Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Rakuten Mobile announced it will start to sell the iPhone from April 30th. This is a big deal! <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple Inc (AAPL US)</a> 's  iPhone accounts for roughly half of all smartphones in Japan and its popularity is on the rise again as the recent steep mobile price reductions have freed up a greater proportion of monthly user budgets that can be spent on handsets

Rakuten Mobile announced it will start to sell the iPhone from April 30th. This is a big deal! Apple Inc (AAPL US) 's  iPhone accounts for roughly half of all smartphones in Japan and its popularity is on the rise again as the recent steep mobile price reductions have freed up a greater proportion of monthly user budgets that can be spent on handsets

Rakuten Group - IPhone Adoption Boosts Consumer Offering Now that Funding Is Secured

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

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

It is mid-late April. That means it is time for my annual NTT Earnings Could Surprise To The Upside Because the Street Is Too Slack insight.Just over 6 months ago, <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> announced a deal to take <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a> private, spending nearly US$40bn to buy out minorities. I thought they paid too much for it, but given the purchase was entirely funded by debt, and they bought the remainder of NTT DoCoMo at a 5% earnings yield and a 6+% cashflow yield, and borrowed money at less than 1%, this is a pretty "easy" thing to accept as a shareholder but for whatever reason, NTT shares dipped after the purchase. Perhaps some thought there would be an equity offering but investors had to know that was nigh impossible as the NTT Law requires the government to hold one third of the shares and there is no way that the government was going to pony up to buy more NTT shares.But investors and Street analysts seemed to have ignored the major effect of the purchase. And we discussed that at the time. That meant an additional ¥200bn in annual net income to NTT shareholders. Six months later, the Street has almost caught up. Now what?

It is mid-late April. That means it is time for my annual NTT Earnings Could Surprise To The Upside Because the Street Is Too Slack insight.Just over 6 months ago, NTT (Nippon Telegraph &amp; Telephone) (9432 JP) announced a deal to take NTT Docomo Inc (9437 JP) private, spending nearly US$40bn to buy out minorities. I thought they paid too much for it, but given the purchase was entirely funded by debt, and they bought the remainder of NTT DoCoMo at a 5% earnings yield and a 6+% cashflow yield, and borrowed money at less than 1%, this is a pretty "easy" thing to accept as a shareholder but for whatever reason, NTT shares dipped after the purchase. Perhaps some thought there would be an equity offering but investors had to know that was nigh impossible as the NTT Law requires the government to hold one third of the shares and there is no way that the government was going to pony up to buy more NTT shares.But investors and Street analysts seemed to have ignored the major effect of the purchase. And we discussed that at the time. That meant an additional ¥200bn in annual net income to NTT shareholders. Six months later, the Street has almost caught up. Now what?

NTT 2022 Consensus Has *almost* Caught Up To Pro-Forma - But It's Still Probably Low

Event-Driven

TSE Tokyo Price Index TOPIX / Event-Driven

Every year for the past few I publish a Japan Dividend Trade notice.
This year my comments are a little different. 
And it has to do with the rebalance after the <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a> tender offer and the general situation (waves hands vaguely at worst selloff in bond indices in years).

Every year for the past few I publish a Japan Dividend Trade notice.
This year my comments are a little different. 
And it has to do with the rebalance after the NTT Docomo Inc (9437 JP) tender offer and the general situation (waves hands vaguely at worst selloff in bond indices in years).

2021 JAPAN DELTA:  This Year's Div Trade Not Like Last Year's Div Trade

Late Tuesday 16 March 2021, the Nikkei carried an article which said that today <a href="https://www.smartkarma.com/entities/imperial-hotel-ltd" target="_blank" data-smartkarma-citation="entities:18742:1" rel="noopener">Imperial Hotel (9708 JP)</a> had decided to renovate its flagship hotel Imperial Hotel Tokyo in Uchisaiwaicho, Tokyo, on the eastern side of Hibiya Park and just off what used to the southern extension of the imperial palace moat.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/194/803/original/953px-Imperial_Hotel_Tokyo.jpeg?1615895144" class="editor-image img-responsive" data-smartkarma-image-id="194803"></figure><div style="text-align: right;" class="content-caption">source: Kakidai, 29 Jan 2012 (own work)</div></section>This is the third iteration of the Imperial Hotel after the the last one, designed by Frank Lloyd Wright and built in 1922, replacing Yuzuru Watanabe's beautiful structure built in 1890, was taken down in 1967. The current version opened in 1970 and has stood for more than 50 years.The article said that the company had decided to rebuild the hotel in line with ongoing redevelopment in the area, since the existing facilities were aging. The goal is to make the Imperial Hotel a central part of yet another "branded" prime location in Tokyo. An announcement is expected this month. The company <a href="https://www.imperialhotel.co.jp/j/company/pdf/20210316.pdf#zoom=100" target="_blank" rel="noopener">announced</a> late in the evening that the news shown in the media was not released by them, and while they are considering rebuilding the hotel, nothing has been decided yet. The article says that the 31-story mixed use tower next to the current hotel will be rebuilt by 2030 and the main hotel asset will be rebuilt by 2036. In the first nine months of this fiscal year, revenue has dropped by 62% - a dramatic drop to be sure - but not surprising given the lack of inbound tourists. The hotel has started renting out serviced apartments for those who think it would be cool to WFH in in a prime central location. For those who are keen observers of that area of Tokyo, this is a long-awaited development. And it behooves one to think of the possibilities. One significant possibility in my mind is that Imperial Hotel does not remain independent.

