Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Keisei Electric Railway Co / Event-Driven

<ul>
<li>Activist investor influence in distributing <a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a>'s ¥1,980bn Oriental Land (4661 JP) stake to existing shareholders could unleash over 150% potential upside</li>
<li>
<a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> is coming up cheap versus <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a>. Yet the longer-term view suggests otherwise. </li>
<li>
<a href="https://www.smartkarma.com/entities/abacus-property-group" target="_blank" data-smartkarma-citation="entities:10566:1" rel="noopener">Abacus Property (ABP AU)</a> confirmed the spin-off of an ASX-listed self-storage REIT with A$3bn in total assets. There's a trade here. </li>
</ul>


Activist investor influence in distributing Keisei Electric Railway Co (9009 JP)'s ¥1,980bn Oriental Land (4661 JP) stake to existing shareholders could unleash over 150% potential upside

Intouch Holdings (INTUCH TB) is coming up cheap versus Advanced Info Service (ADVANC TB). Yet the longer-term view suggests otherwise. 

Abacus Property (ABP AU) confirmed the spin-off of an ASX-listed self-storage REIT with A$3bn in total assets. There's a trade here. 


Last Week in Event SPACE: Kesei/Oriental Land, Intouch, Abacus Property, Great Eagle, JS Global

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

<ul>
<li>Surpassing the pre-COVID average of 49%, the NAV discount currently stands at 61%, implying potential 12% market-neutral returns in the short-term through the recovery of the core transportation business.</li>
<li>Activist investor influence in distributing Keisei Electric's ¥1,980bn <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> stake to existing shareholders could unleash over 150% potential upside, surpassing the earlier mentioned 12% gain.</li>
<li>Thus, there is high likelihood of <a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a>'s continued outperformance over Oriental Land in the medium term.</li>
</ul>


Surpassing the pre-COVID average of 49%, the NAV discount currently stands at 61%, implying potential 12% market-neutral returns in the short-term through the recovery of the core transportation business.
Activist investor influence in distributing Keisei Electric's ¥1,980bn Oriental Land (4661 JP) stake to existing shareholders could unleash over 150% potential upside, surpassing the earlier mentioned 12% gain.
Thus, there is high likelihood of Keisei Electric Railway Co (9009 JP)'s continued outperformance over Oriental Land in the medium term.


Keisei Electric: Distorted Valuation Unveils Opportunity for Activist Investors

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>’s revenue in 4QFY23 could miss consensus by around 12%, but its profitability could exceed consensus expectations by around 20%.</li>
<li>The shares did not react to beating consensus and revising up its guidance in the last quarter. This suggests limited upside risk for the company's shares following 4QFY23 earnings.</li>
<li>Despite consensus medium-term OP estimates, Oriental Land appears to be significantly overpriced, with shares trading at a consensus FY27 EV/OP multiple of 33.4x.</li>
</ul>



Oriental Land (4661 JP)’s revenue in 4QFY23 could miss consensus by around 12%, but its profitability could exceed consensus expectations by around 20%.
The shares did not react to beating consensus and revising up its guidance in the last quarter. This suggests limited upside risk for the company's shares following 4QFY23 earnings.
Despite consensus medium-term OP estimates, Oriental Land appears to be significantly overpriced, with shares trading at a consensus FY27 EV/OP multiple of 33.4x.


Oriental Land: The 33.5x FY27 Consensus OP Bubble

Travis Lundy

<ul>
<li>The Nikkei 225 March 2023 Rebalance is 31 March at the close. There is about US$1.75bn of funding to sell against US$1.85bn of 3 names to buy. </li>
<li>The impact on the Buy Side is middling at 3, 6.4, and 6.9 days of ADV to buy. The three DELETES are larger on average but they are all smallcaps. </li>
<li>One trade - long an ADD vs a Peer - is still worth doing. Indexers buy the stock, it goes into a dark closet, and never comes out.</li>
</ul>


The Nikkei 225 March 2023 Rebalance is 31 March at the close. There is about US$1.75bn of funding to sell against US$1.85bn of 3 names to buy. 
The impact on the Buy Side is middling at 3, 6.4, and 6.9 days of ADV to buy. The three DELETES are larger on average but they are all smallcaps. 
One trade - long an ADD vs a Peer - is still worth doing. Indexers buy the stock, it goes into a dark closet, and never comes out.


TSE Tokyo Price Index TOPIX / Event-Driven

<ul>
<li>Every year it's the same trade. But it isn't really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis - notably allocation.</li>
<li>But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.</li>
<li>And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.</li>
</ul>


Every year it's the same trade. But it isn't really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis - notably allocation.
But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.
And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.


The BIG March 2023 "Wednesday Thursday Trade"

Japan

ORIENTAL LAND CO., LTD. operates Tokyo Disney Resort.  The Company also operates restaurants within the complex and sells Disney merchandise.

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Oriental Land (4661 JP)

Last Week in Event SPACE: Kesei/Oriental Land, Intouch, Abacus Property, Great Eagle, JS Global

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

Keisei Electric: Distorted Valuation Unveils Opportunity for Activist Investors

Surpassing the pre-COVID average of 49%, the NAV discount currently stands at 61%, implying potential 12% market-neutral returns in the short-term...

Oshadhi Kumarasiri

Oriental Land: The 33.5x FY27 Consensus OP Bubble

Despite consensus medium-term operating profit estimates, Oriental Land appears to be significantly overpriced, with the current valuation...

Oshadhi Kumarasiri

Nikkei 225 March 2023 Rebal Tomorrow

The Nikkei 225 Rebalance for March 2023 is tomorrow (Friday 31 March 2023) at the close. There is a US$1.75bn funding sell at the close.

Travis Lundy

The BIG March 2023 "Wednesday Thursday Trade"

This year, there is a US$12bn buy to do on 29 March at the close. Historically, performance is pretty good both on a 2-day period, then slumps....

Travis Lundy

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