Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>In early February 2022, Silchester International Investors (according to its website) sent letters to four low-ROE-earning Japanese regional banks proposing a new dividend policy.</li>
<li>The management and boards of each bank rejected the policy proposal though two of the four had upped their proposed dividend or changed policy prior, and two upped it afterwards.</li>
<li>While <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> is the biggie, <a href="https://www.smartkarma.com/entities/shiga-bank-ltd" target="_blank" data-smartkarma-citation="entities:18665:1" rel="noopener">Shiga Bank (8366 JP)</a> is another one with significant equity holdings. </li>
</ul>


In early February 2022, Silchester International Investors (according to its website) sent letters to four low-ROE-earning Japanese regional banks proposing a new dividend policy.
The management and boards of each bank rejected the policy proposal though two of the four had upped their proposed dividend or changed policy prior, and two upped it afterwards.
While Bank of Kyoto (8369 JP) is the biggie, Shiga Bank (8366 JP) is another one with significant equity holdings. 


JAPAN ACTIVISM:  Silchester Goes After Shiga Bank

<ul>
<li>Last May I proposed a model for thinking about the appropriate discount of <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> vs its giant equity portfolio and small operations. It was a sell.</li>
<li>In December, the bank changed its shareholder return ratio, which indicated less value destruction, and tighter appropriate discount. The shares rallied and discount narrowed. </li>
<li>Now the Shares Adjusted for Banking Ops Valuation have seen the discount to After-Tax Equity Portfolio Valuation widen sharply in the past 10 days. So here's the hedging model.</li>
</ul>


Last May I proposed a model for thinking about the appropriate discount of Bank of Kyoto (8369 JP) vs its giant equity portfolio and small operations. It was a sell.
In December, the bank changed its shareholder return ratio, which indicated less value destruction, and tighter appropriate discount. The shares rallied and discount narrowed. 
Now the Shares Adjusted for Banking Ops Valuation have seen the discount to After-Tax Equity Portfolio Valuation widen sharply in the past 10 days. So here's the hedging model.


Bank of Kyoto (8369) - A Complicated Risk Model Clarified

David Blennerhassett

<ul>
<li>A 266% premium to last close. That is what <strong><a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata Manufacturing (6981 JP)</a></strong> is Offering for 4.2%-held <strong><a href="https://www.smartkarma.com/entities/resonant-inc" target="_blank" data-smartkarma-citation="entities:35582:1" rel="noopener">Resonant (RESN US)</a></strong>.</li>
<li>The $4.50/share Offer price was last exceeded a little under a year ago. Shares have rolled over 84% since last February following an exuberant, meteoric spike over Resonant's RF capabilities. </li>
<li>The Offer is conditional on attaining ownership of 50% of shares out, including Murata's stake.  </li>
</ul>


A 266% premium to last close. That is what Murata Manufacturing (6981 JP) is Offering for 4.2%-held Resonant (RESN US).
The $4.50/share Offer price was last exceeded a little under a year ago. Shares have rolled over 84% since last February following an exuberant, meteoric spike over Resonant's RF capabilities. 
The Offer is conditional on attaining ownership of 50% of shares out, including Murata's stake.  


There Are Offer Premiums. And Then There's Resonant's

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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>FY Mar-22 guidance was raised, but new orders were down in 3Q and both sales &amp; operating are headed down in 4Q. </li>
<li>4Q is seasonally weak and long-term demand drivers such as 5G, IoT and auto electrification remain in place, but the timing of recovery is uncertain.</li>
<li>The shares have dropped 21% since last September, to the low side but not the bottom of their 5-year P/E range. Look for an opportunity to buy for the long-term.</li>
</ul>


FY Mar-22 guidance was raised, but new orders were down in 3Q and both sales &amp; operating are headed down in 4Q. 
4Q is seasonally weak and long-term demand drivers such as 5G, IoT and auto electrification remain in place, but the timing of recovery is uncertain.
The shares have dropped 21% since last September, to the low side but not the bottom of their 5-year P/E range. Look for an opportunity to buy for the long-term.


Murata Mfg. (6981 JP): FY Guidance Raised but Quarterly OP Trend Is Down

<ul>
<li>Good 1H results led to an upward revision to FY Mar-22 sales and profit guidance. Geared to both digital and energy transformations.</li>
<li>Higher R&amp;D spending limits short-term profits but should contribute to long-term growth, particularly in rechargeable batteries.</li>
<li>Selling at a discount to main comparable Murata Mfg (6981 JP). 30% potential upside.</li>
</ul>


Good 1H results led to an upward revision to FY Mar-22 sales and profit guidance. Geared to both digital and energy transformations.
Higher R&amp;D spending limits short-term profits but should contribute to long-term growth, particularly in rechargeable batteries.
Selling at a discount to main comparable Murata Mfg (6981 JP). 30% potential upside.


TDK (6762 JP): Sales & Profits Rebounding, Relatively Cheap

Japan

MURATA MANUFACTURING COMPANY, LTD. manufactures and sells ceramic applied electronic components.  The Company's products include filters, capacitors, thermistors, resistors, noise suppression components, coils, piezoelectric sound components, power supplies, sensors, hybrid integrated circuit (IC), and microwave components.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Murata Manufacturing (6981 JP)

JAPAN ACTIVISM: Silchester Goes After Shiga Bank

Silchester Int'l Investors has written letters to four regional banks where it holds large stakes. The goal appears to be to urge public debate of...

Travis Lundy

Bank of Kyoto (8369) - A Complicated Risk Model Clarified

The Bank of Kyoto (8369) model is clarified so dynamic hedging ratios depend on regional bank PBRs. The model suggests it's at the cheap end of its...

Travis Lundy

There Are Offer Premiums. And Then There's Resonant's

This appears a pretty assured transaction from Murata. Assuming late March completion, I can Resonant trading around $4.40+.

David Blennerhassett

Murata Mfg. (6981 JP): FY Guidance Raised but Quarterly OP Trend Is Down

Shares down 21% since last September, but orders, sales and profits weak in 3Q and 4Q of FY Mar-22. Long-term drivers remain in place, but timing...

Scott Foster

TDK (6762 JP): Sales & Profits Rebounding, Relatively Cheap

Sales and profits rebounding. Higher R&D spending limiting short-term profits but should boost long-term growth in digital and energy...

Scott Foster

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)