Late Tuesday 16 March 2021, the Nikkei carried an article which said that today Imperial Hotel (9708 JP) had decided to renovate its flagship hotel Imperial Hotel Tokyo in Uchisaiwaicho, Tokyo, on the eastern side of Hibiya Park and just off what used to the southern extension of the imperial palace moat.source: Kakidai, 29 Jan 2012 (own work)This is the third iteration of the Imperial Hotel after the the last one, designed by Frank Lloyd Wright and built in 1922, replacing Yuzuru Watanabe's beautiful structure built in 1890, was taken down in 1967. The current version opened in 1970 and has stood for more than 50 years.The article said that the company had decided to rebuild the hotel in line with ongoing redevelopment in the area, since the existing facilities were aging. The goal is to make the Imperial Hotel a central part of yet another "branded" prime location in Tokyo. An announcement is expected this month. The company announced late in the evening that the news shown in the media was not released by them, and while they are considering rebuilding the hotel, nothing has been decided yet. The article says that the 31-story mixed use tower next to the current hotel will be rebuilt by 2030 and the main hotel asset will be rebuilt by 2036. In the first nine months of this fiscal year, revenue has dropped by 62% - a dramatic drop to be sure - but not surprising given the lack of inbound tourists. The hotel has started renting out serviced apartments for those who think it would be cool to WFH in in a prime central location. For those who are keen observers of that area of Tokyo, this is a long-awaited development. And it behooves one to think of the possibilities. One significant possibility in my mind is that Imperial Hotel does not remain independent. 

Imperial Hotel (9708) - Redevelopment Might Hide an LBO Story

Rakuten’s announcement of a ¥242bn investment from Japan Post, Tencent and Wal-Mart is truly a game changer. The proceeds should get it through peak investment for mobile and enhance the value of its fulfilment expansion. It also gives Rakuten, which has looked outmatched in its competitive fight against larger rivals like Softbank/Z Holdings, a trip of powerful allies in eCommerce and fintech. The Tencent participation is particularly interesting as that company expands its own competitive fight with Alibaba. The challenge for Rakuten has not diminished but for the first time since it announced its mobile ambitions in 2017, we feel it has the resources it needs.

Rakuten’s announcement of a ¥242bn investment from Japan Post, Tencent and Wal-Mart is truly a game changer. The proceeds should get it through peak investment for mobile and enhance the value of its fulfilment expansion. It also gives Rakuten, which has looked outmatched in its competitive fight against larger rivals like Softbank/Z Holdings, a trip of powerful allies in eCommerce and fintech. The Tencent participation is particularly interesting as that company expands its own competitive fight with Alibaba. The challenge for Rakuten has not diminished but for the first time since it announced its mobile ambitions in 2017, we feel it has the resources it needs.

Rakuten - Strategic Investments Raise Needed Cash and Level the Playing Field

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)

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NTT (Nippon Telegraph & Telephone) (9432 JP)

Rakuten Group - IPhone Adoption Boosts Consumer Offering Now that Funding Is Secured

Rakuten has secured the iPhone for its mobile service which removes a key differentiating factor although the largest one, coverage, will take...

Kirk Boodry

NTT 2022 Consensus Has almost Caught Up To Pro-Forma - But It's Still Probably Low

NTT Street Consensus for FY21-23 should have had a jump shift at the end of September last year. It did not. It slowly drifted higher. I expect a...

Travis Lundy

2021 JAPAN DELTA: This Year's Div Trade Not Like Last Year's Div Trade

Japan's Annual Dividend Trade is big, and this year, despite some economic weakness since last year, it is still quite bigly. But there may be...

Travis Lundy

Imperial Hotel (9708) - Redevelopment Might Hide an LBO Story

Imperial Hotel (9708) has been an event-in-waiting for a decade, and at the very least, five+ years. It may be for another five, but there is a...

Travis Lundy

Rakuten - Strategic Investments Raise Needed Cash and Level the Playing Field

The investments in Rakuten solve near-term cash concerns but it is the presence of powerful allies that make this a milestone

Kirk Boodry

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