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.

Equity Bottom-Up

<ul>
<li>Koei Tecmo’s earnings yesterday were on the strong side with 4Q OP beating by 28.7% despite a 1.79% miss at the top line. </li>
<li>Thus, the typical pattern of heavy expensing of development costs in 4Q was missing and combined with some one offs could make hurdles for next year high. </li>
<li>With the stock struggling to gain positive momentum and few clear positive catalysts on the horizon we remain negative.</li>
</ul>


Koei Tecmo’s earnings yesterday were on the strong side with 4Q OP beating by 28.7% despite a 1.79% miss at the top line. 
Thus, the typical pattern of heavy expensing of development costs in 4Q was missing and combined with some one offs could make hurdles for next year high. 
With the stock struggling to gain positive momentum and few clear positive catalysts on the horizon we remain negative.


<ul>
<li>Koei Tecmo appears to have made some strides in improving the quality of Stranger of Paradise: Final Fantasy Origins.</li>
<li>This bodes well for the future of its business effectively reskinning its in-house titles with popular outside IPs.</li>
<li>This makes us more interested in the name but we are still waiting for the shoe to drop on investment income.</li>
</ul>


Koei Tecmo appears to have made some strides in improving the quality of Stranger of Paradise: Final Fantasy Origins.
This bodes well for the future of its business effectively reskinning its in-house titles with popular outside IPs.
This makes us more interested in the name but we are still waiting for the shoe to drop on investment income.


Koei Tecmo – Some Nice Signs But Downside Risks Need To Be Priced In First

<ul>
<li>Koei Tecmo delivered strong results with revenue of ¥18.1bn and OP of ¥10.7bn comfortably beating consensus of ¥16.2bn and ¥5.7bn respectively. </li>
<li>OP guidance was raised from an absurdly conservative ¥24.5bn to a still conservative ¥31.5bn, below consensus at ¥33.6bn. </li>
<li>While these results look broadly positive we are concerned that the recent sell off may continue.</li>
</ul>


Koei Tecmo delivered strong results with revenue of ¥18.1bn and OP of ¥10.7bn comfortably beating consensus of ¥16.2bn and ¥5.7bn respectively. 
OP guidance was raised from an absurdly conservative ¥24.5bn to a still conservative ¥31.5bn, below consensus at ¥33.6bn. 
While these results look broadly positive we are concerned that the recent sell off may continue.


Koei Tecmo – Nice on the Surface But We Are Worried

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Today the Osaka Supreme Court dismissed OK Corp's Permission Appeal regarding the EGM approving the <a href="https://www.smartkarma.com/entities/kansai-super-market-ltd" target="_blank" data-smartkarma-citation="entities:15519:1" rel="noopener">Kansai Super</a> merger with H2O subs Izumiya and Hankyu Oasis. That merger is Effective tomorrow.</li>
<li>OK Corp announced it would sell its shares in Kansai Super back to the company - as planned. </li>
<li>A disappointing ruling (especially given the TKS case) which will affect AGMs/EGMs going forward. And it means a soft share price and hard shareholder structure problem for Kansai Super near-term.</li>
</ul>


Today the Osaka Supreme Court dismissed OK Corp's Permission Appeal regarding the EGM approving the Kansai Super merger with H2O subs Izumiya and Hankyu Oasis. That merger is Effective tomorrow.
OK Corp announced it would sell its shares in Kansai Super back to the company - as planned. 
A disappointing ruling (especially given the TKS case) which will affect AGMs/EGMs going forward. And it means a soft share price and hard shareholder structure problem for Kansai Super near-term.


Kansai Super (9919) Merger OKed. OK Tender Going Nowhere. OK Going Home.

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>Koei Tecmo Holdings announced the issuance of CBs, and the repurchase of its own shares and a tender offer for its own shares to comply with Prime Market listing standards.</li>
<li>I wonder if they had to issue CBs, which would have diluted shareholder interest to some extent. There is a way to sell shares in several rounds within four years.</li>
<li>Decrease in founder's stake tends not to be positive for the stock price in long run. Depending on founder's future involvement in the company, it may move to next stage.</li>
</ul>


Koei Tecmo Holdings announced the issuance of CBs, and the repurchase of its own shares and a tender offer for its own shares to comply with Prime Market listing standards.
I wonder if they had to issue CBs, which would have diluted shareholder interest to some extent. There is a way to sell shares in several rounds within four years.
Decrease in founder's stake tends not to be positive for the stock price in long run. Depending on founder's future involvement in the company, it may move to next stage.


Japan's Governance: TSE Market Reclassification and Equity Finance : Koei Tecmo Holdings (3635)

Japan

Koei Tecmo Holdings Co.,Ltd. is a holding company which was established through the merger of Koei Co., Ltd. and Tecmo Ltd. The Company develops and distributes video game software for personal computers and home video game consoles. The Company also operates other media business such as marketing of books and CDs and amusement facility operation.

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Koei Tecmo Holdings (3635 JP)

Koei Tecmo – Potential For a Breakdown

Koei Tecmo had a relatively strong quarter beating at the OP line by 28.7% and could once again hit its MTP target in the first year, but...

Mio Kato

Koei Tecmo – Some Nice Signs But Downside Risks Need To Be Priced In First

Improving quality for Stranger of Paradise: Final Fantasy Origins bodes well for Koei Tecmo's future but we are still waiting for the shoe to drop...

Mio Kato

Koei Tecmo – Nice on the Surface But We Are Worried

Koei Tecmo delivered strong results with revenue of ¥18.1bn and OP of ¥10.7bn comfortably beating consensus. While these results look positive we...

Mio Kato

Kansai Super (9919) Merger OKed. OK Tender Going Nowhere. OK Going Home.

Kansai Super (9919)'s merger with H2O sub Izumiya and Hankyu Oasis will go through tomorrow, after the Supreme Court decided against OK Corp, who...

Travis Lundy

Japan's Governance: TSE Market Reclassification and Equity Finance : Koei Tecmo Holdings (3635)

Koei Tecmo posted the issuance of CBs and the repurchase of its own shares and a tender offer for its own shares to comply with Prime Market...

Metrical Inc

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