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>Rohm is increasingly an automotive semiconductor maker. Its business should hold up reasonably well in the downturn and grow significantly in the long term.</li>
<li>Capital spending risks excess capacity in the coming year, but sets the stage for long term growth. Possible investment in Toshiba a positive. </li>
<li>Weak quarters ahead. Buy on weakness for the long term. </li>
</ul>


Rohm is increasingly an automotive semiconductor maker. Its business should hold up reasonably well in the downturn and grow significantly in the long term.
Capital spending risks excess capacity in the coming year, but sets the stage for long term growth. Possible investment in Toshiba a positive. 
Weak quarters ahead. Buy on weakness for the long term. 


Rohm (6963 JP): Gearing Up in the Downturn

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>The <a href="https://asia.nikkei.com/Spotlight/Toshiba-in-turmoil/Japanese-consortium-makes-final-offer-on-Toshiba-buyout" target="_blank" rel="noopener">Nikkei reports</a> that Japan Industrial Partners (JIP), the preferred bidder, has finally secured financing and submitted a final offer to <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>’s Board.</li>
<li>Nikkei notes that JIP expects to spend about JPY2 trillion on the acquisition suggesting an offer price around JPY4,750 per share, -4% below the undisturbed price of JPY4,957.60 (21 April).</li>
<li>The hard part now is getting the Board to accept the unremarkable offer and the banks’ conditions. If the Board succumbs, the next challenge is to get shareholders to accept.</li>
</ul>


The Nikkei reports that Japan Industrial Partners (JIP), the preferred bidder, has finally secured financing and submitted a final offer to Toshiba Corp (6502 JP)’s Board.
Nikkei notes that JIP expects to spend about JPY2 trillion on the acquisition suggesting an offer price around JPY4,750 per share, -4% below the undisturbed price of JPY4,957.60 (21 April).
The hard part now is getting the Board to accept the unremarkable offer and the banks’ conditions. If the Board succumbs, the next challenge is to get shareholders to accept.


Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>While OP margin remains flat, ROE increased moderately due to higher in total-asset-turnover. Going forward, the drivers of ROE growth are likely to continue through reductions in cash and cross-shareholdings.</li>
<li>It would be more likely to find it in a company that already has high operating profit margin and where ROE can be improved by improving the total asset turnover.</li>
<li>Based on my analysis so far, I assume that companies that raised their stock price valuations did so by clarifying their cash allocation policies and engaging in communication with investors.</li>
</ul>


While OP margin remains flat, ROE increased moderately due to higher in total-asset-turnover. Going forward, the drivers of ROE growth are likely to continue through reductions in cash and cross-shareholdings.
It would be more likely to find it in a company that already has high operating profit margin and where ROE can be improved by improving the total asset turnover.
Based on my analysis so far, I assume that companies that raised their stock price valuations did so by clarifying their cash allocation policies and engaging in communication with investors.


Japanese Companies with Low Debt Should Evaluate Profitability in Terms of ROA Rather than ROE

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The original bid was supposed to be presented fully-funded by 30 September 2022. Then it was early November, then late November, then early December, late Dec, early Jan, end Jan. </li>
<li>Today we find out that The Banks and The Preferred JIP Bidding Consortium will aim to reach agreement by 3 Feb. The Bloomberg article details are newish, and odd. </li>
<li>Shares have deteriorated and vs Peers, they are at their lowest point in many months. And the details do not make me confident this deal is clean yet. </li>
</ul>


The original bid was supposed to be presented fully-funded by 30 September 2022. Then it was early November, then late November, then early December, late Dec, early Jan, end Jan. 
Today we find out that The Banks and The Preferred JIP Bidding Consortium will aim to reach agreement by 3 Feb. The Bloomberg article details are newish, and odd. 
Shares have deteriorated and vs Peers, they are at their lowest point in many months. And the details do not make me confident this deal is clean yet. 


Toshiba (6502) - Funding Mostly Secured, Still, Again, Maybe. Or Maybe Not. Or Not.

<ul>
<li>
<a href="https://www.bloomberg.com/news/articles/2023-01-31/japan-banks-extend-deadline-for-toshiba-bid-s-loan-decision#xj4y7vzkg" target="_blank" rel="noopener">Bloomberg reports</a> that Japan Industrial Partners (JIP), the preferred bidder, has again extended the deadline for securing bank financing of around JPY1.2 trillion (US$8.8 billion).</li>
<li>A new issue has pushed the deadline to 3 February. If JIP manages to secure financing for an offer of around JPY5,100, the next challenge is securing Board support.</li>
<li>The 3QFY2022 update on 14 February needs to avoid further downgrades to keep the deal alive. Toshiba’s multiples are unattractive to peers. Remain on the sidelines for now.</li>
</ul>



Bloomberg reports that Japan Industrial Partners (JIP), the preferred bidder, has again extended the deadline for securing bank financing of around JPY1.2 trillion (US$8.8 billion).
A new issue has pushed the deadline to 3 February. If JIP manages to secure financing for an offer of around JPY5,100, the next challenge is securing Board support.
The 3QFY2022 update on 14 February needs to avoid further downgrades to keep the deal alive. Toshiba’s multiples are unattractive to peers. Remain on the sidelines for now.


Toshiba (6502 JP): Financing Deadline Slips Again as the 3Q Update Looms

Japan

ROHM COMPANY LIMITED manufactures custom linear integrated circuits and semiconductor devices for use primarily in consumer electronics.  The Company has plants and sales offices worldwide.  Rohm's subsidiaries include Wako Electric and Apollo Electronics.

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ROHM Co Ltd (6963 JP)

Rohm (6963 JP): Gearing Up in the Downturn

Rohm has become an automotive semiconductor company geared to electric vehicles. Results through Dec-22 were good, but with signs of a slowdown....

Scott Foster

Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part

The hard part now is getting the Board to accept the unremarkable offer and the banks’ conditions. If the Board succumbs, the next challenge is to...

Arun George

Japanese Companies with Low Debt Should Evaluate Profitability in Terms of ROA Rather than ROE

I would like to discuss the Nikkei article of January 13th, "Undervalued stocks under pressure for ROE above 10%, room for improvement in profit...

Metrical Inc

Toshiba (6502) - Funding Mostly Secured, Still, Again, Maybe. Or Maybe Not. Or Not.

A new Bloomberg article tells me JIP/Banks negotiations are extended 3 more days to breach what seems an impossible impasse. This just doesn't seem...

Travis Lundy

Toshiba (6502 JP): Financing Deadline Slips Again as the 3Q Update Looms

The ongoing financing deadline extensions and a looming 3Q update add to the deal uncertainty. While the price ratio is undemanding, Toshiba’s...

Arun George

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