Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Japan Petroleum Exploration / Event-Driven

<ul>
<li>Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.</li>
<li>The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.</li>
<li>In this insight I look at several possible rankings for potential large buyback targets.</li>
</ul>


Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
In this insight I look at several possible rankings for potential large buyback targets.


JAPAN GOVERNANCE CHANGES II - Who Could Surprise on Buybacks? Quant Rankings

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Taisho Pharmaceutical Holdin / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/taisho-pharmaceutical-holdin" target="_blank" data-smartkarma-citation="entities:3774:1" rel="noopener">Taisho Pharmaceutical Holdin (4581 JP)</a> is the leader in the Japanese OTC drug market. The company’s Lipovitan, Pabron and RiUP brands capture top market share in their respective categories.</li>
<li>With the re-opening of economy, increasing number of people are indulging in outdoor activities and consumer spending is recovering. These should boost Taisho’s OTC drug business.  </li>
<li>The company’s prescription pharmaceutical business is well-positioned for long-term growth, driven by strong performance of existing drugs and upcoming new product launch.</li>
</ul>



Taisho Pharmaceutical Holdin (4581 JP) is the leader in the Japanese OTC drug market. The company’s Lipovitan, Pabron and RiUP brands capture top market share in their respective categories.
With the re-opening of economy, increasing number of people are indulging in outdoor activities and consumer spending is recovering. These should boost Taisho’s OTC drug business.  
The company’s prescription pharmaceutical business is well-positioned for long-term growth, driven by strong performance of existing drugs and upcoming new product launch.


Taisho Pharmaceutical (4581 JP): A Compelling Play on Japan’s Consumer Spending Recovery

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

NTT (Nippon Telegraph & Telephone) / Event-Driven

NTT (Nippon Telegraph & Telephone) (9432 JP)

<ul>
<li>On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.</li>
<li>From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.</li>
<li>Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.</li>
</ul>


On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.
From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.
Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.


TOPIX FFW Transition - Big Flows from April to June

<ul>
<li>Sawai Pharmaceutical’s in-house expansion plan, coupled with its recent acquisition of a production facility will enhance annual production capacity by 48% in multiple stages by 2030.</li>
<li>Capacity expansion will help the company to achieve its aim of market share expansion amid a shortage of generic drug supply in Japan.</li>
<li>Through H1 FY22, the company has achieved 51% and 58% of full-year’s revenue and core operating profit target for Japan, respectively.</li>
</ul>


Sawai Pharmaceutical’s in-house expansion plan, coupled with its recent acquisition of a production facility will enhance annual production capacity by 48% in multiple stages by 2030.
Capacity expansion will help the company to achieve its aim of market share expansion amid a shortage of generic drug supply in Japan.
Through H1 FY22, the company has achieved 51% and 58% of full-year’s revenue and core operating profit target for Japan, respectively.


Sawai Pharmaceutical: Big Capacity Expansion Planned Amid Supply Shortages to Drive Market Share

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Biofermin Pharmaceutical Co / Event-Driven

On 14th May, Pharmaceutical company <a href="https://www.smartkarma.com/entities/biofermin-pharmaceutical-co" target="_blank" data-smartkarma-citation="entities:20533:1" rel="noopener">Biofermin Pharmaceutical Co (4517 JP)</a> ("Biofermin") announced they had agreed to merge with their parent <a href="https://www.smartkarma.com/entities/taisho-pharmaceutical-holdin" target="_blank" data-smartkarma-citation="entities:3774:1" rel="noopener">Taisho Pharmaceutical Holdin (4581 JP)</a> ("Taisho") which will result in Biofermin getting delisted from the Tokyo Stock Exchange. Biofermin shareholders will receive 0.5 Taisho shares per Biofermin share.The Biofermin shareholder meeting for approving the Deal is expected to be on 24th June 2021 and the Merger is expected to become effective on 1st August 2021. More below the fold.

On 14th May, Pharmaceutical company Biofermin Pharmaceutical Co (4517 JP) ("Biofermin") announced they had agreed to merge with their parent Taisho Pharmaceutical Holdin (4581 JP) ("Taisho") which will result in Biofermin getting delisted from the Tokyo Stock Exchange. Biofermin shareholders will receive 0.5 Taisho shares per Biofermin share.The Biofermin shareholder meeting for approving the Deal is expected to be on 24th June 2021 and the Merger is expected to become effective on 1st August 2021. More below the fold.

Biofermin (4517 JP) - Taisho (4581 JP): Merger Is a Done Deal

Japan

Taisho Pharmaceutical Holdings Company Ltd. produces and sells pharmaceuticals, foods, and  other related products. The Company also provides insurance agency and information processing services and operates hotel businesses.

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Taisho Pharmaceutical Holdin (4581 JP)

JAPAN GOVERNANCE CHANGES II - Who Could Surprise on Buybacks? Quant Rankings

JAPAN GOVERNANCE: There is a buyback story coming. It will be big. Bigger than the past year or two, and it will continue. What to buy?

Travis Lundy

Taisho Pharmaceutical (4581 JP): A Compelling Play on Japan’s Consumer Spending Recovery

Taisho’s mainstay OTC drug business will continue to recover with re-opening of the economy, increasing number of people indulging in outdoor...

Tina Banerjee

TOPIX FFW Transition - Big Flows from April to June

Changes to the Topix FFW methodology will result in a turnover of 2.87% & trade of ¥2,285bn from April to June. There is a lot to trade on some...

Brian Freitas

Biofermin (4517 JP) - Taisho (4581 JP): Merger Is a Done Deal

Taisho Pharma and subsidiary Biofermin (4517) have agreed to merge. The vote looks like a done deal. This is a short-dated rate of return trade.

Janaghan Jeyakumar, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

JAPAN GOVERNANCE CHANGES II - Who Could Surprise on Buybacks? Quant Rankings

JAPAN GOVERNANCE: There is a buyback story coming. It will be big. Bigger than the past year or two, and it will continue. What to buy?

Travis Lundy

Taisho Pharmaceutical (4581 JP): A Compelling Play on Japan’s Consumer Spending Recovery

Taisho’s mainstay OTC drug business will continue to recover with re-opening of the economy, increasing number of people indulging in outdoor...

Tina Banerjee

TOPIX FFW Transition - Big Flows from April to June

Changes to the Topix FFW methodology will result in a turnover of 2.87% & trade of ¥2,285bn from April to June. There is a lot to trade on some...

Brian Freitas

Sawai Pharmaceutical: Big Capacity Expansion Planned Amid Supply Shortages to Drive Market Share

By chalking out a huge capacity expansion plan and new product launches, Sawai is expected to enhance market share in Japan generic drug market,...

Tina Banerjee

Biofermin (4517 JP) - Taisho (4581 JP): Merger Is a Done Deal

Taisho Pharma and subsidiary Biofermin (4517) have agreed to merge. The vote looks like a done deal. This is a short-dated rate of return trade.

Janaghan Jeyakumar, CFA