Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX largely unchanged after three days of Equity derisking; Higher US Rates continue to pose a concern; China Property Turmoil Prompts Govt Intervention</li>
<li>JAPAN. NKY Futures +0.1% vs Cash; USDJPY 145.4; Japan's July CPI slows to 3.1%; Govt considering tax break for Cos that lift wages; INCJ to cut Renesas stake to &lt;10%</li>
<li>JAPAN X. Efficiency and Innovation in Vehicle Design: Toyota's New Generative AI Approach. We like this development at Toyota and see multiple long-tailed benefits.</li>
</ul>


OVERSEAS. SPX largely unchanged after three days of Equity derisking; Higher US Rates continue to pose a concern; China Property Turmoil Prompts Govt Intervention
JAPAN. NKY Futures +0.1% vs Cash; USDJPY 145.4; Japan's July CPI slows to 3.1%; Govt considering tax break for Cos that lift wages; INCJ to cut Renesas stake to &lt;10%
JAPAN X. Efficiency and Innovation in Vehicle Design: Toyota's New Generative AI Approach. We like this development at Toyota and see multiple long-tailed benefits.


Ohayo Japan| Pause at End of Brutal Week; JAPAN X: AI-Powered Efficiency: Toyota's Design Revolution

<ul>
<li>OVERSEAS. All Major US Equity Indices rose: SPX +0.7%; Dow 1.2% after a last weeks sell off; US 10Yr yields rise on anticipated increased sales; Mgmt Transition worries at Tesla?</li>
<li>JAPAN.  NKY Futures +0.5% vs Cash; USDJPY  142.5;  METI releases guidelines on developing AI HR; Toshiba tend to start (finally!); Broker upgrades to MHI(7011) (A bit late to the party)</li>
<li>NUGGET. ENEOS to collaborate with Total Energy (France) to produce SAF. SAF has huge potential and we think its worth paying attention to as Japan pushes its carbon-zero agenda.</li>
</ul>


OVERSEAS. All Major US Equity Indices rose: SPX +0.7%; Dow 1.2% after a last weeks sell off; US 10Yr yields rise on anticipated increased sales; Mgmt Transition worries at Tesla?
JAPAN.  NKY Futures +0.5% vs Cash; USDJPY  142.5;  METI releases guidelines on developing AI HR; Toshiba tend to start (finally!); Broker upgrades to MHI(7011) (A bit late to the party)
NUGGET. ENEOS to collaborate with Total Energy (France) to produce SAF. SAF has huge potential and we think its worth paying attention to as Japan pushes its carbon-zero agenda.


Ohayo Japan| Equities Rebound; Yields Rise; NUGGET: Sustainable Aviation Fuel -ENEOS Joins the Party

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>Japan Industrial Partners (JIP) will launch the <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> tender offer of JPY4,620 per share from 8 August to 20 September.</li>
<li>The Board has reaffirmed its recommendation to accept the offer. JIP’s inability to raise its bid is used as an excuse to ignore the material peer rerating and unattractive terms.</li>
<li>The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior alternative, increasing deal risks. </li>
</ul>


Japan Industrial Partners (JIP) will launch the Toshiba Corp (6502 JP) tender offer of JPY4,620 per share from 8 August to 20 September.
The Board has reaffirmed its recommendation to accept the offer. JIP’s inability to raise its bid is used as an excuse to ignore the material peer rerating and unattractive terms.
The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior alternative, increasing deal risks. 


Toshiba (6502 JP): Tender Offer Launches, 1Q Results Increase Deal Risks

<ul>
<li>OVERSEAS.  SPX500 fell on Friday, and closed -2.3%WoW;  July jobs report showed cooling in the labor market;  Apple -4.8% weighed on market sentiment; Reports that Buffet buying short dated UST.</li>
<li>JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Investors favor Japan&gt;  China;  Oasis's Fischer says still more to be done with Governance.</li>
<li>NUGGET. Honda is ahead of their motorcycle electrification strategy vs Japanese competitors.  With the #1 global share and 2.7 trillion yen in sales, they CANNOT afford to be left behind.</li>
</ul>


OVERSEAS.  SPX500 fell on Friday, and closed -2.3%WoW;  July jobs report showed cooling in the labor market;  Apple -4.8% weighed on market sentiment; Reports that Buffet buying short dated UST.
JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Investors favor Japan&gt;  China;  Oasis's Fischer says still more to be done with Governance.
NUGGET. Honda is ahead of their motorcycle electrification strategy vs Japanese competitors.  With the #1 global share and 2.7 trillion yen in sales, they CANNOT afford to be left behind.


Ohayo Japan| SPX -2.3%WoW; Buffett Buying UST; NUGGET:Motorcycle Electrification - Honda Roars Ahead

<ul>
<li>On 28 July, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> disclosed that JIP delayed the tender start to “<em>sometime in August 2023</em>” vs the target “<em>in the last ten days of July 2023.</em>”</li>
<li>Toshiba reports 1Q results on 7 August. A solid 1Q will undermine the Board’s recommendation of the offer in part on the premise that the IFA’s DCF valuation is unrealistic.</li>
<li>The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip away at the offer’s attractiveness. </li>
</ul>


On 28 July, Toshiba Corp (6502 JP) disclosed that JIP delayed the tender start to “sometime in August 2023” vs the target “in the last ten days of July 2023.”
Toshiba reports 1Q results on 7 August. A solid 1Q will undermine the Board’s recommendation of the offer in part on the premise that the IFA’s DCF valuation is unrealistic.
The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip away at the offer’s attractiveness. 


Toshiba (6502 JP): Risk/Reward as 1Q Results and Tender Start Approach

Japan

Mitsubishi Heavy Industries, Ltd. is a comprehensive heavy machinery maker. The Company manufactures machinery, ships, turbines and engines, prime movers, aircrafts, and machine parts for military and commercial use.  Mitsubishi Heavy Industries also researches and develops nuclear power plants.

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Mitsubishi Heavy Industries (7011 JP)

Ohayo Japan| Pause at End of Brutal Week; JAPAN X: AI-Powered Efficiency: Toyota's Design Revolution

Equities sell off pauses at end of brutal week; NKY Futures +0.1% vs Cash; USDJPY 145.4; Japan's July CPI slows to 3.1%; Tax breaks for Cos that...

Mark Chadwick

Ohayo Japan| Equities Rebound; Yields Rise; NUGGET: Sustainable Aviation Fuel -ENEOS Joins the Party

US stock rebound; 10 year yields rise - anticipating a wave of buying; NKY Futures +0.5% vs Cash; USDJPY 142.5; METI releases guidelines on...

Mark Chadwick

Toshiba (6502 JP): Tender Offer Launches, 1Q Results Increase Deal Risks

The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior...

Arun George

Ohayo Japan| SPX -2.3%WoW; Buffett Buying UST; NUGGET:Motorcycle Electrification - Honda Roars Ahead

JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Global Investors favor Japan over China; Oasis's...

Mark Chadwick

Toshiba (6502 JP): Risk/Reward as 1Q Results and Tender Start Approach

The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip...

Arun George

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