Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

<ul>
<li>The Kishida administration is looking for funding sources for its two big objectives - 1) raising the birthrate, 2) raising defense spending by 60% in 5yrs to 2% of GDP.</li>
<li>The second is not new. It was in an "order" PM Kishida gave to FinMin Suzuki and MinDef Hamada last November. They need ¥48trln by end 2027. </li>
<li>Yesterday, in an LDP meeting, the idea of changing the NTT Law so the government could sell more NTT shares was mooted. It's worth thinking about.</li>
</ul>


The Kishida administration is looking for funding sources for its two big objectives - 1) raising the birthrate, 2) raising defense spending by 60% in 5yrs to 2% of GDP.
The second is not new. It was in an "order" PM Kishida gave to FinMin Suzuki and MinDef Hamada last November. They need ¥48trln by end 2027. 
Yesterday, in an LDP meeting, the idea of changing the NTT Law so the government could sell more NTT shares was mooted. It's worth thinking about.


NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?

David Blennerhassett

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex (8698 JP)</a> and Docomo announced an agreement. It is not clear ANY of this has to happen at prices favourable to minorities. But equally, it won't be egregiously bad.</li>
<li>
<a href="https://www.smartkarma.com/entities/people-s-insurance-co-group-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:362:1" rel="noopener">People's Insurance (PICC) (1339 HK)</a>'s implied stub is at a lifetime low. The market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.</li>
<li>
<a href="https://www.smartkarma.com/entities/jmdc-inc" target="_blank" data-smartkarma-citation="entities:28673:1" rel="noopener">JMDC (4483 JP)</a> is a growth stock, growing organically. It is a rare enough thing. If you want to buy the back end, wait until it gets here.</li>
</ul>



Monex (8698 JP) and Docomo announced an agreement. It is not clear ANY of this has to happen at prices favourable to minorities. But equally, it won't be egregiously bad.

People's Insurance (PICC) (1339 HK)'s implied stub is at a lifetime low. The market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.

JMDC (4483 JP) is a growth stock, growing organically. It is a rare enough thing. If you want to buy the back end, wait until it gets here.


Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex

<ul>
<li>NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn't. Good. Not great. </li>
<li>But NTT announced a ¥200bn buyback. Again good. Not great. </li>
<li>And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.</li>
</ul>


NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn't. Good. Not great. 
But NTT announced a ¥200bn buyback. Again good. Not great. 
And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (9432 JP)</a> will likely buy back more shares than previously expected as the government sells shares down. Buy dips vs peers KDDI and Softbank Corp. This is a long-term tilt.</li>
<li>There are some doubts over the fate of <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a>'s SET50 membership, at present, but it should escape deletion in December 2023. </li>
<li>Don't punt <a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" data-smartkarma-citation="entities:41:1" rel="noopener">Fortescue Metals (FMG AU)</a> on the off-chance of a change of control in the wake pf the Forrest split. If anything, there might be a leakage of shares.</li>
</ul>



NTT (9432 JP) will likely buy back more shares than previously expected as the government sells shares down. Buy dips vs peers KDDI and Softbank Corp. This is a long-term tilt.
There are some doubts over the fate of Delta Electronics Thai (DELTA TB)'s SET50 membership, at present, but it should escape deletion in December 2023. 
Don't punt Fortescue Metals (FMG AU) on the off-chance of a change of control in the wake pf the Forrest split. If anything, there might be a leakage of shares.


Last Week in Event SPACE: NTT, Delta Electronics, Fortescue Metals, Nomura Real Estate

<ul>
<li>Six weeks ago, LDP Policy Research Council chairman KAGIUDA led a discussion about full NTT privatisation to fund defence. Today he said serious deliberations begin in August. Shares fell today.</li>
<li>The LDP wants non-tax resources to increase defence/social spending. Selling would require a change in NTT Law, but the argument is that communications have changed/internationalised.</li>
<li>As discussed in <a href="https://www.smartkarma.com/insights/ntt-9432-jp-would-the-govt-sell-all-its-shares-why-how-how-long-overhang" target="_blank" data-smartkarma-citation="insights:104184" rel="noopener">NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?</a>, there are questions on overhang. BUT... presumably there are mitigants. </li>
</ul>


Six weeks ago, LDP Policy Research Council chairman KAGIUDA led a discussion about full NTT privatisation to fund defence. Today he said serious deliberations begin in August. Shares fell today.
The LDP wants non-tax resources to increase defence/social spending. Selling would require a change in NTT Law, but the argument is that communications have changed/internationalised.
As discussed in NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?, there are questions on overhang. BUT... presumably there are mitigants. 


NTT (9432) - LDP Consideration of Full Sale Is Not Necessarily Overhang

Japan

Nippon Telegraph and Telephone Corporation provides a variety of telecommunication services, including telephone, telegraph, leased circuits, data communication, terminal equipment sales, and related services. The Company provides both local and long distance telephone services within Japan.

NTT (Nippon Telegraph & Telephone) (9432 JP)

NTT (Nippon Telegraph & Telephone) (9432 JP)

NTT (9432 JP) - Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?

Yesterday saw a curious bit of news. The govt may try to change the NTT Law to enable them to sell NTT shares to raise funds for increased defense...

Travis Lundy

Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Amari Ni Mo... NTT (9432)

NTT's Q1 is OK, but not fantastic. "In line". But they announced a buyback, and LDP pol Amari's comments Sunday tell you there are more buybacks...

Travis Lundy

Last Week in Event SPACE: NTT, Delta Electronics, Fortescue Metals, Nomura Real Estate

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

NTT (9432) - LDP Consideration of Full Sale Is Not Necessarily Overhang

NTT dropped today outright and vs peers on news that the LDP is moving forward with "serious consideration" about a full selldown to fund defence...

Travis Lundy