Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Last Friday 30 October after the close, theme park operator and character licensor <a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio Co Ltd (8136 JP)</a> announced earnings for Q2. They were less than salutary with H1 revenues -38.3%, and H1 OP and Net Profit negative to the tune of about negative 15% OPMs and NPMs.</p>
<p>Q1 revenues were down 45.5%yoy. Q2 turned out to be down 31.5%yoy. H2 revenues are now forecast to be down 18%yoy, which strikes me as aggressive. </p>
<p>The stock fell 7% on the news, and did not rally on Day 2.</p>
<p>Today after the close, the company announced that its lead shareholder <a href="https://www.smartkarma.com/entities/sega-sammy-holdings-inc" target="_blank" data-smartkarma-citation="entities:19932:1" rel="noopener">Sega Sammy Holdings (6460 JP)</a> wanted to sell some of its position, dropping it from 10+% to about 7.1% by selling 3,510,000 shares and to accommodate that desire and to use its cash to increase capital efficiency, the company would conduct a ToSTNeT-3 buyback before the open on 5 November to buy up to 3,391,700 shares, spending up to JPY 6 billion, at today's closing price of JPY 1,769/share. </p>
<p>This doesn't change float. It slightly positively affects future-when-profitable-again EPS. But for anyone who is bearish, it represents an opportunity. </p>

Last Friday 30 October after the close, theme park operator and character licensor Sanrio Co Ltd (8136 JP) announced earnings for Q2. They were less than salutary with H1 revenues -38.3%, and H1 OP and Net Profit negative to the tune of about negative 15% OPMs and NPMs.
Q1 revenues were down 45.5%yoy. Q2 turned out to be down 31.5%yoy. H2 revenues are now forecast to be down 18%yoy, which strikes me as aggressive. 
The stock fell 7% on the news, and did not rally on Day 2.
Today after the close, the company announced that its lead shareholder Sega Sammy Holdings (6460 JP) wanted to sell some of its position, dropping it from 10+% to about 7.1% by selling 3,510,000 shares and to accommodate that desire and to use its cash to increase capital efficiency, the company would conduct a ToSTNeT-3 buyback before the open on 5 November to buy up to 3,391,700 shares, spending up to JPY 6 billion, at today's closing price of JPY 1,769/share. 
This doesn't change float. It slightly positively affects future-when-profitable-again EPS. But for anyone who is bearish, it represents an opportunity. 

<p>A brief thinkpiece about where <a href="https://www.smartkarma.com/entities/nexon-co-ltd" target="_blank" data-smartkarma-citation="entities:16032:1" rel="noopener">Nexon (3659 JP)</a> sits vs its peers and history. Conclusions are that NEXON is not dramatically expensive to its peers on a Forward EV/EBIT multiple basis. You would need another 5+% into the close to be comfortable with a clean short-term trade given the change in Real World Float</p><p>Original insight is <a href="https://www.smartkarma.com/insights/familymart-delisting-and-its-nikkei-225-replacement-is-nexon-3659" target="_blank" data-smartkarma-citation="insights:44429" rel="noopener">Familymart Delisting and Its Nikkei 225 Replacement Is Nexon (3659)</a>.</p><p>More below the fold.  </p>

A brief thinkpiece about where Nexon (3659 JP) sits vs its peers and history. Conclusions are that NEXON is not dramatically expensive to its peers on a Forward EV/EBIT multiple basis. You would need another 5+% into the close to be comfortable with a clean short-term trade given the change in Real World FloatOriginal insight is Familymart Delisting and Its Nikkei 225 Replacement Is Nexon (3659).More below the fold.  

Is It Safe to Short NEXON into the Inclusion?

Global Gaming and Casinos Industry Specialist, Casino Business Review LLC

Howard J Klein

Global Gaming and Casinos Industry Specialist

Equity Bottom-Up

Caesars Entertainment  / Equity Bottom-Up

<ul>
<li>Caesars South Korea project partnership has a US$775m price tag. Incoming CEO El Dorado Reeg appears inclined to sell the project to increase cash proceeds to finance his deal.</li>
<li>Cash portion of the US$17.3b deal rises by delay in closing past March 15th so ERI is strongly incentivized to find a buyer for its South Korea development deal.</li>
<li>During virus crisis, identifying buyer could be difficult. But of all possible, Sega Sammy, already partnered in Paradise City Korea is most logical.</li>
</ul>


Caesars South Korea project partnership has a US$775m price tag. Incoming CEO El Dorado Reeg appears inclined to sell the project to increase cash proceeds to finance his deal.
Cash portion of the US$17.3b deal rises by delay in closing past March 15th so ERI is strongly incentivized to find a buyer for its South Korea development deal.
During virus crisis, identifying buyer could be difficult. But of all possible, Sega Sammy, already partnered in Paradise City Korea is most logical.


