Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>With a new Medium-Term Management Plan and a buyback, the stock was cheap as of Thursday's close. It was less cheap after it went limit up +25% on Friday.</li>
<li>That put it in the camp of "it may go up more but probably not a lot". It has told you about big divs and buybacks.</li>
<li>But model it up and they need to do more buybacks. Both to meet share price gains and the needs of legions of potential cross-holders looking to sell. </li>
</ul>


With a new Medium-Term Management Plan and a buyback, the stock was cheap as of Thursday's close. It was less cheap after it went limit up +25% on Friday.
That put it in the camp of "it may go up more but probably not a lot". It has told you about big divs and buybacks.
But model it up and they need to do more buybacks. Both to meet share price gains and the needs of legions of potential cross-holders looking to sell. 


Koito Mfg - Stock Over-Pops on New MTMP/Buyback; There Will Be Overhang

<ul>
<li>
<a href="https://www.smartkarma.com/entities/koito-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:15841:1" rel="noopener">Koito Manufacturing (7276 JP)</a> is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.</li>
<li>As Toyota Group's leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block. </li>
<li>Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.</li>
</ul>



Koito Manufacturing (7276 JP) is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.
As Toyota Group's leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block. 
Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.


Koito Mfg (7276) - New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned

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>Koito reported 4QFY22 results on the 27th of April and had a 16% revenue miss despite a 3% revenue beat for the quarter. </li>
<li>Top line momentum remains strong overseas but material costs continue to pressure gross margins. </li>
<li>Guidance for ¥67bn in OP was a significant miss vs. consensus at ¥92.3bn.</li>
</ul>


Koito reported 4QFY22 results on the 27th of April and had a 16% revenue miss despite a 3% revenue beat for the quarter. 
Top line momentum remains strong overseas but material costs continue to pressure gross margins. 
Guidance for ¥67bn in OP was a significant miss vs. consensus at ¥92.3bn.


Koito - Profitability Remains Under Pressure

<ul>
<li>Koito reported its 3QFY22 results yesterday and saw revenues of ¥199.7bn (+18.3% QoQ, -4.4% YoY) and OP of ¥14.2bn (7.1% OPM up 2.0% points QoQ). </li>
<li>The reported revenue was 6.5% higher than consensus estimates while operating profit was -9.2% lower creating a mixed picture. </li>
<li>Margins should normalise over time unlocking upside while underlying demand remains very healthy.</li>
</ul>


Koito reported its 3QFY22 results yesterday and saw revenues of ¥199.7bn (+18.3% QoQ, -4.4% YoY) and OP of ¥14.2bn (7.1% OPM up 2.0% points QoQ). 
The reported revenue was 6.5% higher than consensus estimates while operating profit was -9.2% lower creating a mixed picture. 
Margins should normalise over time unlocking upside while underlying demand remains very healthy.


Koito – Hit by Material Costs and Unexpected Plan Changes

<p>On Thursday we highlighted a number of stock pairs that had seen extreme levels of relative performance dislocations, speculating that this was due to relative value unwinds that were being rushed for completion prior to the long weekend. This morning the skews are reversing and with Nikkei now outperforming Topix (+02.7% vs. -0.87% at the time of this writing) we believe this opportunity is being realised quickly. Our thoughts on next steps below.</p>

On Thursday we highlighted a number of stock pairs that had seen extreme levels of relative performance dislocations, speculating that this was due to relative value unwinds that were being rushed for completion prior to the long weekend. This morning the skews are reversing and with Nikkei now outperforming Topix (+02.7% vs. -0.87% at the time of this writing) we believe this opportunity is being realised quickly. Our thoughts on next steps below.

Japan Long Weekend Portfolio Blowout Theme Is Working Quickly

Japan

KOITO MANUFACTURING CO., LTD. produces lighting equipments for automobiles such as head and tail lights, rear combination lamps, and fog lamps.  The Company has  its production facilities in Japan, the US, the UK, Czech, China, Thailand, Taiwan, and India.  Koito Manufacturing also manufactures electronics parts for aircrafts including lighting equipments and oil pressure gauges.

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Koito Manufacturing (7276 JP)

Koito Mfg - Stock Over-Pops on New MTMP/Buyback; There Will Be Overhang

Not a no-brainer to sell the first pop, but it models out to about 10% IRR to a reasonably aggressive future multiple. And the buyback invites...

Travis Lundy

Koito Mfg (7276) - New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned

Koito Mfg announces a MTM and a larbigge buyback. Cross-holders sold the last one; could sell this one too. Combo of accretion, div, EPS growth,...

Travis Lundy

Koito - Profitability Remains Under Pressure

Koito's margins are under pressure due to material cost increases and subdued sales domestically but healthy net cash buffers valuations and...

Mio Kato

Koito – Hit by Material Costs and Unexpected Plan Changes

Koito revenue was 6.5% higher than consensus while OP was -9.2% lower creating a mixed picture. Margins should normalise over time unlocking upside...

Mio Kato

Japan Long Weekend Portfolio Blowout Theme Is Working Quickly

On Thursday we highlighted a number of stock pairs that had seen extreme levels of relative performance dislocations, speculating that this was due...

Mio Kato

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