).


Japan Tobacco: An Activist Targeting Torii Pharmaceutical, Turns to JT to Fulfil Their Wishes

Japan

Japan Tobacco, Inc. operates as an tobacco product company. The Company manufactures, markets and sells cigarettes and other tobacco products internationally. Japan Tobacco is also engaged in pharmaceutical and food businesses.

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Japan Tobacco (2914 JP)

Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Expect a broadly quiet start in Japan. Panasonic plans to establish its third US battery plant;. JT increasing its focus on heated stick products;...

Mark Chadwick

Toyo Construction FY23 Profit Forecast - 105% Payout = 6.5%, Lots of Shares Changing Hands

In Japan one doesn't usually officially announce the next FY's earnings + dividend forecast before the just-ended year is finalised. Toyo did. ¥63...

Travis Lundy

Japan Tobacco (2914) | Time to Work the Balance Sheet

Results are ticking along and it seems like business as usual for the coming year. The balance sheet could be the catalyst for the share price -...

Mark Chadwick

Torii Pharmaceutical (4551 JP): Board Opposes Shareholder Proposal for Appropriation of Surplus

LIM Japan has sent a document to Torii Pharmaceutical requesting the company to distribute 100% of its surplus to shareholders and conduct a...

Tina Banerjee

Japan Tobacco: An Activist Targeting Torii Pharmaceutical, Turns to JT to Fulfil Their Wishes

It was reported a few weeks ago that activist investor LIM Advisors has sent a letter to Japan Tobacco requesting the company to divest its 53%...

Oshadhi Kumarasiri

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