Caesars South Korea: A Candidate for Sale by Acquirer El Dorado Resorts

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

<p>Which one or ones would Nexon hunt with US$1.5bil, which it got from Neople from late last year to this May? Or it may already be in discussion with some of the target companies. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/962/original/1.png?1591240890" class="editor-image img-responsive" data-smartkarma-image-id="137962"></figure><div class="content-caption">(Source: Nexon Co., Ltd.)</div><hr><div class="content-highlight"><h2>Four clear points</h2></div><p>Nexon made the below four points very clear.</p><p>It will invest a total of US$1.5bil. Which ones? It will go after publicly traded entertainment companies, presumably including gaming companies. Then, it limits its role as a minority shareholder. What does it want in return? Of course, it is IPs, for which Nexon always has a great need.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/137/969/original/3.png?1591243139" class="editor-image img-responsive" data-smartkarma-image-id="137969"></figure>

Which one or ones would Nexon hunt with US$1.5bil, which it got from Neople from late last year to this May? Or it may already be in discussion with some of the target companies. (Source: Nexon Co., Ltd.)Four clear pointsNexon made the below four points very clear.It will invest a total of US$1.5bil. Which ones? It will go after publicly traded entertainment companies, presumably including gaming companies. Then, it limits its role as a minority shareholder. What does it want in return? Of course, it is IPs, for which Nexon always has a great need.

Nexon's "Realistic" Target Companies (Mostly from Japan) For US$1.5bil Cash

Equity Analyst, LightStream Research

Chacko Jacob

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.

<p>Established in 1960, the <a href="https://www.smartkarma.com/entities/13517" target="_blank" data-smartkarma-citation="entities:13517:1">Oriental Land (4661 JP)</a> began as a developer of reclaimed land. One of the company’s main projects involved reclaiming land off Urayasu in Chiba Prefecture, about 40 minutes from Tokyo Station. While this project was being carried out, OLC reached an agreement with <a href="https://www.smartkarma.com/entities/15439" target="_blank" data-smartkarma-citation="entities:15439:1">The Walt Disney Co (DIS US)</a> to build and operate a theme park on the reclaimed land. Ten years later, in 1983, Tokyo Disneyland opened its gates to the public.</p>
<p>The Disneyland theme park opened with 32…</p>

Established in 1960, the Oriental Land (4661 JP) began as a developer of reclaimed land. One of the company’s main projects involved reclaiming land off Urayasu in Chiba Prefecture, about 40 minutes from Tokyo Station. While this project was being carried out, OLC reached an agreement with The Walt Disney Co (DIS US) to build and operate a theme park on the reclaimed land. Ten years later, in 1983, Tokyo Disneyland opened its gates to the public.
The Disneyland theme park opened with 32…

OLC Ltd (4661 JP): Multiples Pose More Of A Danger To Tokyo Disney Resort Than Heatwave & Typhoons

Japan

SEGA SAMMY HOLDINGS INC. is a holding company established through the merger of Sega and Sammy.  The Group mainly develops and manufactures commercial-use video game machine, home-use video game software, and pachinko pinball machine. Sega Sammy Holdings also operates amusement parks.

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Sega Sammy Holdings (6460 JP)

Biggish Sanrio (8136) ToSTNeT-3 Buyback

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Travis Lundy

Is It Safe to Short NEXON into the Inclusion?

Nexon has bounced on the Nikkei 225 inclusion. It may not have bounced enough to be aggressively short. The forward fundamental multiple isn't...

Travis Lundy

Caesars South Korea: A Candidate for Sale by Acquirer El Dorado Resorts

Caesars South Korea project partnership has a US$775m price tag. Incoming CEO El Dorado Reeg appears inclined to sell the project to increase cash...

Howard J Klein

Nexon's "Realistic" Target Companies (Mostly from Japan) For US$1.5bil Cash

Which one or ones would Nexon hunt with US$1.5bil, which it got from Neople from late last year to this May? Or it may already be in discussion...

Sanghyun Park

OLC Ltd (4661 JP): Multiples Pose More Of A Danger To Tokyo Disney Resort Than Heatwave & Typhoons

Established in 1960, the Oriental Land (4661 JP) began as a developer of reclaimed land. One of the company’s main projects involved reclaiming...

Chacko Jacob

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